Republic of the Philippines

UNIVERSITY OF SOUTHERN MINDANAO

Libungan, Campus
Libungan, Cotabato

THE EFFECTIVE PRICING STRATEGY OF ADIDAS RUNNING

SHOES COMPANY FOR CUSTOMERS SATISFACTION

ERICA FAITH R. SAPINE

JUNE 2021
I. INTRODUCTION
Adidas is a German based company with its largest market share in Europe,
Adidas also a German multinational company that outlines and produces sports
dress and adornments. In the Adidas Bunch, it comprises of the reeboks sportswear
organization, Taylor Made-Adidas organization, golf organization (counting
Ashworth), and Rockport. Adidas is the biggest game wear producer in Germany
and Europe and the second greatest sportswear maker on the planet. Other than
games footwear, Adidas likewise creates different items. Adidas was the dominating
manufacturer of sporting goods. It achieved this success by developing cleated
shoes for the soccer and track and field sports.

Earlier it was launched only for sports people who are into playing different sports,
but then as per the changing trends, people of other disciplines also started
purchasing the products due to its high quality. Adidas running shoes has kept its
rates in such a range where middle-class people can also afford the products. Its
main target audience is teenagers who play different types of sports. Football is one
of the sports where the demand for Adidas shoes was rising and the shoes are used
till date.
II. BACKGROUND
 History
Adidas is a multi national sports corporation that produces,
designs, and creates sport clothing and accessories. Two German
brothers, Adi and Rudolf Dassler, founded the company in 1924.
Originally the company was named Dassler shoes. In 1948 Rudolf left
and went on to make his own company, which is now puma and
Adidas’ earliest competitor. This then inspired the name Adidas that
was changed by Adi. 1949 was the formal registrations of Adidas AG.
In the early 1970’s Adidas was the most renowned athletic footwear
brand. They really began to gain a lot more competition when Nike
was introduced and shown in the 1972 Olympics. Although Nike was in
the picture Adidas still remained a sought after footwear.
MISSION
 Improving sports. In this mission statement, Adidas emphasizes on its role to
continuously lead in offering its customers the best products. For the love of sports, Adidas
has a sports-specific culture embedded in everything about the company. For instance, the
Adidas is very particular when it comes to specifics of what it showcases for each category
of sports such as shoes for men and women, and the respective sports they engage in.
Other than in the provision of sportswear, Adidas is a great supporter of sports through
targeted campaigns and sponsorship programs to support young talents.
 Exceeding expectations. The reason Adidas has a reputation that precedes it is
simply because of its uncompromising attitude on quality. Adidas is a brand that one can
say demands little marketing efforts courtesy of the satisfaction it gives its customers
wherever they are. And there is much more to Adidas – the company remains faithful to its
sustainable roadmap that incorporates among other supporting its workers and the
environment at large.

 Innovations. Adidas clearly shows that creative mindset is at the heart of all its
operations as demonstrated by the constant rollout of incredible sports shoes and other
related products. The designs characterizing its work are precise and tailored to the specific
needs of the athlete, showing just why the company has become a darling in the sports
sector.
Vision
 Being the design leader. In the first component of this
vision statement, Adidas re-emphasizes that it is not a
company that sits back and follows the rest. Instead, it is
driven by the inventiveness and desire to lead the rest by
setting a quality bar that meets the needs of its
customers.
 Boost athletes. The progressiveness demonstrated by
Adidas in the production of products that meets the
changing needs of the customer shows just how much
the company values the athleticism of its clients.
Core Values
Adidas core values comprise “performance, passion, integrity, and diversity.” They are the
principles that have kept Adidas ahead of its game for decades. They ensure the strategic
approaches of the company align with the mission and vision statements. They reveal the
following details:

Performance. In everything it does, Adidas emphasizes on the need for all stakeholders
to maintain the ultimate rate of performance. The company acknowledges the
competitiveness of the sportswear, boots and accessories market, and therefore, only the
best players can thrive there.

This value relates to the second one that is all about an appetite of sports and everything
good about it. Adidas is also categorical on the influence of a culture of doing things right
has on the growth trend of a company. It stresses that this is what keeps the customer
loyal and enthusiastic about what the company has on offer. To sum up, the type of
culture that gives Adidas the reputation it boasts, the value of diversity, not only in the
products it produces but also the backgrounds it associates and calls Adidas family gives
it a global outlook.
 MARKET SEGMENTATION
 Demographic Segmentation
Adidas running shoes brand their product into range of female, male
and kids. The consumers can have product which fit into most
demographic possible.
 Psychographic Segmentation
Adidas divides the market into various group. It was thought that
consumers within a given social class have similar buy behavior, thus,
adidas focus on many different social class. Consumer’s interest in the
product is affected by their way of life and what they buy are their way
of expression.
 Behavioral Segmentation
Adidas use behavioral variables to segment the market, designing
products that correspond to their consumer’s personalities.
TARGET MARKET
The main targeted market for adidas running shoes company is
the urban youths and adults, usually between 13-40 years old, with
competitions to lifestyle. Adidas also targets both genders and
almost all the social class, less the lower class.

PRODUCT POSITIONING
The competitive advantages adidas have over its
competitors are its product quality, distribution network and
brand equity. It had over two thousand and four hundred
stores worldwide which account to over four billion dollars
business. Adidas running shoes company have sponsored
multiple world events such as NBA, FIFA and The Olympic
games.

Adidas Marketing Mix (4Ps) Strategy
Adidas Product Strategy:
Adidas has always strived to provide the best of the best goods and equipment to
the athletes through its innovations including the first shoes designed for ice and
the first multi- studded shoes.
 Adidas Price/Pricing Strategy:
Adidas has a particular set of customers and it strives to give the best products and
experience to them. Due to its innovations and continuous product improvement
which leads to top notch performance, all the Adidas products are premium priced.
The pricing strategy in the marketing mix of Adidas has focused upon high quality
and competitor offering.
 Adidas Place & Distribution Strategy:
Adidas has made its products available around the globe through various
distribution channels like franchises, mass merchandise, speciality stores and
online retails (own and other e-commerce platforms).
 Adidas Promotion & Advertising Strategy:
Adidas has always endorsed and promoted itself through media. Adidas marketing
mix promotional strategy is to use a 360 branding strategy covering all aspects of
media and communication. Adidas promotes itself through commercial campaigns
on TV, print, online, billboards etc.
 MARKET ENVIRONMENT FACTORS
 Political Factors affect Adidas:
The major political issues that affecting Adidas are changing trade policies and
political unrest in many countries. Adidas has to tackle such issues in order to
sustain its global presence and financial performance.
 Economic Factors affect Adidas:
Unemployment, wages rates, taxation, inflation and interest rates are those
economic factors that can affect Adidas performance and profitability. Adidas
products are not necessity of life but focus on active life style consumer and
athletes. There are noticeable fluctuations in the global economy.
 Social Factors affect Adidas:
Culture, religion, life style and preferences are those social factors affecting Adidas
performance and brand image and customer loyalty. Adidas should keep in mind all
the communities and beliefs when taking any decision and implanting strategy.
 Technological Factors affect Adidas:
For every sports brand embracing innovative technologies is a competitive edge
over competitors. Technology can not only be used in a product itself but also in
overall company operation for example product and process, management and
accounting system.
Competitors analysis
III. ALTERNATIVE
Some of the top competitors brands of Adidas runinng shoes company are the following:
 Nike
Do you know which brand is the world’s leaning footwear brand? Your answer should be none
other than Nike. It is the most trusted brand looking for inspiration and invocation in the life of
every person who has a body.
NIKE Brand Valuation. $122.3 billion
 PUMA
PUMA is worth mentioning and one of the strong Adidas competitors. The reason is that once
Puma and Adidas were operated under the brand name of Gebrüder Dassler Schuhfabrik by
Rudolf and Adolf. Later on their relations were deteriorated and separate the entity in to two
companies Adidas and PUMA. Now PUMA is competing with Adidas brand in the market.
PUMA Brand Valuation. $6.8 billion
 Under Armour
The third in the competitor list is Under Armour. Another successful brand in the category of
sports, footwear and casual apparel founded in 1996. The company shows great commitment and
become leader in the apparel and footwear industry.
Under Armour Brand Valuation. $9 billion
 Customer's analysis
Customers are a very important element in any form of business for the
reason that there cannot be a business transaction in the absence of
customers. They are the reason for the production of goods and
services without which no business could take place. Businesses
should therefore put the consumer in mind when undertaking any
process concerning goods and services from production to final sale
not forgetting pricing. The consistent focus on product quality and
customer experience has enabled Adidas to nurture a global and loyal
customer base, particularly teens and young adults between 16 and 24
years in urban areas.

Adidas customers consist of upper and Upper-middle class social

groups. Identifying and understanding consumer’s individual
motivations and goals for doing sport, their lifestyle and fitness level,
where they are doing sport and their buying habits will help them in
creating meaningful products, services and experiences that build a
lasting impression and brand loyalty.
 SWOT ANALYSIS
 Strengths (Powerful Brand)
One of Adidas’ biggest strengths is, without a doubt, its powerful brand. Alongside
Nike and several others, Adidas is one of the premium sportswear brands
recognized in every corner of the globe. Not only does the brand have widespread
awareness, but it’s also a positive brand image. Adidas products are associated
with being fashionable and relatively high quality. All in all, Adidas’ powerful brand
is a key part of how it manages to capture such a large fraction of the luxury
sportswear sales.
 Weakness (Outsourced Manufacturing)
Adidas outsources the production of its products to Far Eastern manufacturers.
While this strategy does allow the brand to cut costs, it’s one of their major
weaknesses. By outsourcing manufacturing processes to third-party suppliers
working overseas, Adidas loses some control over how its products are made. This
makes it extremely difficult for Adidas to ensure all of its products meet the same
rigorous quality standards. Furthermore, by outsourcing the manufacture of its
products, Adidas is put at the mercy of third-party suppliers.
Opportunities

•Growing Industry
The primary opportunity for Adidas may well be the growing sportswear
industry. Health and fitness are hotter than ever, and there’s no sign they’ll
be slowing down any time soon. This means there will be a consistent
increase in the number of people practicing sport and thus needing
appropriate sportswear. This is not an opportunity unique to Adidas,
however. Other sportswear brands will be exposed to the same, growing
industry, and it’s up to Adidas to think of clever ways to outpace them.

•Smart Materials
Science is more advanced than ever. Every week, new materials are
discovered that have dozens of benefits over traditional alternatives. To
add to that, consumers are always looking for products that are built
better. These two factors together present a new opportunity for Adidas:
the use of smart materials. By continually investing in the development
and manufacture of new materials that can be used in sportswear, Adidas
may be able to offer a superior product to its competitors.
Threats
•Competition
As with any company, the threat of competition is always present. Adidas is
known for its fierce rivalry with Nike, and they really can’t drop their guard in
that battle. As it stands, consumers choose between Adidas and Nike on the
basis of personal preference, since there’s no major difference in the product
lines or qualities. This is why it’s incredibly important that Adidas continues to
promote its brand image, hence the suggestion of celebrity endorsements
discussed previously.

•Counterfeit Products
The sportswear industry is ripe with counterfeit products. Given the hefty price
tags of premium sports apparel brands such as Nike and Adidas, it should
come as no surprise that many consumers want a cheaper alternative, but
with the same powerful brand. Counterfeit products already exist for Adidas,
but the company has done a good job of encouraging consumers to buy the
real thing. However, if Adidas were to have a fallout with one of its overseas
suppliers, the risk of a huge influx of counterfeit products is an extremely
scary prospect.
PRICE ANALYSIS
Price is a very essential aspect in every business as it is the
fundamental determinant of the profit to be achieved after the sale of a
commodity or service and therefore influences the success or failure
level of the business. Pricing is the process of determining the cost of a
product or a service so as to identify what a business will obtain in
exchange of its products or services. Value of the product towards the
customers should also be considered in determining a price to ensure
that the customers pay what is equivalent to the value gained (Pratt,
n.d).

The pricing strategies adopted by the Adidas running shoes company

are a contributing factor towards the sales they make as price is
directly dependent on demand. When one company reduces its shoes
prices and still retains the quality it is likely to attract more customers
than the other. The lowering of prices is aimed at attracting many
customers toward its variety of footwear.. This will also enhance its
positioning in the market.
 IV. SOLUTIONS AND
RECOMMENDATION
The following solutions are suggested in a situation:
Adidas should increase their market shares through issue new products, competitive
pricing strategies, and advertisement and promotions activities. Adidas running shoes
also should restructure market dominance by separate themselves from the competitors
mainly through mass promotion strategies and pricing strategies which make Adidas
more attractive to customers. Besides that, Adidas must increase their awareness of
corporate social responsibility to strengthen their image of themselves. What’s more,
Adidas should pay much attention to their department to research out different kinds of
people with different taste to get the market diversification goals.

Recommendations:
I recommend the most would be to enlarge the advertising budget and put out more
billboards, advertisement, commercials, athletes that people want to see. The consumer
is going to buy want appeals and attract them. Not only would I say better advertisement I
would say better advertisement not just in the US but also to our country specifically
because it seems as though they have the attention of Europe. The company should
open more stores that customers can go to besides a major factory as well. A lot of
revenue Adidas gains is from the local retail stores. Other than these things I really love
the brand, to me it’s the original and the more comfortable of all brand but the only thing
is Adidas just looks better to my eye.
 V. Conclusion:
In this Case study of Effective strategies of Adidas running shoes company for
customers satisfaction i came up with different effective strategies and about
the group's strategy. An organization's marketing mix is its own way to
uniquely position the brand and drive sales. For adidas, this includes
understanding what its consumers want and producing innovative products
that fulfill their needs. Using innovative methods of sports marketing, on a
scale never before seen in the industry, enabled adidas to target the youth
audience in London whilst also having a global reach through social media
and online promotion.

The Group's vision & mission statements are clear includes almost all of the
things that should be found in an organization's vision & mission statement,
but the vision statement is long on superlatives as well.
And i found that the Company have the ability to integrate geographically with
having no significant barriers. And i advise the company to take advantage of
that and expand to wherever it's possible to expand to, of course after making
the proper studies. Finally, the company's corporate level strategy and a
broad differentiation business level strategy.