ASSIGNMENT NO* 02

NAME: M. TALAL AZEEM

ROLL* 201360263
SUBJECT: MARKETING (F)

Q: Macro environment Economical factors Adidas?

Economic Recession-Pandemic:

The worldwide pandemic of covid-19 and the shutdown of businesses have

pushed the global economy into recession. It’s the end of 2020 and the beginning
of 2021, and the businesses aren’t fully working up to their capacities. Even
though Adidas is a financially stable brand, but it has faced a huge decline in
annual revenue and net income.
According to a report by macrotrends.net, the annual revenue of Adidas was
22.63 billion dollars in 2020. Out of which the net profit of the brand after
minimizing all the expenses was 0.529 billion dollars. In 2020, the annual revenue
and net profit of the brand decreased roundabout 12.83% and 75.31%.

Exchange Rate:
Adidas is a German brand and it deals in Euros with neighboring European
countries. When it comes to international trade and the company’s
manufacturers in Asia, those deals are in US dollars. It happens often. Even the
company has to deal with different currency exchange rates every day. Economic
recession and other circumstances like the pandemic make the exchange rate
volatility. Even a small change in the US dollar and Euro rates can make a huge
difference when you multiply it by millions.
 Local Economic Issues:
The sportswear brand, Adidas, is operating its business globally. The interest rate,
inflation rate, unemployment rate, and many other factors in different countries
are different. Such economic issues play a huge role in affecting the purchasing
power of consumers. When the buying power of people is low, they would reduce
their spending. The decrease in sales means low profit to the company. This is
exactly what happened for the past few months of the pandemic.

Leisure Product:
There are two types of products; necessity and leisure. Sports and exercise are
not a necessity for everyone. Only the wealthy and well off people could afford
the luxury of exercise and sportswear. It’s not the need for the lower middle class
and working-class people. When it’s a leisure product, the attitude of people
towards it is also leisure. That’s why the sale of sportswear products has dropped
during the pandemic because the people didn’t consider its necessity.

Counterfeit Issue:
CEO of Adidas, Rorsted, said in his interview that roundabout 10% of Adidas’s
products in Asia are fake and counterfeit. There’re many third-party sellers in
Asia, they manufacture low-quality products and use the logo of Adidas and sell
them in the market at a high price. When customers see the logo of Adidas,
they’re willing to pay a high price for it.

 Economical Strategies
Biggest sportswear manufacturer of Europe & one of the biggest in the world,
Adidas is segmented based on demographic, psychographic & behavioral factors.
The Adidas group has four brands in its strong portfolio – Reebok, Adidas,
Rockport & Taylor made meant for different segment customer groups. Adidas
uses differentiated targeting strategy to target young adults, adults as well as
children who have passion for fitness & sports. Although it targets customers in
the age group of 13-40 years but majority of its customers are of 15-30 years of
age who hail from upper middle class or the luxury class of customers. User &
benefit based positioning are the strategies Adidas uses to create distinctive
image in the mind of the prospective consumer. By emphasizing the value of
quality products from a trusted brand Adidas is able to maintain its brand
essence. The portfolio is divided as follows.
o They have Adidas-performance in Competitive sports,
o Reebok & Reebok classics in Active sports & casual sports, &
o Adidas originals, Adidas Fun, Rockport in Sports fashion.

Q: Micro environment competitor’s factors

Adidas is a German multinational brand that designs and manufactures sports
footwear, apparels and related accessories for athletes, sports enthusiasts and
fitness lovers. Adidas was founded in 1920 with the name of Dassler Brother Shoe
Factory and named as Adidas since 1949. After Nike, which is the world leading
brand of footwear, Adidas stand the second largest brand in the world. Adidas
most valuable acquisition was Reebok Sportswear Company which took place in
2005 for $3.8 billion. This acquisition allowed Adidas to compete Swoosh Nike. Let
us discuss for key facts and figures of Adidas. The mission of Adidas is to be the
best sports company in the world. The company’s worldwide employees are
56,888 that comprising 50% male and 50% female. Adidas has produced 900
million units worldwide in 2017. The net sale made by Adidas was €21.218 billion
in 2017 and investing €187 million in R&D. Adidas brand is a huge success but still
having strong competition in the market.

List of Top Competitors of Adidas:-

 Nike
 PUMA
 Under Armor
 New Balance
 ASICS
 FILA
 Hanesbrands
 Foot Locker
 Li Ning
 Anta
 Competitive Strategies

Just like Nike, Adidas competitive strategy focuses on broad differentiation

approach (Ghauri and Cateora, 2014). At the corporate level, the company
focuses on innovation, production of new and unique products and effective
processes to assist in coping with competition. As part of this strategy, the
company has developed multiple brands and also taken over Reebok brands thus
giving it competitive advantage especially in its main market in Western Europe
(Adidas, 2017). This multi-brand approach helps not only in development of
diverse brand portfolio but also allows the company to cater for all segments of
the market. Adidas also strives to keep a unique identity by focusing on its core
competencies such as best marketing and distribution channels in different
countries, critical evaluation of consumer buying behaviors and securing prime
shelf space. Adidas has also embraced e-commerce so as to become more
efficient and appeal more to their customers as well as making the products more
accessible to their customers around the world (UKFT, 2017). Adidas also has a
close control of its supply chain and its overseas producers so as to facilitate
customization of products which can appeal to a broad range of customers. In
addition, Adidas uses differentiated targeting strategy to target young adults and
children who have passion for sports and fitness. Though Adidas target customers
are in the age group between 13 and 40 years, most of the customers are
between 15 and 30 years of age and hail from the middle class and the luxury
class of customers (Adidas, 2017). Moreover, Adidas positioning is based on user
and benefits strategy.