adidas marketing audit
TRANSCRIPT
Marketing Audit
DJ Eckman, Jeff Frodsham, Jessica Jones
Grahm Schmaltz, Zach Waxler
Spring 2015
1
“From the court to the catwalk, the stadium
to the street; whatever the game, we play
the same way: Heart over head. Inclusion
over ego. United by passion.”
- adidas
2
Table of Contents
Executive Summary .................................................................................... 4
Chapter One ................................................................................................ 7
APPAREL AND FOOTWEAR INDUSTRY .................................................................................... 8
DEMOGRAPHICS .............................................................................................................. 8
ECONOMICS ................................................................................................................... 9
ENVIRONMENT/ NATURAL RESOURCES ................................................................................ 12
SCIENCE/ TECHNOLOGY TRENDS ....................................................................................... 15
REGULATIONS AND POLICIES ............................................................................................. 17
CULTURAL/ SOCIAL TRENDS .............................................................................................. 19
CONCLUSION ................................................................................................................ 22
Chapter Two .............................................................................................. 23
MARKET LIFE CYCLE ........................................................................................................ 24
BARGAINING POWER OF CUSTOMERS/BUYERS ..................................................................... 25
RIVALRY AMONG EXISTING COMPETITORS .......................................................................... 27
BARGAINING POWER OF SUPPLIERS .................................................................................... 29
THREAT OF POTENTIAL ENTRANTS ........................................................................................ 31
COMPETITIVE SUBSTITUTES ................................................................................................. 33
STAKEHOLDERS ............................................................................................................... 34
SUMMARY ..................................................................................................................... 35
PORTERS FIVE FORCES ..................................................................................................... 37
Chapter Three ............................................................................................ 38
STRATEGIC MARKET POSITION ........................................................................................... 39
PRODUCT PORTFOLIO ANALYSIS ........................................................................................ 40
COMPETITIVE ADVANTAGE ASSESSMENT ............................................................................. 44
SUMMARY ..................................................................................................................... 45
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Chapter Four .............................................................................................. 47
ADIDAS COMPETITIVE SITUATION ....................................................................................... 48
PROPOSED NEW/IMPROVED MARKET POSITION ................................................................... 49
STRATEGY ...................................................................................................................... 50
PLAN OF ACTION ........................................................................................................... 51
SUMMARY ..................................................................................................................... 53
Chapter Five .............................................................................................. 54
CURRENT DIAGNOSTIC PROMOTION/SOCIAL MEDIA PROFILE ................................................ 55
RECOMMENDATIONS FOR PROMOTIONS AND SOCIAL MEDIA................................................. 58
PROMOTIONAL SUMMARY ................................................................................................ 59
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Executive Summary
Adidas is a high quality athletic apparel and footwear company targeting worldwide
athletes along with everyday consumers. Recently, industry competition has become
increasingly intense, with Adidas going head-to-head with top rivals Nike and UnderArmour.
Competitors of Adidas have produced a higher level of brand loyalty because they have
better connections with their consumers. Buyers want a brand that links them to their favorite
athletes and allow consumers to believe they can be like those athletes.
In order for Adidas to reach their promotional objectives, they need to continue dominating
the soccer industry. They need to create more of a personal connection with consumers,
specifically millennials. By avoiding the broad market of the athletic industry and narrowing
their focus on specific markets, Adidas can (1) control markets that competitors aren’t in, (2)
endorse athletes of their choice, (3) innovate products so consumers can wear them on and
off the field and (4) create more of a personal connection with consumers through social
media. Our recommendations for Adidas are:
Narrow product focus to underserviced sports, such as cricket and hockey, to gain
market share and expand on current niche markets such as soccer
Sponsor rising stars of the niche markets to expand brand reputation and awareness
Capitalize on the rising trend of wearing athletic apparel as casual wear, along with
promoting the use of wearable technology
Increase social media presence to strengthen consumer connection and create
brand loyalty
Move into New Emerging Sports Markets in Asia and UK
In order for Adidas to increase revenues, they need to expand their product offering by
entering into niche markets. Adidas needs to become the leading supplier for underserviced
sports such as cricket, hockey, and rugby. Expanding into these new sports will broaden
Adidas reach internationally by becoming more relevant in growing countries like India, and
expanding in the United Kingdom. Adidas also needs to narrow their focus of sponsorship
deals by getting out of sports that are not profitable, such as NBA basketball and expanding
their successful sports, like soccer. Adidas is the biggest sponsor of soccer internationally and
this strength should be utilized.
Engage in More Sponsorships
Sponsorships of athletes are a main source of brand awareness for companies in this industry
and lead to much of their revenue. Adidas currently has a sponsorship deal with Lionel Messi,
who is the best and most popular soccer star in the world. In order to continue their success
in the global soccer market, Adidas needs to leverage his popularity and success along with
his new soccer line. They can use him in advertisements for their promotions and campaigns
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to closely relate him to the brand. Messi can be for Adidas, what Michael Jordan was for
Nike.
They also have a partnership with FIFA that give them a needed edge over competition in
the soccer industry. This sponsorship needs to be leveraged by displaying Adidas’ brand
through signage at the World Cup and other Adidas sponsored competitions. Adidas can
also use this relationship to become the main sponsor of international competitions such as
the Africa Cup of Nations.
As Adidas targets niche markets, like cricket, hockey, and rugby, they need to sign top stars
in those sport, such as Kumar Nangakkara, Nathan MacKinnon, and Anthony Watson. This will
allow them to increase brand awareness in these markets. This will increase sales as fans of
these sports start to buy Adidas gear to be like their favorite players. They should target some
of the top young stars in order to have them for a longer time and grow with them through
their careers.
Linking Athletic to Athleisure
Adidas already has an excellent athletic apparel line that offers high performance products.
Adidas will use wearable technology to track customer’s physical achievements, and allow
them to connect more closely with their clothing. In addition to improving athletic apparel,
Adidas will look to increase their Adidas Originals product line, starting with athleisure.
People who follow the athleisure trend typically wear their athletic apparel through their
daily activities. Denim sales have declined and now companies are finding incentives in
entering the athletic apparel and shoe industry. Adidas already has the advantage of
having a strong market share in this industry, but they need to continue to expand their
Adidas Originals product line and build brand awareness that their athleisure line exists within
this line. Adidas needs to specifically target women in the market because women are the
biggest proponents of this trend. Adidas plans to create an overall brand image by linking
the athletic side of the company with the athleisure side. Using the current “all in” campaign,
Adidas will show athletes wearing athletic apparel along with the Adidas Originals everyday
clothing. This creates brand loyalty throughout the different aspects of the clothing line.
Social Media Presence
Social media will be a key aspect in Adidas’ new promotional campaign by using it as a tool
to connect to the consumers. We will unify all social media platforms with the Adidas slogan
“all in.” By doing this, Adidas will accomplish connecting athletic with athleisure apparel and
footwear in the mind of consumers. “All in” will also give the consumer a phrase to remember
Adidas by. Adidas wants to build overall brand loyalty through direct social media
interaction. Responding to the posts of the customer will allow Adidas to essentially track the
progress of the campaign. Social media is an important communication tool of the future
and Adidas plans to use it in their new promotional plan.
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Conclusion
By following these recommendations and carrying out the plan of action, Adidas can re-
discover who they are as an athletic apparel and footwear company. Adidas’ promotional
strategies will help gain market share and connect more effectively with its consumers
through niche markets. Endorsing new athletes in these niche markets will help increase
Adidas brand awareness and reputation throughout the industry. Expanding on the Adidas
athleisure line will create high switching costs, which will lead to higher brand loyalty. Social
media will play a key aspect in this by connecting with the customer on a more personal
level along with becoming more loyal to the brand. These new promotional objectives will
help Adidas follow their new strategic marketing plan and increase brand preference in the
athletic apparel and footwear industry.
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Introduction
In 1924 Adi Dassler wanted to provide athletes with the best possible equipment and
created his own business to be able to accomplish this goal. He started his company in his
mother’s kitchen in Bavaria, Germany. After Dassler created a shoe, athletes Lina Radke in
1928 and Jesse Owens in 1936 both won gold metals wearing these shoes, creating a
milestone for the beginning of the business that would soon become famous. 1949 Adi
Dassler decided to start over in the town of Hersogenaurach. He registered the business as
“Adi Dassler adidas Sportschuhfabrik” along with a shoe with the 3-stripes. Dessler had
established his products in the shoe industry, so in 1967 he then opened his he expanded his
products by creating an apparel line.
Adi Dessler stayed in tuned with athletes by listening to their needs and producing something
that would offer them improvement as an athlete. He kept up with trends and the needs
and wants of athletes and continually came out with new products that changed the way
athletes would perform, such as the screw-in studs on lightweight football boots. Through his
consistencey Adidas has been able to expand business globally. To this day consumers see
Adidas as a high-end very valuable company that offers quality athletic apparel and
footwear to provide athletes with the best possible equipment.
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chapter one
The Macroenvironment
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Apparel and Footwear Industry - Active Sportswear
Adidas operates in the athletic footwear and apparel industry including products for men,
women and children. They are headquartered in Herzogenaurach, Germany. By the end of
the 2013 fiscal year they were the second largest athletic footwear and Apparel Company
in the world, trailing only Nike. By the end of 2014 they were surpassed by UnderArmour for
second largest athletic footwear and Apparel Company in the US Market. After the
recession of 2008, the industry has seen growth as a result of consumers having greater
disposable income and luxury goods are in higher demand because of it.1, 2
Demographics
There are three major demographic trends that are impacting the sports apparel and
footwear industry. They include (1) a rise in the Hispanic population of the United States; (2)
the change of thoughts and values between the baby boomer generation and the
millennial generation; and (3) the amount of women that are buying sports apparel and
footwear.
Rise in Hispanic Population
In the last four decades, the Hispanic
population in the United States has steadily
grown. This is an opportunity for the sports
apparel industry because of the Hispanic
love for soccer. With this rise in the
population, sports apparel companies will
benefit greatly. Soccer, or Futbol, is the most
popular and most played sport in the world
although, in the United States, it is not as
popular. This is starting to change with the
rise in the Hispanic population.
Baby Boomers and Millennia’s
With the Baby Boomer generation (1946-64)
growing older, the Millennia’s (people who
1http://www.netadvantage.standardandpoors.com.dist.lib.usu.edu/NASApp/NetAdvantage/showPublication.do?dataPosition=1&SP
ID=38198 2http://search.proquest.com.dist.lib.usu.edu/newsstand/docview/1643322979/4CD97D9E53AC4705PQ/11?accountid=14761
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reached young adulthood around the year 2000) are taking over the consumer markets. This
is an opportunity for the sports apparel industry because the younger generation enjoys
shopping and wearing the new fitness clothes. The industry has seen an increase in sales and
as the millennial generation’s children grow older, the industry will continue to grow.3
Consumer Markets
In recent years, the sports apparel and footwear industry has seen a rise in its women
consumers. Women and girls’ apparel, as of 2014, accounts for 59.10% of the industry, Men’s
and boys’ apparel account for 36.50% while other apparel accounts for 4.40% with the
average age of these consumers ranging from 13-30 years old (millenials). Nike recently
shifted their marketing focus on women because they know how valuable they are to the
growth of the industry. It is important for companies in the industry to understand how the
market is segmented among the consumers. This can create opportunities for the industry
because companies can tailor their products to better fit the demographics of their users by
marketing more precisely towards the specific target audience (IBIS World).4
Economics
There are four major economic trends that are impacting the athletic apparel and footwear
industry. They include (1) an increase in disposable income as a result economic growth; (2)
the fluctuation of rubber prices before and after the 2008 recession; (3) variations in cotton
prices based on climate conditions and cotton supply, which is further influenced by
genetically modified cotton seeds; and (4) outsourcing and import practices in international
trade.
3 http://www.pewhispanic.org/2014/04/29/hispanic-nativity-shift/
4 http://clients1.ibisworld.com/reports/gl/industry/default.aspx?entid=470
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Disposable Income Growth
Disposable income growth, along with rising demand for luxury products are likely to
increase industry profitability in the next five years. As the economy continues to rebound,
global per capita disposable income will likely grow, enabling shoppers to purchase more
footwear and apparel. IBISWORLD projects that profit growth will grow from 9.3% in 2014 to
9.8% by the end of 2019 in the footwear industry. In the apparel industry, profit is expected
grow from 4.2% in 2014 to 6.3% by the end of 2019.
With gas prices being the lowest they have been since 2009, consumers have more
disposable income and the footwear and apparel industries are reaping the benefits. The
growing affluence of shoppers in BRIC nations will also drive the demand for luxury footwear
and apparel. Companies like Nike, Adidas, and UnderArmour plan to excel in selling high-
end accessories, footwear, and apparel through online and mobile application purchases in
existing and emerging markets. 5, 6
Rubber Prices
The prerequisite demand for rubber in the production of merchandise represents a
significant input cost to footwear manufacturers. From 2009 to 2014, the world price of
rubber rose at an average annual rate of 7.6%. This poses a threat to manufacturers’
purchasing costs and will lower profit margins as a result. The fluctuating world price of crude
oil dictates the price of rubber, because it is a key component in rubber production. As the
price of rubber has grown over the last five years, operator profit margins have declined
leaving profits at a mere 9.3% of industry revenue. Automotive and construction industries
have high need for synthetic rubber and are driving up the demand for natural rubber,
because they are close substitutes.
Crude oil prices are not projected to
rapidly increase from 2015 to 2020, due
to the current economic downturn in
Europe and China, which in turn will
limit synthetic rubber price growth. The
footwear industry now sees this as an
opportunity to increase revenue
because current reduction in oil prices
is allowing them to buy rubber at a
cheaper cost and thus make a larger
profit.7, 8
5 http://clients1.ibisworld.com/reports/gl/industry/industryoutlook.aspx?entid=500
6 http://clients1.ibisworld.com/reports/gl/industry/industryoutlook.aspx?entid=470
7 http://clients1.ibisworld.com/reports/us/bed/default.aspx?bedid=990038
8 http://clients1.ibisworld.com/reports/gl/industry/currentperformance.aspx?entid=500
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Cotton Prices
Cotton is a primary necessity for clothing items and when its price increases, the cost to
manufacture with it increases as well. Most manufacturers absorb the higher price of cotton
in order to maintain competitive pricing in an industry that is filled with competition. China,
India, Pakistan, and the United States are the primary producers of cotton, and prices
fluctuate based on climate and environmental conditions in these areas. In 2010, cotton
prices spiked significantly due to flooding in Pakistan, as well as a cotton export ban set by
India’s government to protect its domestic textile industry. From 2010 to 2015, the world price
of cotton has fallen at an annualized rate of 6.8% to 72.8 cents per pound. It is difficult to
predict how cotton prices will fluctuate due to the impact weather has on growth and
production. The use of genetically modified cotton seeds is expected to continue rising,
which will increase the supply of cotton over the next five years. U.S. Department of
Agriculture predicts that China will account for over 60% of global cotton stocks in 2015,
leaving the price of cotton to be heavily impacted by the Chinese economy. This can be
good news or bad news for the
apparel industry based on the
growth of the Chinese economy.
Economists will look for China and
other suppliers to utilize the modified
cotton seeds even more in the
production process to allow
manufacturers and retailers in the
apparel industry to flourish.9, 10
International Trade
International trade accounted for just over 69% of revenue in 2014 in the footwear industry
and has been vital for the economic growth in the industry over the past five years.
Specializing in low-cost options, China has become the largest exporter of footwear in the
world at 65% production volume and North Asia as a whole, accounts for more than 70% of
the industries production volume. Demand from consumers with increasing affluence in
China and India have also benefited manufacturers and exporters of high end products.
Economists expect North Asia to raise their production prices as a result of more developed
nations outsourcing most of their manufacturing activities to them. In the coming years,
marketing experts look for companies like Adidas and Nike to search for more ways to
produce and manufacture their products domestically in a cost effective manner.11, 12
9 http://clients1.ibisworld.com/reports/us/bed/default.aspx?bedid=990001
10 http://clients1.ibisworld.com/reports/gl/industry/currentperformance.aspx?entid=470
11
http://clients1.ibisworld.com/reports/gl/industry/ataglance.aspx?entid=500 12
http://clients1.ibisworld.com/reports/gl/industry/currentperformance.aspx?entid=500
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Environment/Natural Resources
There are five major environmental and natural resource trends that are impacting the
apparel and footwear industry. They include (1) becoming more environmentally sustainable
by increasing the focus on using less energy and reducing the amount of resources used in
creating products; (2) the availability of necessary materials such as cotton and rubber; (3)
consumers tending to recycle their old clothing to lessen the impact on the environment; (4)
the rising use of recyclable materials in clothing; and (5) creating the technology that allows
clothing to become more environmentally sustainable.
Becoming Environmentally Sustainable
Not only are companies looking to recycle materials and reuse them in their products, but
they are also beginning to pay attention to the quality of the material they are using. Making
sure that a material is good for the environment is becoming an important factor when
creating athletic apparel.
One of the main materials used in clothing manufacturing is cotton. Adidas, along with
several other large companies have committed to the Better Cotton Initiative, which
promotes using cotton that uses less pesticides, crop rotation, fair working conditions, and
using water more efficiently. Adidas used 23% better Cotton in 2013 and has plans to reach
40% by the end of 2015. They have committed to using 100% Better Cotton by 2018.13
Adidas and Nike have also vowed to reduced their carbon footprint and have laid out plans
with Greenpeace to phase out hazardous chemical discharges. Adidas is also shooting for a
30% reduction in carbon emissions by 2015, and has also set targets for energy reduction on
their suppliers.14
Availability of Materials
Two of the main materials that drive the athletic apparel industry are the availability of
cotton and rubber. Cotton production is heavily reliant on the weather, and a season of bad
weather can cause a sudden increase in price that makes cotton harder to get. Rubber
production is reliant mostly on the automotive industry, which in turn means that it relies on
the price of oil.
Cotton prices are recovering from an extreme spike in the price in 2011, when much of the
world’s cotton production was affected by poor weather. Cotton availability was also
affected by bans on exporting cotton out of the country. These countries now have huge
13
http://www.adidas-group.com/en/sustainability/products/materials/#/ 14
http://greatist.com/fitness/athletic-wear-companies-social-good
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stockpiles of cotton, which is helping lower the price over the past 4 years. Prices are
expected to slowly decline, but stay steady for the most part over the next few years. Barring
any bad weather or natural disasters, cotton should be readily available in the near future.15
With the wealth increasing in largely populated countries like China and India, the demand
for automobiles has seen a large increase. This demand increases the price of synthetic
rubber, which is produced from oil. If oil is expensive, then synthetic rubber becomes more
expensive.16
Recycled Clothing
An emerging trend in the environmental industry is for consumers to recycle clothing. Fast-
fashion and cheap clothing has become very popular among consumers. This cheaper
clothing often leads to worse quality and more clothing being thrown in the garbage.
Instead of throwing their clothes away, many people are now turning to thrift shops as a way
of getting rid of their old clothes, and not further hurt the environment.
Thrift stores use the clothing to help others that need help buying clothes. Often times they
sell the clothing to third world countries to be used there. If the clothing is too ragged to be
worn again, thrift stores are also helping to turn the clothing into material that can be used
as cleaning rags, insulation, carpet padding, or even broken down further into material that
can be used to create a new piece of clothing.
Companies around the globe are coming up with ways to inform their consumers how they
can help recycle old clothing. Levi’s has released a campaign informing people on how to
help their jeans last longer, and what they can do when it is time to get rid of them. Gap ran
a campaign where they had customers bring in their old pairs of jeans to recycle and turn
the jeans into insulation. Around 70% of Patagonia clothing has either been produced from
recycled clothing, or can be recycled and turned into something else. Their goal is to be
100%. If the clothing cannot be reworn, it can always be broken down and used to create
something new. 17, 18
Recyclable Materials
Athletic apparel companies around the world have been taking the steps to use more
recyclable materials in their clothing in recent years. Recycled polyester is a synthetic fiber
that is created from old clothing and plastic bottles. Adidas, Nike, and UnderArmour have all
used recycled polyester in various clothing lines they have released. Consumers like the idea
of companies creating more sustainable, environmentally friendly products, and companies
15
http://clients1.ibisworld.com/reports/us/bed/default.aspx?entid=990001 16
http://clients1.ibisworld.com/reports/us/bed/default.aspx?bedid=990038 17
http://articles.latimes.com/2010/mar/21/image/la-ig-clothesrecycling-20100321 18
http://www.earth911.com/recycling-guide/how-to-recycle-clothing-accessories/
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have found that they are not sacrificing on quality. Nike’s 2014 FIFA World Cup Jerseys were
created entirely from plastic bottles, and they said the jerseys were 15% lighter and provided
increased ventilation than previous jerseys had provided.
Adidas utilized recycled polyester as the main material in the uniforms and apparel that they
supplied for the 2012 London Olympic Games. As the official sportswear partner of the
Olympics, Adidas was able to provide over 70,000 uniforms to athletes and volunteers for the
games.
Along with recycled polyester, Adidas also commonly uses recycled rubber, organic cotton,
Polylactic Acid, Tencel, and non-mulesed wool in their products. This can be found
anywhere from clothing, inlay soles, packaging, or even in production. Companies that work
with Adidas are recycling about 99% of their waste and putting it back into production. 19,20,21
Sustainable Clothing
One of the main focuses of the industry is developing the technology to create more
sustainable clothing. Sustainability is a key feature that many consumers are interested in.
They want to feel like they are helping the environment, as well as wearing quality items.
The industry is very focused on trying to cut back on the amount of water that is used in the
manufacturing process. Companies are currently looking into developing technology to
reduce and eliminate the amount of water that is used in the dyes to color clothing. Adidas
introduced their drydy technology that allows their suppliers to dye clothing by using
compressed CO2 to color clothing. Nike followed the same trend by purchasing DyeCoo
Textile Systems which uses compressed CO2 to dye clothing as well. Levi’s has decreased the
amount of water that it uses in the process of finishing their jeans by about 96%. The industry is
shifting toward recycling all of the water from the manufacturing process and re-using it
again and again. 22, 23
With technological advances the materials used in the apparel industry are becoming more
sustainable. Cotton production is becoming more efficient and sustainable. The technology
for more efficient water use is there available and people are utilizing this technology.
Companies have also figured out how to recycle old materials, like plastic bottles, and utilize
them in their products.24,25,26
19
http://www.adidas-group.com/en/sustainability/products/materials/#/ 20
http://metro.co.uk/2011/05/30/london-2012-olympics-uniforms-to-be-made-from-recycled-materials-27151/ 21
http://www.nytimes.com/gwire/2010/07/09/09greenwire-recycled-plastics-industry-scores-gooooal-at-w-42896.html 22
http://www.theguardian.com/sustainable-business/dyeing-textile-sector-water-risks-adidas 23
http://www.greenbiz.com/blog/2013/12/17/nike-moves-water-free-chemical-free-dyeing 24
http://www.adidas-group.com/media/filer_public/2014/04/14/2013_sustainability_progress_report_fair_play_final_en.pdf 25
http://iq.intel.com/tech-gives-clothing-sustainable-edge/ 26
http://www.environmentalleader.com/2014/03/18/levis-water/
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Science/Technology Trends
There are four major science and technology trends that are impacting the athletic apparel
and footwear industry. They include (1) the rise in the number of consumers shopping online;
(2) utilizing mobile applications to further interact with consumers; (3) wearable technology
and how it’s rebranding the apparel and footwear companies; and (4) how 3D printers may
become a potential threat to apparel production.
Online Shopping
Online Shopping
Online shopping has become a social norm in a society that utilizes the internet more than
ever before. The United States e-commerce has grown on an average of 10% annually for
the past five years. Total expected e-commerce sales for 2015 are expected to grow to $279
billion. Consumers are shifting to online shopping because of convenience, accessibility, and
a wide range of online retailers. Footwear and apparel industries see this opportunity to
reach a wider audience and not have to rely on brick and mortar stores for customers to
purchase products.27
One disadvantage that comes with online shopping is the nuisance of returning items that
customers don’t like, or don’t fit. Many customers are reluctant to purchase clothing online
because they like to try on the items before purchasing. They don’t want to deal with
shipping it back to the company in case the clothes don’t fit. A developing trend in the
industry is companies are taking advantage of the hassle of returning products, and are
willing to pick up those unwanted products and ship them back for a small fee. This has the
potential to change the industry and create the incentive for more consumers to switch to
online shopping. 28
Mobile Apps
Mobile and mobile applications are becoming bigger and better than ever before. A critical
aspect for retailers launching and maintaining mobile apps is to make certain they ensure
uniqueness to their specific business. Adidas recently launched a new mobile application
called Adidas Confirmed that allows avid consumers more control over limited releases and
push notifications when the product is ready to collect. Nike released a similar app a week
later in SNKRS that allow consumers to do similar things to Adidas Confirmed, but SNKRS is an
online retail store for shoes. These mobile applications benefit both the industry and the
consumers while offering ways to access premium products. A recent study about digital’s
27
http://agbeat.com/business-news/online-shopping-increasingly-popular-here-are-the-freshest-stats/ 28
http://www.entrepreneur.com/article/243578
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influence on in-store sales showed that when consumers engage in digital tools or mobile
retail apps during in-store shopping, they are 40% more likely to buy a product.29,30
Wearable Technology
In the last few years, wearable technology has made a huge impact on the apparel
industry. A popular product in the wearable technology space is fitness bands and fitness
watches. These include Nike Fuel Band, Fitbit, Jawbone and Garmin brands. This new trend is
an opportunity for the sports fitness industry because it gives uses a more effective way to
work out. The watches have capabilities that allow for it to be synced to a Smartphone
permitting the user to monitor the progress of their workout. Watches are not where
wearables end. According to tech analysts, smart garments are the future of wearable
technology. A nonexistent market last year will turn into a market that is projected to reach
10 million in sales in 2015 and 26 million in 2016. Larger companies in the apparel and
footwear industry, such as Nike and Adidas, see this as an opportunity to take the next step
in the trending health and wellness lifestyle.31
3D Printing
3D printing allows for consumers to create a unique item that is truly one of a kind. Users can
design an idea, upload it digitally, and then print. The clothing being printed will be able to
be completely original, and custom fit each individual that wants to purchase an item.
3D printing is a technology that has been around for around 25 years, but has only recently
started to gain traction within the industry. 3D printing is becoming more affordable, and the
technology behind it has gone through substantial increases within the last 5 years. 3D
printers can produce anything from plastic parts, toys, and even prosthetic limbs. Clothing is
also starting to be produced which could signal a new wave of manufacturing for the
apparel industry.
The athletic apparel industry could see a major change in the future if 3D printing really takes
off. Customers could come into stores and custom make the exact item they want, and then
the stores would create the item and deliver it whenever the printing was finished. If the
technology becomes even more accessible, customers may have printers in their homes,
allowing them to print off clothing whenever they feel the need for it. Apparel companies
would have to find a way to penetrate that market and continue to succeed within the
industry.32, 33
29
http://www.essentialretail.com/news/article/54d88473d7b0e-the-year-of-the-new-retail-mobile-app 30
http://www.bidnessetc.com/35453-nike-inc-new-snkrs-app-gains-traction/ 31
http://www.digitaltrends.com/wearables/smart-clothing-garments-at-ces-2015-and-beyond/ 32
http://mashable.com/2015/01/11/3d-printed-fashion-at-ces/ 33
http://3dprint.com/8722/under-armour-3d-printing/
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Regulations and Policies
The level of regulation is medium in the athletic apparel and footwear industry. There are
four major regulatory and legal trends in the industry that pose threats and opportunities.
They include (1) human rights policies; (2) environmental regulations; (3) shipping regulations;
and (4) trade and manufacturing regulations. All companies in this industry are affected by
these policies and must adapt their company procedures to align with the industry
standards.
Human Rights
The first regulation is Human Rights Policies and how employees are treated. Penalties are
imposed on manufacturers that do not follow US labor and wage laws. There are also
occupational health and safety regulations that must be obeyed. The United Nations urges
corporations in manufacturing industries to follow human rights standards set by the
International Labor Organization.
Much of the production in this industry is still very labor-intensive with sewing and cutting
machines still needing to be operated by humans. A lot of the labor is done abroad
because it is much cheaper, but companies must still follow various occupational health and
safety legislations.
Companies are responding positively to the regulations imposed and actively trying to
integrate them. For example, in 1980 Nike faced criticism for its treatment of workers in
Cambodia as well as demonstrations in 2000 opposing Nike’s involvement with unfair labor
practices abroad. This resulted in Nike making adjustments in its sponsorships and labor
policies. Most companies have now focused on improving human rights conditions in all their
supply and manufacturing chains. 34
Because the industry is so labor intensive, wages and salaries are the second-highest cost
item at 18.5% of revenue. It is difficult for U.S. companies to compete with countries in Asia
and South America because those countries are very low labor-cost areas. This has lead
many U.S. footwear manufacturers to use offshore contractors to produce their products.
These U.S. manufacturers must follow all occupational health and safety legislations for their
contractors in these countries which include guidelines on wages.35
Environmental Regulations
The second regulation is directed towards how the company interacts with and affects the
environment. Companies in this industry are striving to be greener in the manufacturing of
products and materials, dyeing of material, and production of athletic apparel and
34
http://www.thunderbird.edu/blog/faculty/washburn/2011/04/18/beneath-the-under-armour-a-green-and-ethical-company#_edn9 35
http://clients1.ibisworld.com/reports/us/industry/competitivelandscape.aspx?entid=369
18
footwear because of the impacts they have on the environment. They are working towards
using their resources more efficiently by recycling, reducing energy used to run their
businesses, reducing waste created, and improving water quality with less water waste.36
Companies are required to follow anti-dumping laws regarding materials that they use such
as synthetic and leather materials. This requires companies to follow the necessary
procedures in how they dispose of the materials used in their factories and facilities. 37
These regulations are viewed as threats as well as opportunities. The threats are related to
the cost of switching manufacturing procedures or materials used to be more eco-friendly.
There are also fines or fees for unregulated procedures that companies must pay and result
in a threat to the industry. The opportunities come as companies establish environmentally
friendly practices they save money in the long run, are more efficient in their production, and
enjoy a more positive brand image as they help the environment by following environmental
laws.
Shipping Regulations
The third regulation deals with shipping and management of the production line in a
company. There are some specific regulations when it comes to shipping in this industry. For
example, all importers are required to submit detailed manifests to US customs 25 hours prior
to when the cargo leaves the country of origin. International trade rules and customs
operations must be adhered to as well. This can add more time and effort to the shipping
process.
Wholesalers that import footwear are subject to quotas on the amount and type of goods
imported. These quotas are agreed upon by themselves and the countries from which they
are importing. There are also US customs duties and restrictions. State and federal vehicle
enforcement officials are expected to increase safety inspections of trucks, specifically
medium-duty units.38
These regulations can pose threats by making it harder for companies to ship products and
materials. The supply chain must follow all regulations which can cause the process to be
hindered and slowed if not done so correctly.
Trade and Manufacturing Regulations
The fourth and last regulation highlighted in this section is the restrictions on trade and
manufacturing. These regulations present opportunities for where products can be
manufactured. At the same time these policies put limitations on manufacturing locations
which forces companies to make decisions on where to produce. 36
http://www.thunderbird.edu/blog/faculty/washburn/2011/04/18/beneath-the-under-armour-a-green-and-ethical-company#_edn9 37
http://clients1.ibisworld.com/reports/us/industry/operatingconditions.aspx?entid=369 38
http://clients1.ibisworld.com/reports/us/industry/operatingconditions.aspx?entid=969
19
“The outsourcing of production to low-cost countries will continue to adversely affect industry
revenue, as domestic manufacturers struggle to compete with their overseas counterparts.
Producers will likely seek out new sources of cheap labor in untapped overseas locations,
such as the Philippines, Thailand and the Dominican Republic.” -IBISworld The Trans-Pacific Partnership (TPP) is a proposed partnership that intends to promote freer
trade and reduce tariffs as well as eliminate other trade barriers especially those imposed on
goods from Vietnam. If it is put into effect it will put domestic manufacturers under a lot of
stress and could encourage the threat of import penetration. Companies manufacturing in
the US would have to compete with low-cost countries overseas.
The director of public affairs at New Balance said recently that it would become incredibly
difficult for them to continue manufacturing domestically if cheap imports from Vietnam
flooded the market. They are the only remaining significant shoe manufacturer in the US.39
Cultural/Social Trends
There are four social and cultural trends impacting the athletic apparel and shoe industry
include (1) New fitness trends create opportunities for the industry; (2) Eating diets are
affecting the types of fitness apparel consumers buy; (3) Social media allows an outlet for
competitors in the industry to market through, and (4) Sponsorships in professional and
collegiate sports are fueling innovation in team apparel. All these trends present
opportunities and threats that the industry needs to pay close attention to.
Fitness Trends
According to Shape Magazine the idea of going to the gym is going to change in the mind
of women. Instead of going to the gym to run on the treadmill or lift heavy weights there’s a
new, fun, and attractive alternative. The alternatives are different classes that are now being
offered. Some of these classes are Pound, Animal Flow, Pole Workouts, Groove, Zumba,
Rowing, and BodyArt Training. Shape Magazine expresses that “these innovative workouts
mix up traditional training methods to deliver sweat-inducing sessions, amazing results, and
fitness that’s fun again”. This new market isn’t full of competitors so it’s crucial that the
industry seeks growth by expanding in the market while the opportunity presents itself.40
New Eating Diets
Recent obesity rates have shown terrible effects of people’s health and the harsh reality that
people need make significant changes to their diets. According to State of Obesity more
39
http://clients1.ibisworld.com/reports/us/industry/industryoutlook.aspx?entid=369 40
http://www.shape.com/fitness/workouts/15-next-big-fitness-trends
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than one third of children and adolescents are overweight or obese. More than 2/5
teenagers are obese (or 43 percent). This 43 percent of obese teenagers will likely become
obese adults. At least one out of every five teenagers has abnormal cholesterol levels,
risking heart disease. Around 70 percent of obese youths have additional risk factors come
along with their obesity. Since the 1980’s there has been a gradual increase in Americans’ diets. There was a slight
decrease in the early 2000s but we are looking to only see healthy diets in the future. Luckily
some consumers are catching onto the healthy trend and are making more health
conscious decisions. A research report by Mintel Research Consultancy has found that 37
percent of consumers surveyed that have been limiting or avoiding calories in the past six
months. 20 percent have avoiding fats and oils and 17 percent reported cutting back on
products with sugar or added sugar.
Eating “clean” and wholesome foods have become a growing trend that is more and more
popular. Food fads come and go but we are now seeing foods like quinoa, organic, vegan-
friendly, gluten-free, non-GMO foods rise among the processed and sugary foods. Nutrition
trends now include natural, fresh products. There has been a 0.8 percent growth in eating
healthy and estimated value of 66.3 percent in 2014. Low-carb, high-protein diets are now
trending. This means there is a decrease in grain consumption and increase in meat
consumption. The athletic apparel and
shoe industry cringes at
the obesity rates
knowing people that fall
into that category are
possibly lost consumers
to them. However with a
market where consumers
are health conscious
and aim to live healthier
will tend to be their
consumers because
those will be the active
fit people that also buy
athletic apparel and
shoes.41, 42, 43, 44, 45
41
http://clients1.ibisworld.com/reports/us/bed/default.aspx?bedid=64 42
http://www.self.com/flash/nutrition/2014/12/top-healthy-food-trends-joy-bauer/ 43
http://stateofobesity.org/ 44
http://clients1.ibisworld.com/reports/us/bed/default.aspx?entid=64 45
http://www.everydayhealth.com/pictures/top-healthy-food-trends/#11
21
Social Media & Gadgets
There are a few major players when it comes to social media which are Facebook, Twitter,
and LinkedIn. Facebook is the top player with 65.4% of the market share. It was launched in
2004 and now has over one billion active users. Twitter is the next runner up with 16.2%
market share. LinkedIn, another competitor, shares 15.1% of the market. Social media sites
have only been become trendier which means sites will expand its consumer base, generate
revenue, and will benefit companies in advertising. As more people have used social media,
businesses are able to take people’s information and target specific audiences in their
advertising. This is helpful to advertisers so they are able to receive feedback in a short
amount of time. Due to these key factors, in 2015 revenues are expected to grow 25.4%
annualized five-year rate to $11.2 billion. On these social media sights games are offered.
Platforms target various ages, especially kids. It has been very popular to play Angry Birds and Candy
Crush on Facebook or through other sites. Kids are now less likely to play sports and more likely to stay
indoors and play electronic games via social media platforms or via X-Boxes or Playstations.
Social media is presenting opportunities to companies to market to their consumers because
they have a large user base. If companies utilize Twitter, Instagram, Facebook, Pinterest, and
various others, they will be able to create a stronger brand image and reach out to a larger
audience. It is important that companies and organizations follow the current trends to use
social media as a marketing tool to introduce products and promotions they may offer.46
Sponsorships of Professional and Collegiate Sports
The team sports apparel industry is without a doubt fueled by professional and collegiate
sports teams. Nike, Adidas and UnderArmour are a few of the leaders for sports team’s
throughout the world. One example is Nike and its partnership with the National Football
League, equipping players from head to toe in their gear. The NCAA has multiple
partnerships with Nike, Adidas, and Russell, all of which add to the apparel industries growth
(Collegiate Licensing Company).
46
http://clients1.ibisworld.com/reports/us/industry/ataglance.aspx?entid=4574
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Conclusion
When considering the most important opportunities and threats that are currently facing our
industry, they fall into two main categories: social/mobile trends and material production
changes.
Three opportunities that fall into the social/mobile trend category include the health and
wellness trend, the wearable technology trend, and the social media trend. These
opportunities are critical to the industry because they are currently some of the most
important aspects of the apparel industry, specifically the sports fitness sub-industry. The
trend of living a healthy, exercise oriented life is becoming increasingly popular because
that is what people view as being “attractive”. The second opportunity is the wearable
technology trend. With the advances in technology over the last 10 years, fitness watches
and smart garments create an opportunity for the industry because they are compatible
with mobile technology and that information is easily shared through those mobile devices.
Fitness fanatics are raving about this technology because it makes their fitness experience
more engaging. The final opportunity is the social media trend. This trend is linking consumers
together and is ultimately the driving force behind the health and wellness trend as well as
the wearable technology trend.
When it comes to threats in the apparel industry, recyclable materials and the potential for
changes of the cotton and rubber prices is a cause for concern. The trend of being more
eco-friendly has changed the industry because people are becoming more conscious of
recycling. Although this seems to be a positive change for the environment, it could
negatively impact the apparel industry. Consumers may only willing to purchase eco-friendly
apparel which would result in higher input costs for companies within the industry.
Considering what Adidas should do in response to these opportunities and threats, they
need to monitor these trends in order to optimize their marketing techniques. One objective
that Adidas needs to consider is understanding the changes in consumer perception of
social media. Changes in the use of social media result in marketers changing the way they
reach their consumers. Another objective that should be considered is the changes in fitness
and wearable technology. Adidas must stay up-to-date with these innovations in order to
compete with similar companies. Finally, Adidas should continue to monitor the recycling
and “go-green” trends in order to understand and adjust to what their consumers want. They
must meet the needs of their consumers and understand their views.
23
chapter two
Competitive Environment
24
Market Life Cycle
The athletic apparel and footwear industry is in the mature phase of the product life cycle.
Companies are still aiming to
maintain their market share
because base products and
services have been
established, but they are still
looking for a way to
differentiate their organization.
The industry’s contribution to
the economy is assumed to
grow along the lines of GDP
by 7.4% over the next ten
years, which means the
industry is stable (Figure 1). 1
A mature product life cycle weighs heavily on both the number of existing industry
manufacturers as well as product innovation that make the consumers want more. Adidas
and UnderArmour are fighting to establish a competitive advantage through product
modifications and improvements in the production process. Substitutes are nearly
nonexistent in this industry and barriers to entry are extremely high, leaving it difficult for the
product life cycle to reach the
declining phase. Small shifts in
segment market share may occur
annually, drastic changes are unlikely
leaving the athletic apparel and
footwear industry in the mature phase
(Figure 2). 2
Marketing Campaigns
Overall, the marketing programs of Adidas are appropriate and successful. Adidas uses its
advertisements to build brand loyalty and drive sales numbers. For example, in June of 2012,
the Adidas Light You Up mobile campaign was a runaway success. Their goal was to “drive
foot traffic to New York City’s Penn Station to view an Adidas “Light You Up” promotional
1 http://clients1.ibisworld.com/reports/gl/industry/industryoutlook.aspx?entid=470 2 http://clients1.ibisworld.com/reports/gl/industry/industryoutlook.aspx?entid=500
25
light show”. The results were outstanding with thousands of attendees joining in from the
surrounding areas.3 Just weeks before the 2014 FIFA World Cup in Brazil, Adidas launched its
most successful advertising campaign ever, the “Adidas –All In” campaign.4 This campaign
used the words “All in or Nothing” on multiple types of advertisements and has been
extremely successful. The campaign led to higher brand awareness of Adidas and they are
continuing to adapt the campaign through social media.
Other industry players seem to have the same success with their individual advertisements. In
the same year, Nike launched the “Find Your Greatness” campaign. This campaign focused
on professional athletes inspiring normal people that want to experience their own great
moment. Nike produced a film that appeared in 25 different countries across the globe. The
campaign resulted in outstanding success and is still seen on t-shirts, billboards and social
media.5
Bargaining Power of Customers/Buyers (High Threat)
There are two major consumer trends that are affecting the athletic apparel and footwear
industry. They include (1) high bargaining power among buyers because of their price
sensitivity and low switching costs; and (2) identifying the key target markets and how their
bargaining power will affect Adidas and other industry players.
High Bargaining Power among Buyers
In the athletic apparel and footwear industry, the power lies in the hands of the buyer and
necessitates constant innovation by the industry leaders in order to maintain a steady
customer base. In an industry filled with competitors, buyers are both price sensitive and
switching costs are relatively low, giving the brunt of the bargaining power to the buyer. In a
society that relies heavily on comfort clothing such as athletic apparel, buyers are seeking to
find apparel and footwear that fit their budgets, as well as the trending style. The macro
trend of “athleisure” spans across all ages and is driving out competitive substitutes. For
example, jean sales in the U.S. fell 6% to $16 billion in 2014 and yoga pants and other active
wear sales jumped 7% to $33.6 billion in 2014.6
The “athleisure” trend is driving buyers to be more sensitive to higher prices and is making it
easier for buyers to switch to competitors at a lower cost within the industry. This poses a
threat to a company like Adidas because they are competing against many other
3 http://www.millennialmedia.com/advertise/campaign-successes/adidas-aulight-you-upau-mobile-
campaign-is-a-runaway-success/ 4 http://news.adidas.com/GLOBAL/Latest-News/adidas-France-launches-its-campaign--all-in-or-nothing--
/s/fa4bf18f-3148-40c2-84c8-dcec1bb2d325 5 http://news.nike.com/news/nike-launches-find-your-greatness-campaign-celebrating-inspiration-for-the-
everyday-athlete 6 http://search.proquest.com/newsstand/docview/1561784185/170D3DC471394150PQ/3?accountid=14761
26
producers of “athleisure” apparel. Buyers are increasingly likely to switch to competitors who
offer products at a more reasonable price.
Key Target Markets
Wholesalers
Manufacturers distribute athletic apparel and footwear directly to wholesalers, who market
the products to specialty retailers, such as clothing stores and department stores. Apparel
wholesalers generated 12.6% of the industry’s domestic revenue in 2014 and footwear
wholesalers generated 12.8% of the industry’s domestic revenue. Wholesalers generate the
second highest domestic revenue, trailing only the exported products of the industry.
Wholesalers carry the highest bargaining power out of industrial buyers, because they have
the greatest bargaining leverage between manufacturers and retailers.7
Retail Stores
Retailers are a key target market for the athletic apparel and footwear industry because
they have the option to purchase products in bulk directly from the manufacturer or the
wholesaler. Retail stores accounted for 10.4% of the apparel industry’s revenue and 11.8% of
the footwear industry’s revenue. Retailers have high bargaining power as well, because they
are selling directly to the consumers. Their personal service promotes the products, gathers
feedback about the company’s product quality, as well as gauge their customers’ interests.
Internet Sales
The internet’s market share has grown significantly over the last five years thanks to the
global recession of 2008 and the convenience of shopping online. E-commerce is used for
both business-to-business sales and business-to-consumer sales allowing for efficient
transactions. The internet has a medium level of bargaining power because online sales give
the ability for the product to reach the consumer in a convenient and direct way. In
contrast, some consumers prefer to purchase their athletic apparel and footwear directly
from store, which allows for the ability to “try on” the product and notice the details of the
products, like fabric and fit.
End Users
The primary target market for the athletic apparel and footwear industry are the end users.
They rely on all other target markets to purchase their products and have a relatively low
switching cost when it comes to selecting a brand. Buyers of athletic apparel are active
individuals living an exercise oriented life that seek apparel that’s affordable yet fits the latest
trends. Companies like Nike, Adidas, and UnderArmour are always considering the buying
trends of consumers and looking for innovative products that appeal to them. Professional
sports teams, professional athletes and college sports teams make up a significant piece of
7 http://clients1.ibisworld.com/reports/gl/industry/productsandmarkets.aspx?entid=470
27
the consumer base, so the athletic apparel and footwear industry utilizes their visibility and
influence to market to everyday consumers. The end user does have bargaining power
when it comes to price sensitivity between industry competitors, but lacks any sort of
bargaining power when it comes to point of purchase.8
Rivalry Among Existing Competitors (High Threat)
The athletic apparel and footwear industry is at a high level of competition and threat. This is
indicated by the fact that there are (1) a few main companies with high market share in the
industry; (2) low switching costs and loyalty among consumers; and (3) that it is a popular
and mature industry. The major companies are Nike, UnderArmour, and Adidas.
Market Share/Competition
A few companies control the industry with large market share and brand awareness. These
companies sell the same type of products at an equally high quality so they are competing
for the same customers with the same interests and needs. Sometimes the only
differentiating factor between buying decisions is what brand the customer sides with and
not the price or other deciding factors.
Switching Costs and Loyalty
There are low to almost no switching costs between brands in this industry. Consumers can
buy one brand of shoe or another product one time and a different brand the next time. This
makes it hard to compete in the market because consumers can leave a brand easily.
Consumers are also loyal to brands that they use. Once someone starts using a particular
brand of products they grow very loyal and rarely switch brands. It is not uncommon to see
consumers dressing in the same athletic brand from head to foot. Once a consumer knows
that the brand is high quality they will search them out when they are looking for a new
product. When brands are advertised well that helps build brand loyalty. The sponsorship of
popular athletes drives the loyalty to each brand as well because consumers follow their
favorite athletes.
These two aspects create high competition because consumers have the option to change
brands with no loss to them and they are loyal to their brands.
Growth Rate
The industry is growing at a mature rate, which also indicates a competitive environment.
NPD Group, a consumer market research company, reported that active wear (or athletic
apparel and footwear) sales accounted for $33.7 billion last year, representing 16% of the
8 http://clients1.ibisworld.com/reports/gl/industry/productsandmarkets.aspx?entid=500
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total apparel market (July 2013-June 2014).9 Because the industry is mature it is very hard for
new entrants to enter the market. The three major brands control most of the sales and are
growing at a mature rate.
Major Competitors
The industry is dominated by three major competitors. Those competitors are Nike,
UnderArmour, and Adidas.
Nike
Nike is one of the most well-known and popular brands today. It is hard to go through a day
and not see something Nike, someone sponsored by Nike, or an event that they are a part
of. Last year (2014) US sales of footwear and apparel totaled $11.8 billion, which was the
highest in the industry by almost $10 billion, as reported in a Wall Street Journal article by Sara
Germano. Their Jordan brand totaled $2.5 billion in footwear sales alone. They almost own
the entire American market for basketball shoes with the Nike and Jordan brands
accounting for more than 90% of the market.10 With their high market share and successful
sales Nike is ranked as the first major competitor in the industry.
UnderArmour
UnderArmour is quickly growing to become a competitive rival to Nike. US sales of footwear
and apparel totaled $2.6 billion in the last data released for the year 2014. They recently took
the number two spot in the sportswear market from Adidas partly by increasing in both
apparel (17% sales increase) and footwear sales (34% growth) in the year 2014 (Germano
2015). A sponsorship deal with Stephen Curry (Golden State Warriors NBA guard) has given
them a foothold in the basketball-shoe market as well, allowing them to compete with Nike’s
strong grasp of that industry. UnderArmour is growing quickly and continues to compete with
the older and larger companies of the industry and is now ranked at number two.
Adidas Compared to Competitors
US sales of footwear and apparel totaled $1.6 billion last year (2014). Adidas has been a
competitive company in the industry for a while but, as mentioned above, recently lost its
number two spot in the sportswear market to UnderArmour. At the end of 2014 they were
ranked third in footwear and apparel and suffered a 30% drop in shoes sales and 20% drop in
apparel sales. Their Reebok brand of footwear sales fell 27% to $252 million. (Germano 2015).
Adidas is still a competitive force in the industry but has been experiencing a loss in sales and
has not kept up with the more competitive brands in the industry and is now ranked at third.
9 https://www.npd.com/wps/portal/npd/us/news/press-releases/activewear-growth-sets-pace-for-overall-
apparel-market/ 10 http://www.wsj.com/articles/under-armour-overtakes-adidas-in-u-s-sportswear-market-1420753934
29
What is Adidas doing to stop US decline?
Adidas recently hired a new president for North America, Mark Kind. He has been vocal
about increasing marketing and investment spending on American sports. Their global
design director has relocated to the US from Germany and they will open a new design
studio in New York later this year as they try to Americanize their offerings.11
Bargaining Power of Suppliers (Low/Moderate Threat)
There are three main categories that make up the bargaining power of suppliers. They
include (1) the high concentration of suppliers within the industry, and how the industry is
dealing with switching costs; (2) the raw materials used to produce athletic apparel and
footwear, and how they are differentiated; and (3) costs related to distributing the product
across the world. After analyzing these three categories we have determined that the threat
level for suppliers is moderate to low.
High Fragmentation of Suppliers
Manufacturers in the apparel and footwear industry are heavily reliant on exporting their
products in order to survive. Exports account for 73.5% of revenue in the industry, signaling
that it is important for Adidas to have good relationships with its producers in order to ship
their products all around the world. There is a high fragmentation of suppliers in the industry,
which shows low supplier power.12 Adidas works with over 1,200 different suppliers in 65
countries.13 If one supplier was having issues or not meeting their standards, Adidas could
easily replace them. Normally large clothing companies can issue high demands to suppliers
in order to cut costs and speed up production. Recently in the industry, larger companies like
Adidas and Nike have invested valuable resources into manufactures by providing them
with technology that helps create more sustainable clothing and cutting down on carbon
emissions. This investment shows that these larger companies will be more reasonable when
working with manufacturers, signaling an increased switching cost. However, switching cost
is not high enough to classify as a high threat.
Raw Materials
Materials such as cotton, rubber, and synthetic fibers are essential for manufacturers to
operate in the apparel and footwear industry. These raw materials are not differentiated,
and can easily be purchased from many suppliers around the world.
11 http://www.wsj.com/articles/under-armour-overtakes-adidas-in-u-s-sportswear-market-1420753934 12 http://clients1.ibisworld.com/reports/gl/industry/productsandmarkets.aspx?entid=470 13 http://www.adidas-group.com/en/sustainability/supply-chain/supply-chain-structure/
30
Cotton
Cotton is one of the most significant raw materials in the apparel and footwear industry. It is
used in a vast majority of clothing, so if the price of cotton is high, the manufacturing costs
go up with it. Normally the price does not fluctuate enough to cause extreme costs to
manufactures, and typical there is enough cotton produced globally to satisfy the demand.
Cotton is susceptible to the weather, so if there is extreme weather in a particular year, the
price could experience a significant change. Barring any significant weather problems, the
future outlook for cotton prices is expected to fall about 0.8% annually until 2020. The athletic
apparel and footwear industry should not have to worry about their ability to acquire cotton
in the near future.14
Rubber
Rubber is a key raw material in the apparel and footwear industry, specifically when it comes
to producing shoes. Like cotton, when the price of rubber goes up, it directly affects the
manufacturer costs. Most global rubber demand is reliant on the automotive industry,
because with the increase in demand for cars, the demand for tires also increases. With
crude oil prices significantly down around 44% in 2015, the cost for rubber is also decreasing,
down around 30% since 2013.15 Compound growth of rubber for 2015-2020 is expected to
decrease around 7.1%, signaling that now is the perfect time for the athletic apparel and
footwear industry to be using rubber.16
Synthetic Fiber
Synthetic Fiber is another raw material that is growing to be very popular within the athletic
apparel and footwear industry. The industry uses this material in making many of the athletic
and exercise clothing that is typically seen. The industry is starting to rely ore on recycled
polyester, which is a type of synthetic fiber. Mainly produced by petroleum, synthetic fibers
are affected by the price of crude oil. Typically when the price of oil goes up, synthetic fiber
prices will follow, but not to the same degree. By 2020, prices are only expected to increase
by 0.8% annually. The athletic apparel and footwear industry can continue to easily
purchase synthetic fiber in the near future.17
Transportation
Transportation and distribution costs are heavily influenced by the cost of crude oil. In 2015
the cost of oil decreased around 44.3%. Costs are expected to increase annually at a rate of
7.4% through 2020.18 Volatility can be a problem with trying to predict the oil costs. Many oil-
producing countries have unstable political markets that could affect the availability and
cost of oil significantly. If Iran and the United States can reach an agreement on a nuclear
14 http://clients1.ibisworld.com/reports/US/bed/default.aspx?bedid=990001 15 http://clients1.ibisworld.com/reports/us/bed/default.aspx?entid=990007 16 http://clients1.ibisworld.com/reports/US/bed/default.aspx?bedid=990038 17 http://clients1.ibisworld.com/reports/us/bed/default.aspx?entid=1973 18 http://clients1.ibisworld.com/reports/us/bed/default.aspx?entid=990007
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deal, there could be access to a large amount of oil available that Iran has access to. This
would lead to a decrease in the price of crude oil.19
Threat of Potential Entrants (Moderate Threat)
There are three major companies that are moderate threats as potential entrants into the
industry. They are (1) Levi’s; (2) Oakley and; (3) Lululemon Athletica. These are existing, well-
established companies in the apparel industry and have the potential to disrupt the market.
Barriers to Entry
The threat level of new entrants in the athletic apparel and footwear industry is moderate.
There are high barriers to entry that have been put in place. Also, due to the “athleisure”
trend, the industry is swarming with new competitors, creating a dense red ocean in an
industry that already has such prominent leaders.
The athletic apparel and footwear industry has developed high barriers to entry to prevent
the rise of many large competitors. Major players have established a complex network of
distribution from suppliers to buyers. They also have established contracts with retailers to
have their products available in stores across the globe. It is very difficult for new entrants to
overcome such barriers in the athletic apparel and shoe industry. Few companies have a leg
up in competition to other workout apparel and shoe companies. Some of these large-scale
companies are Nike, Adidas, and UnderArmour. Nike holds 20.9% of the sportswear industry,
trumping all competitors. These companies dominating the industry create intimidating
barriers for new entrants to gain market share.
20
19 http://news.yahoo.com/us-iran-race-fill-contours-nuclear-agreement-095104258--politics.html
32
Incentive to Enter the Industry
There is high incentive to enter into the workout apparel and shoe industry because of the
“athleisure” trend and because of the decline in denim sales. These directly correlate with
one another. People who follow the “athleisure” trend tend to wear their workout apparel for
everything outside of actually
working out. People are now
wearing sports apparel as they
run errands and go about daily
routines. As this is becoming
popular in the U.S. and catching
on in Europe, denim is being
neglected and sales are
plummeting. Denim sales have
taken a significant hit and have
declined as workout apparel has
boomed with more and more
growth.21
Levi’s
With denim sales declining Levi’s will see a decline in their sales. They may look into stepping
into the athletic apparel and shoe industry to bounce back from their loss. Levi’s has the
expertise in the apparel world and would not have the stress of battling key entry barriers of
distribution and gaining brand awareness. They could disrupt the athletic and shoe industry
with their success they have shown in the past.
Oakley
Oakley would be successful in entering the industry, and would also be a high threat. Oakley
has seen the potential in the market and is making steps to sell athletic apparel. Oakley
already has a strong base in eyewear and performance clothing. They are now actively
searching for an advertising agency to create a global marketing campaign to promote
their eyewear and sports apparel brand. Oakley wants to try to reach outside their typical
target audience of men and try to target women.22 They have a competitive edge in
offering the “whole package”, including their eyewear and sports apparel as the whole look. 20 http://www.portal.euromonitor.com.dist.lib.usu.edu/portal/statistics/tab 21 http://www.portal.euromonitor.com.dist.lib.usu.edu/portal/company/main 22 http://search.proquest.com.dist.lib.usu.edu/docview/1355277579/111492CE1FA346C1PQ/7?accountid=14761
33
With this creative marketing strategy, they could potentially disrupt the industry, especially
because of their reputable status.23
Lululemon Athletica
Another high threat company that already exists in the sports apparel and shoe industry is
Lululemon. They have overlapped fitness and fashion into their brand and have targeted
women with the sports apparel they offer.
Lululemon is very popular among women
and seems to only grow and gain more
market share. According to their retailer’s
new chief executive office, Laurent
Potdevin, they can enter into the men’s
wear and hit it big.24 As Lululemon extends
their apparel to other categories, such as
men’s wear, they will only grow and
become a higher threat to other
companies in the industry.25
Competitive Substitutes (Low Threat)
There is one major substitute for the athletic apparel and footwear industry, which is the
casual apparel and footwear industry. This industry acts as a low threat for the athletic
apparel and footwear industry because, for the most part, there are not many substitutes for
athletic wear/footwear. For example, fitness shoes are the most practical product for a
runner, not hiking boots or outdoor shoes. The athletic apparel and footwear industry is in
since an oligopoly because a small number of companies have a majority of the market
share.
While there is some movement between the consumers of the athletic apparel and
footwear industry and the casual apparel and footwear industry, it does not affect the
market share. One low threat example of movement between the two would be yoga
pants. Women typically buy yoga pants for fitness reasons yet lately they are been used for
leisurewear. Another example that shows that the threat of substitutes is low is how people
find athletic apparel the most useful in sports situations. Fitness clothes are basically the only
product practical while fitness training. As an example of an industry that does have 23 http://search.proquest.com.dist.lib.usu.edu/docview/1507835850/111492CE1FA346C1PQ/3?accountid=14761 24 http://search.proquest.com.dist.lib.usu.edu/docview/1517395128/F76B1DA308D4AE6PQ/18?accountid=14761 25 http://search.proquest.com.dist.lib.usu.edu/docview/1561461079/F76B1DA308D4AE6PQ/8?accountid=14761
34
substitutes, look to the drink industry. Red Bull energy drinks can be a substitute for soda
because it basically does the same thing at the same price point. Athletic apparel doesn’t
have these substitutes and there is nothing for the consumer to switch to. In summary, if a
consumer wants to buy active wear to use while working out, the most common option is to
look at athletic apparel and footwear companies such as Adidas, Nike and UnderArmour.
Stakeholders (Moderate Threat) There are a few entities that influence the industry as stakeholders. They include (1)
sponsorships and (2) human rights/labor groups. These entities combine to create a
moderate level of threat for the industry.
Sponsorships
Sponsors are a major part of advertising and revenue for companies in this industry. The three
major companies are always competing for the rights to partner with specific athletes and
teams. The sponsorships influence the industry by promoting the brand that they wear. For
example, Michael Jordan was a major part of Nike’s early success because he wore Nike
and became a national icon. If a company can sign a partnership with a major athlete or
team then it is a great way for them to increase awareness for their products and increase
sales. The following is some information on the sponsorships that Adidas, Nike, and
UnderArmour have right now.
Adidas
Adidas has struggled to maintain market share competing with Nike and UnderArmour.
According to a New York Times article by Ken Belson, Adidas will not be renewing their
partnership with the NBA at the end of the 2016-17 and this is a great opportunity for other
companies to take their sponsorship. At the beginning of the partnership they paid about
$400 million for the 11-year deal. Without the NBA they won’t have a major sports league
contract. Adidas does own Reebok that has a contract to supply uniforms to the NHL.
Nike
Nike controls more than 85% of the basketball footwear market in the US.26 They also do all
the team uniforms for the NFL. They sponsor major athletes from all sports as well as some
soccer teams and colleges. Their top endorsement deals include Michael Jordan ($60
million/yr), Tiger Woods ($20 million/yr), and Rafael Nadal, Rory Mcllroy, Derek Jeter, and
LeBron James (all $10 million/yr).27
26 http://www.nytimes.com/2015/03/17/sports/basketball/adidas-to-exit-the-nba-opening-the-door-to-
rivals.html 27 http://www.tsmplug.com/richlist/nike-highest-paid-endorsement-deals/
35
UnderArmour
With Adidas dropping their NBA partnership this opens up a great opportunity for
UnderArmour to compete with Nike for the new sponsorship. The NBA deal would allow them
to compete head to head with Nike and help them build their overseas presence because
of the NBA’s growing international appeal.
Human Rights/Labor Groups
Human Rights and Labor Groups influence the industry because in recent years companies
have received negative publicity for abusing employee’s working rights. Sweatshops have
been known to “force employees to work unpaid overtime, deny bathroom breaks and sick
leave, and retaliating against workers who seek better treatment.”28 By doing this,
companies are able to get clothing at cheap prices, creating larger profit margins.
The public along with human rights and labor groups have become aware of these major
issues and the abuse that employees have been receiving, which has pushed new labor
rights to protect these abused employees. These regulations have changed the way
companies run their manufacturing and how they treat employees. Companies now go the
extra mile to show the public their employees are treated fairly.
Summary The most important and influential threats the athletic apparel and footwear industry is
currently facing is (1) loss of professional sports sponsorships to competitors and (2) low
switching costs of consumers purchasing from other companies within the industry.
When it comes to professional sports sponsorships, brands like Adidas, Nike and UnderArmour
are the market leaders. With competition in this space so high, professional sports teams are
constantly required to test the market for other sponsorships. This presents a threat to Adidas
and its current sponsorships.
Low switching costs in this industry also poses a threat to Adidas. Moving to an industry
competitor, consumers can simply do so with minor switching costs. This presents a threat
because Adidas lacks incentives for consumers to stay brand loyal to their company.
Although these threats can seem overwhelming, opportunities are also seen in the athletic
apparel and footwear industry which includes the athleisure potentials and new sponsorships
in areas Adidas hasn’t touched on. Athleisure is the idea that people are using yoga pants,
for example, for everyday use. They are purchasing from the athletic apparel industry and
using it for other reasons. This is something that Adidas can exploit. Potential for new
sponsorships in other areas is an opportunity because it’s an opportunity for Adidas to raise its
brand loyalty. By tapping into different markets, Adidas can increase its overall market share
and begin to close the gap with industry leader Nike.
28 http://www.greenamerica.org/livinggreen/nosweatshops.cfm
36
Key objectives that Adidas can do in light of these opportunities and threats are as follows.
1.) Specialize in popular sport sponsorships for multiple countries (India - Cricket, AUS -
Rugby, Mexico - Soccer, America – Baseball, Canada – Hockey)
2.) Increase switching costs by creating incentives for people to purchase Adidas
wearable technology clothing and footwear. By linking clothes, footwear, and the
sport together, switching costs can be raised and create brand loyalty throughout the
company.
3.) Tap into the athleisure department by producing high quality yoga pants that rival
that of Nike and Victoria’s Secret. The pants will be worn for fitness along with casual
use.
PORTER’S FIVE FORCES Bargaining Power of
Buyers/Customers
High Threat
•End consumers are price sensitive – Many options from the competitors and low switching costs (+) •Wholesalers - have high bargaining
leverage between manufacturers and retailers (+) •Online shopping – Allows for convenient price comparisons (+)
Competitive
Substitutes
Low Threat
Suppliers Bargaining
Power
Low/Moderate Threat
Potential Entrants
Moderate Threat
Rivalry among Existing
Competitors
High Threat •Nike – Highest Threat – Footwear and
apparel sales totaled $11.8 billion in 2014 (industry leader). Extremely high market share (-)
•Under Armour – High Threat – 17% growth in apparel in 2014 and recently overtook Adidas in the U.S. market for second in total sales . Footwear and apparel sales totaled $2.6 billion (2014) (+)
•Sponsorships – Nike, Under Armour, and Adidas compete for sponsorships and partnerships in professional and college sports (-) •Human Rights/ Labor Groups –
Forced companies to improve working conditions in manufacturing facilities (-)
•Casual Apparel and Footwear Industry - Consumers prefer active wear while exercising, but some switch to casual apparel like t-shirts and sweatpants (-)
•Leisure wear – Positive influence on consumer cross over because of the daily use of “athleisure” wear (+)
Stakeholders/
Influencers/Shapers
Moderate Threat •Highlight Fragmented – Several small
suppliers within the industry (+) •Investing in Suppliers- Investments in sustainable technology(-)
•Cotton - Easily available; prices decreasing through 2020 (+) •Rubber – Decrease in demand for tires signals an increase in rubber supply with prices decreasing 7.1% annually (+) •Synthetic Fibers – Relies heavily on recycled polyester with prices increasing 0.8% annually (+)
•Oil Prices – Extreme price volatility threatens transportation, rubber, and synthetic fiber costs (-)
•Lululemon - Actively extending brand into men’s wear allowing the company to be a preferred brand to several consumers (-) •Oakley – Strong consumer base that is
currently pursuing a clothing line in the athletic apparel industry (-) •Levis -Advantages in distribution and brand awareness if they look to tap into the athletic apparel and shoe industry(-)
(+) Strengthens
Adidas position in the
marketplace
(-) Weakens Adidas
position in the
marketplace
Legend
37
38
chapter three
Marketing Strategies
and Programs
39
Strategic Market Position
Adidas Mission Statement
“When it comes down to it, we strive to be the global leader in the sporting goods industry
because we want to help athletes achieve their personal best. We want to ensure we have
the most desirable brands and satisfied consumers and, for this, we need to develop
premium products and provide responsive services. Only then will we be rewarded with top
results and a leading position in our industry. We know very well, that – at the end of the day
– these top results are also tied to the substantial value we want to provide our shareholders
with.”1
Analysis of Mission Statement
Adidas’ mission statement describes the company’s outlook on being a global leader in the
sporting goods industry. Their focus is making the Adidas brand the most desirable and
provide an overall premium product. Their marketing strategy takes a hybrid approach to
the industry by providing services and products to multiple consumer categories instead of
focusing on niche markets or differentiating their products from competitors. While the
organization does a fair job in keeping their market share, they do not separate themselves
from competitors in any unique way. Adidas isn’t great at one service or product, more so
good in lots of different categories. This creates a market position that is less valuable than
their competitors like, for example, Nike.
Effectiveness of the Mission Statement
Adidas mission statement is very broad and is tied to individuals that are already athletes
rather than making athletes out of ordinary individuals. Adidas has to find a creative way to
use their slogan “all in” to show that every individual has the chance to become great. The
organization wants to leverage
their global resources by entering
diverse markets in order to find
new markets and create new
products for those markets. But in
their mission statement, Adidas
fails to recognize the fact that
entering diverse markets will help
them develop the premium
products and responsive services
they are searching for.
In terms of image, Adidas is largely centered on soccer, yet the mission statement paints a
broad picture of the target market segments. The leading competitor in the industry, Nike,
1 http://www.adidas-group.com/en/group/strategy-overview/#/
40
provides a mission statement that every individual can relate to: “Bring inspiration and
innovation to every athlete* in the world, *If you have a body, you are an athlete.”2 For
Adidas mission statement to connect with consumers, they have to be more specific on how
they communicate the values of the company.
Effectiveness of the Strategic Market Position
Adidas strategic market position is too broad to gain the kind of high market share they are
looking for. Although Adidas is sponsoring a number of top athletes in the NBA and NFL, they
struggle strategically marketing their products to fit the eyes of consumers. They are focused
too much on the entire athletic industry rather than finding specific niche markets within the
industry. Adidas is still the leader in market share for international soccer and is currently
sponsoring the best soccer player in the world in Lionel Messi.
Adidas is not the cost leader in the athletic apparel and footwear industry and is currently
struggling to create products that are different than competitors. Adidas is a company that
Michael Porter would classify as “stuck-in-the-middle,” meaning Adidas is pursuing more than
one competitive strategy at a time. In order for Adidas to gain a competitive advantage,
they need to concentrate on a narrow segment of the athletic apparel and footwear
industry. By focusing on a narrower segment of the market, Adidas will be able to market
their products in a way that consumers in those markets will want to buy them and
competitors will want to avoid them.
Product Portfolio Analysis
The following will be a
product portfolio analysis
for Adidas. Four product
areas will be described
according to the BCG
Model. These four products
are (1) stars, (2) cash cows,
(3) dogs, and (4) a
problem child. Key
objectives for Adidas to
focus on will be highlighted
at the end to demonstrate
what the organization can
do to better position the
product portfolio.
2 http://about.nike.com/
41
Star
These products have high market share and high growth rate. They are successful parts of
the brand that will one day turn into “cash cows” that will supply them with a steady income
over a longer period of time. New technologies like wearables and applications are very
popular today and are possibly a great product for Adidas if they can continue to adapt the
trends. They are not extremely strong in this category but do compete well in the industry.
Another strong point for Adidas is their sponsorships of athletes. Their biggest “star” is the best
soccer players in the world, Lionel Messi. Adidas recently released a Messi line of soccer
products, which looks to be a very popular line among soccer fans. Messi’s popularity and
visibility provide Adidas with a situation like Michael Jordan was for Nike; he is an extremely
important key to their current and future success in sales and brand awareness.
Cash Cow
Products labeled “cash cows” have low growth and high market share. Adidas most
profitable and most successful department or product line is the soccer industry. According
to Chris Katje’s article in The Street, Adidas had $2.4 billion in soccer revenue in 2013. Nike,
who is Adidas biggest competitor, had $1.9 billion in soccer revenue.3
Soccer can also be classified as a “star” type of product, but because of the consistent
income and high market share that Adidas gets from soccer it is also their best “cash cow.”
They have a low growth rate in soccer but that is because they are already well established
and their growth is classified as consistent. According to an online article by Heath Chester,
“In Spanish football the biggest four selling ‘brands’ are, in no particular order, Real Madrid,
Barcelona, Lionel Messi and Cristiano Ronaldo.” Adidas has sponsorship deals with Real
3 http://www.thestreet.com/story/12736727/1/adidas-looks-to-beat-nike-for-soccer-dominance-in-2014-world-
cup.html
42
Madrid and Messi (Nike has Barcelona and Ronaldo).4
Adidas has sponsored FIFA since 1970 and outfits many of the top international teams,
including Argentina, Germany, and Spain. Lionel Messi is Adidas top star in the soccer world,
as mentioned before. He is ranked 39th on Forbes list of top 100 celebrities and has he 10th
best social presence.5 This is a great strength that has allowed Adidas to establish themselves
in the industry.
Adidas long history in the soccer industry and their sponsorships of strong teams and
successful players, including Messi, puts their soccer department and product line in the cash
cow product category. They have a relatively low rate of growth because they are already
established in the market, but also gives them a high market share because of their long
history of success and involvement.
Dog
These products have low growth and low market share. The biggest “dog” for Adidas is
basketball and the NBA. The basketball industry is competitive and dominated by Nike.
Together with their Jordan brand, Nike owns 90% of the American market for basketball
shoes.6 This leaves Adidas with a low market share and minimal opportunity for market
growth.
Because of the low market share and low growth Adidas made an announcement that put
them all over the news recently. They announced that they would not bid for a new contract
with the NBA. Their current deal ends after the 2016-2017 season. This leaves Nike and
UnderArmour open to compete for the new contract. Adidas is already backing out of the
basketball industry and ditching one of their biggest “dog” products.
They also have less popular sports in the outdoor industry like snowboarding that aren’t doing
much for them. The less popular sports like softball or skateboarding are in danger of being
trapped in this category. They currently have low growth and low market share and unless
Adidas can do something to fix this, they will follow basketball as a “dog” sport.
Problem Child
Products that fit into this section have high growth and low market share. Athleisure can be
classified as a potential problem or opportunity in this category for Adidas. Athleisure is a
growing industry that Adidas is a part of, and more people are buying active wear to use as
regular clothes. They are comfortable and portray a look of athleticism that people are
4 http://www.insidespanishfootball.com/87530/adidas-nike-and-battle-for-messi-and-cristiano/ 5 http://www.thestreet.com/story/12736727/1/adidas-looks-to-beat-nike-for-soccer-dominance-in-2014-world-
cup.html 6 http://www.wsj.com/articles/under-armour-overtakes-adidas-in-u-s-sportswear-market-1420753934
43
drawn to. Since it is a fairly new trend, the market share is low but sales are growing. The
product has a basic strategic direction that can be improved.
Another part of Adidas portfolio is their sponsorship of celebrities like Kanye West and Pharrell
Williams. These celebrities have low market share because the industry is so broad, but they
offer great opportunities to promote Adidas and gain more market share. Their product lines
offer more of an athleisure style or casual attire. They also are great brand ambassadors if
leveraged right, and their popularity outside of sports allows them to reach a different
demographic then their normal products.
Key Objectives to Improve the Product Portfolio
Adidas must use Messi as much as possible to improve the soccer product portfolio. His
signature soccer line needs to be a main focus of their advertising. When people think of
Michael Jordan they think of Nike
because he was all over TV
commercials, print advertising,
and had his own line of products.
This can be exactly the same
thing for Adidas. Mess is the
greatest soccer player in the
world and is seen by millions
through games, sponsored
commercials, and products. His
popularity will push fans to think of
Adidas soccer and his fame and
popularity as an icon outside of
sports will create better brand
awareness around the world.
As mentioned above, Adidas needs some “star” products or products that can help them
grow. Their “cash cow” product, soccer, needs to be maintained. Their top athlete, Lionel
Messi, recently became the second Adidas soccer player to get his own brand or signature
line.7 Adidas needs to leverage his popularity as much as they can as customers buy into the
new brand. This will generate cash that can be invested into “star” products or “problem
children.”
Adidas is already doing the right thing with their “dog” department of basketball and that is
backing out of the market. It is costing them too much and that money could be used
elsewhere. They need to do the same with their other less popular products. Their “problem
child” of athleisure will easily be turned into a “star” with a little more focus and direction.
7 http://www.thestreet.com/story/12736727/1/adidas-looks-to-beat-nike-for-soccer-dominance-in-2014-world-
cup.html
44
Their celebrity brand ambassadors will help increase market share in athleisure wear through
more promotions and advertising.
Competitive Advantage Assessment
Adidas has 3 key strategies that give them a competitive advantage within the athletic
apparel and footwear industry; (1) sponsorships that allow them to be the sole supplier of
athletic apparel to athletes and sports teams to create their desired brand image; (2)
establishing strategic policies on placing themselves in the proper sports market and being
represented in ways that will attract the right attention to their brand; and (3) having access
to raw materials that are low in cost, allowing them to produce large amounts of products.
This will allow Adidas to have an advantage in jumping into current athleisure trends.
Sponsorships
Sponsorships is one of the biggest ways athletic companies can bring in revenue. For
example, Adidas uses soccer as a competitive advantage by being a sponsor of major
soccer players, teams, leagues, and competitions throughout the world. Adidas sponsors the
World Cup every four years and by being the main sponsor, they have the advantage over
other athletic companies. They also sponsor other international events such as the UEFA Cup
or the Olympics. They supply jerseys, cleats, footballs, and any other gear imaginable that
relates to soccer.
Strategic Policies
Strategic policies have shaped the direction that Adidas wants to be represented in. Clearly
they have stayed focused in being the premiere supplier within the soccer industry. In the
past they have been the official jersey sponsor of the NBA and recently announced they
would no longer pursue this sponsorship. They are looking to expand into other areas of
sponsorship within the NBA, such as specific athletic footwear. We feel that in basketball, the
real money is in what shoes are being worn, not what type of jersey is being worn. Adidas
may feel this way as well and decided paying the large fee to be the NBA jersey sponsor
was no longer worth it. This shows that Adidas has policies in place that they are sticking with
to help them expand their brand in the right ways.
Access to Raw Materials
Raw materials such as cotton, rubber, and synthetic fiber have recently become more
affordable with trends staying at a consistent price. These materials at cheaper prices cut
costs significantly, allowing them to produce more clothing at a lower price. Adidas is able
to gain a higher profit margin that places them in a position where they can reinvest those
profits to follow current trends, such as the athleisure trend. They also have the ability to
expand those trendy product lines.
45
Sustainable Competitive Advantage
According to Barney’s Criteria for Sustainable Competitive Advantage, a sustainable
competitive advantage must be valuable, rare, hard to imitate, have no comparable
substitutes, or be complex. Overall Adidas does not have a strong sustainable competitive
advantage. Adidas is not complex because they do not have a strong interrelationship
between various skills and assets. Adidas is not imperfectly imitable and has plenty of
comparable substitutes because any other athletic supplier such as Nike or UnderArmour
can create similar products or offer similar sponsorship deals. However, they do have a slight
comparative advantage because there is an element of rarity and value where they have a
very strong brand image in soccer and hold a majority of key sponsorship deals within the
soccer industry. It would be difficult for another company to enter into the soccer industry
and create the same type of market control because so many soccer consumers hold a
strong brand preference with Adidas.
Key Marketing Objectives and Strategic Initiatives
A key marketing objective that’s necessary to improve Adidas market position is their policy
to continue reviewing their sponsorships and move away from sponsorships that don’t
benefit their brand image. This is shown by dropping the NBA jersey sponsorship, and
improving footwear for specific players. Adidas needs to continue putting their name on the
right products within sports. Adidas also needs to improve on their lack of switching costs for
customers. Customers can switch between many different brands when it comes to athletic
apparel. Adidas needs to give customers a reason to stay brand loyal to prevent the rise of
substitutes. This type of strategic initiative could create an “Adidas-Cult” that could give
them a firm hold in the market.
Summary
Adidas is faced with a number of weaknesses that need to be fixed, as well as strengths that
can help them be successful. Those weaknesses include (1) their strategic market position
and (2) their lack of “stars” or products with high growth and high market share. Their
strength is their “cash cow” of soccer that provides a low but steady rate of growth and high
market share.
Adidas market strategy position is too broad. They focus on trying to cover too many sports
making it hard for them to increase market share. They are also competing in a very
competitive industry. Adidas lacks that are growing in sales, which may hurt them in the
future.
Their greatest strength is their dominance in the international soccer industry. They have a
high market share in this industry and sponsor some of the finest teams and players in the
world. Where they are one of the bottom brands in many other sports, they are the top
brand in soccer.
46
The principle objectives needed to leverage Adidas strengths and bolster their weaknesses
are as follows. They need to (1) leverage their strength in the soccer industry, (2) fix their
strategic market position, (3) and raise switching costs.
Adidas has a long history in international soccer and that industry should be their main focus.
It is one of the most popular, if not the most popular sport in the world and interest within the
United States is growing as well. As they shift their focus to soccer, this will fix their strategic
market position, which is too broad at the moment. It will also give them a foothold within
the growing United States soccer market. One of the last things Adidas needs to do is raise
the switching cost within the industry. It is too easy to go between brands and that is
something that hurts Adidas. As Adidas strengths are leveraged and their weaknesses
improved they will be more competitive in the industry and see more success in their
business.
47
chapter four
Plan of Action
48
Adidas Competitive Situation
There are four issues noted in the previous chapters that will drive recommendations for this
chapter. They include: (1) Lack of innovative products that tap into the athleisure market, (2)
Low switching costs allow consumers to switch to industry competitors at a minor cost, (3)
Adidas lacks sustainable advantage because they are operating in broad markets rather
than specific niche markets and (4) The “Head-to-Head” marketing strategy between
Adidas and Nike is causing consumers to choose between the two brands.
Growing Popularity of the Athleisure Market
Adidas needs to make it a priority to manufacture and innovate products that appeal to
consumers in the trending athleisure market, specifically wearable technology. Wearable
technology can be worn on and off the field of play and Adidas can leverage this by
creating wearable technology that fits both sides. Women make up a large part of both the
athletic and athleisure market and by focusing on these niche markets through wearable
technology, Adidas will build a better consumer connection.
Customers’ Low Switching Costs
Adidas lacks the incentives for consumers to stay brand loyal and is causing the consumers
to switch to alternative competitors. Adidas needs to address this problem by connecting
their products with specific sports.
Lack of Niche Markets
Adidas currently operates in the broad market of athletic apparel and footwear industry. By
specializing in specific niche markets such as cricket, hockey, or rugby, Adidas can expand
sponsorships and gain traction in emerging global markets.
49
Nike Seeking Women
Nike is the global leader in
athletic apparel and footwear
sales and is Adidas main
competitor. Both athletic brands
target similar athletic oriented
customers, but recently Nike has
specifically targeted women with
their new marketing campaign.
Nike expects the women’s line
could add $2 billion of additional
sales by 2017.1 This opens the
door for Adidas to not only
expand sponsorships in emerging
athletic markets, but Adidas has
the opportunity to exploit the
millennial demographic group as
well.
Proposed New/Improved Market Position
Proposed Mission Statement
Adidas strives to provide top quality athletic apparel and equipment for every unique
athlete around the world. No matter the talent level, we provide the necessary products
and services to make you feel like a professional athlete. Experience what being “all in” is
about.
New Market Position
In order to improve their market position, Adidas needs to continue to focus on the following
items:
High profile and cost efficient sponsorships
Specializing in cricket, hockey, rugby, and continue dominance in the soccer industry.
Underserved markets like Zumba and Crossfit
Focus on the growing athleisure trend in order to capitalize on this specific market
segment.
1 http://www.businessinsider.com/nike-betterforit-women-campaign-2015-4?utm_source=linkedin-
ticker&utm_medium=referral
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We believe that these points will help Adidas market position because it strengthens their
dominance in global sponsorships as well as representation in smaller athletic markets.
Specializing in these specific markets will build Adidas reputation as not only an athletic
apparel and footwear company, but as an athleisure company.
Strategy
Major Objectives for New Vision
In order to capture their proposed vision, Adidas needs to control specialized markets that
are less popular in the industry. They can do this by growing the number of sponsorships in
these markets and supply more products to those industries. This is a great opportunity for
Adidas to take advantage of these markets and become the main brand in these industries.
One of their biggest strengths is the soccer industry and by focusing on countries where
soccer is growing in popularity, Adidas can capitalize on that strength. Specializing also
solves one of their threats and weaknesses, which is being too broad and not being able to
compete with competitors like Nike that have more market share.
Scope
Adidas will attempt to reach several customer segments under these new objectives. Adidas
will begin marketing to the large customer segment that is involved in specialized sports.
Adidas is already established in the global soccer industry, and they need to look to
continue this global dominance by continually marketing in popular areas like Western
Europe, South America and Africa. Adidas seeks to become permanently established in the
United States as the market leader in soccer. Soccer popularity is rapidly growing in the
United States and this offers Adidas a large market to sell their products too. Also, Adidas will
be targeting sports like cricket, hockey, and rugby that are underserved in the athletic
apparel and equipment market. Their focus is on target areas where these sports have large
popularity and have the disposable income to purchase products for these sports. For
cricket and rugby, the United Kingdom and Australia are the biggest players, while hockey is
mainly focused in Canada, the United States, and Russia.
Adidas will also be looking to
target new trends and
demographics that are emerging
within the industry. Healthy living
and fitness trends like Zumba and
Crossfit are gaining popularity and
present a large target market,
especially in the United States.
Athleisure is also making strides in
the United States with consumers
wearing athletic apparel in
everyday life, even passing for
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business casual in the workforce. Adidas needs to become a more visible player in the
athleisure trend by making customers aware that they offer these items.
Through marketing to these populations, Adidas will utilize their brand strength in the soccer
industry to continue dominating soccer markets. They look to capitalize on the opportunity to
market to emerging trends and underserviced sports.
Achieving Competitive Advantage
By entering various niche markets, Adidas will gain sustainable competitive advantage by
offering products that are valuable to those consumers in specific niche markets. Adidas will
find significant value in these underserved markets. Since there aren’t any companies that
have yet to establish their brand in the market, Adidas can enter and experience large
market growth and establish a dominant base to make them the preferred brand of the
niche consumer.
Adidas will become more unique and complex by offering products in these specific and
defined market segments that are not highly saturated. Products offered by Adidas in these
underdeveloped markets will give them a head start to become rare and dominant to
separate themselves to potential entrants.
Plan of Action
Adidas needs to market more towards the niche markets of cricket, hockey and rugby,
along with continuing its global dominance of the soccer industry. To reach this goal, Adidas
must market to the specific countries where these sports are most popular. Marketing
campaigns such as television advertisements, print advertisements and sponsoring local
teams will aid in our efforts to make Adidas the leader in these sports.
To increase brand awareness, Adidas will focus on
signing some of the most popular athletes in those
new sports industries that they will be focusing on.
Players such as Kumar Sangakkara (cricket), Nathan
MacKinnon, Connor McDavid and Jack Eichel
(Hockey), and Anthony Watson and Richie McCaw
(Rugby) are top targets within their specific sport and
could give Adidas a good start to increasing their
brand reputation. To continue leading the soccer
industry, Adidas must continue to build the
relationship with the FIFA organization and leverage
Lionel Messi’s superstar image. Through World Cup
signage, Africa Cup of Nations, and new sponsored
soccer events, Adidas can build their relationship with
FIFA. Lionel Messi can be the Michael Jordan of
Adidas and help increase not only brand awareness,
but a positive reputation for the brand. It is essential to
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raise our brand awareness by continuing our partnerships in the soccer industry.
Specific promotions involving athletes would include a new and improved “all in” campaign.
Adidas would feature each of our selected athletes running off of their respective fields into
the locker room. They would change out of their Adidas athletic gear into Adidas athleisure
clothes and exit the locker
room. This would focus on
the use of Adidas
products on the field as
well as off. They would
then say, “I’m all in, are
you?” A unified
promotional campaign
would link all our
sponsored athletes to the
new theme, creating a
universal voice for Adidas.
Place
By focusing on new niche markets Adidas will be moving a lot of their distribution of products
to other countries like India and Europe. The target market segments will be focused on
players and fans in those new niche sports as well as consumers of athleisure products.
Product
Their products will move to be more focused on equipment and gear in sports like rugby,
cricket, hockey, and soccer. This will narrow down Adidas focus so they can compete on a
global scale. By differentiating their products, they are able to get away from the exact
same products and markets that Nike and UnderArmour are working in and take advantage
of untapped markets.
Adidas should also look to utilize wearable technology to create high switching costs for their
products. Adidas offers a micoach product line where consumers can gather information
about their performance through the products. Adidas can develop new cleats or clothing
that can connect with each other through the micoach technology to increase switching
costs for consumers. As part of the “all in” campaign, Adidas will feature athletes wearing
the wearable technology in the advertisements. Wearable technology would include soccer
cleats and leisure shoes that connect to the consumer’s smartphone.
For the more extreme athlete, the Reebok Biostamp can be embed into their arm and
connect wirelessly to the consumer’s smartphone. This allows them to track their overall
athletic performance along with their nutrition goals and overall well-being.2
2 http://www.wareable.com/sport/super-bowl-2015-xlix-wearable-tech-in-the-nfl
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Promotion
Adidas must market its strategies to specific industries like cricket, hockey and rugby.
Sponsoring athletes, running TV ads and producing print media will all aid in promoting the
brand of Adidas. These efforts, combined with continuing the partnerships in soccer, will help
Adidas gain traction on the market share of the industry. Social media is another aspect that
Adidas must gain ground in. By utilizing platforms such as Twitter, Facebook, and Instagram,
Adidas can make its brand image even stronger.
Price
Adidas should shy away from focusing on cost leadership in the industry. Adidas brand
image has previously allowed them to charge a higher price but should focus more on price
parity while entering into these new markets. Adidas has the opportunity to tap into the
cricket and rugby markets and focus on producing higher quality products in these smaller
but growing markets.
Summary
Adidas wants to focus their marketing efforts on the new niche markets of cricket, hockey
and rugby. These markets are located in different areas across the globe where the niche
sports are most popular. They will be focusing on providing new equipment and gear that
cater to the niche sports, as well as developing wearable technology to differentiate those
products in the market and create high switching costs. Adidas will be promoting through
traditional marketing as well as online marketing strategies and TV advertisements. They will
also look to gain new sponsorship deals to expand their brand image, involving players and
teams of the new niche markets. Adidas will focus on using a price parity system early in the
campaign so they can compete with other smaller brands in the niche industries, then can
adjust prices later. They will rely on their strong brand reputation for high quality to
differentiate them from the rest of the competition.
The target markets that Adidas should expand into are fans and athletes of new niche
markets, including popular trends like athleisure and new exercise trends like Crossfit and
Zumba.
We hope that the pricing and promotional strategies will appeal to consumers by engaging
them in the idea that they can purchase high quality gear that their favorite athletes are
using for a price that is comparable to the rest of the market. The new products will appeal
to the consumer because they will be able to purchase high quality gear that they haven’t
had the opportunity to purchase before.
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chapter five
#allin Promotion and Social
Media Strategy
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Current Diagnostic Promotion/Social Media Profile
Promotional Objectives
Adidas is focusing their promotional goals on creating value for athletes, stakeholders, and
fashionista’s through their products. If stakeholders value Adidas over competitors, that will
build Adidas brand image and raise switching costs. Adidas wants to make every athlete
feel they have the potential to play like a professional. These promotional objectives lead to
Adidas main goal, which strives to be the global leader in the athletic apparel and footwear
industry.
Adidas Organizational Strategies
Adidas bases their organizational strategies off of their “six key strategic pillars.”
1. Maintaining a diverse brand portfolio
2. Company investments are focused on highest-potential markets
3. Creating a flexible supply chain
4. Leading through innovation
5. Develop a team grounded in our heritage
6. Becoming a sustainable company
Each of these pillars build off one another and Adidas believes these six strategies will lead
them to achieve their promotional goals.1
Types of Media
Adidas is actively engaged in several different forms of media when promoting their
products. Social media allows Adidas to connect with millions of consumers by promoting
specific, new products and sponsored athletes. Adidas also ties in their digital
advertisements with social media by leaving the consumer an opportunity to learn more
about the specific promoted product through a hashtag. Adidas currently promotes through
print ads, but only in bigger markets like soccer, basketball, football, and golf.
Current Slogans/Appeals
Adidas slogans are broad and change from year to year. A few of Adidas current slogans
are “impossible is nothing” and “Adidas is all in.” Hashtags can also social media slogans and
Adidas is currently trending two hashtags to promote new products and a new year. The first
one is #BoostYourRun, which promotes Adidas new Ultra Boost running shoe. The second
hashtag is #ThereWillBeHaters promoting their new line of 2015 soccer cleats.
1 http://www.adidas-group.com/en/group/strategy-overview/#/
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Endorsed athletes are at the heart of
Adidas current appeals. Young athletes
want to be them and by showcasing
their world class talent while wearing
Adidas will boost sales and brand image.
Musicians and other celebrities are the
emerging appeals that Adidas uses to
grow their Adidas Original brand.
Both the current slogans and appeals
reinforce Adidas market image. Adidas
image is having a presence in nearly
everything involving athletics, and is now actively pursuing musicians. Their slogans and
appeals follow suit. Adidas does not keep a recurring slogan which not only leaves
customers confused, but limits brand recognition among consumers. Adidas endorses world
class athletes like Lionel Messi and Damian Lillard to musicians like Elton John. There is not a
clear cut style or correlation between these celebrities, which leaving Adidas image unclear.
Adidas Social Media Strategy
Adidas’ social media platforms are currently doing an excellent job informing customers and
followers of their various product lines. They currently promote their lines through Twitter,
Instagram, Facebook, Pinterest, etc. They have varying accounts on every platform for their
main account, originals, soccer, football, running, women, etc. By separating their accounts,
Adidas is able to target specific audiences. Adidas athletes efficiently promote the brand by
tagging Adidas in their posts and wearing Adidas products on and off the field. In return,
Adidas will tag their athletes to further promote their product lines. All the posts Adidas
makes on social media are distinguishable in who they are targeting and make it clear to
consumers in what their products offer. Adidas uses their social media platforms for posts
containing: their sponsored athletes wearing various athletic equipment, Adidas Originals
apparel and footwear for product promotion.
Diagnostic Current Promotional Mix Profile
As mentioned before, one of their current promotional campaigns is the “Adidas is all in”
campaign. This hits on the passion that consumers have for whatever they are involved in
and invites everyone to participate. On the Adidas blog they mention, “In 2011, Adidas
brought together sport, street, and style for the very first time in one campaign and told the
world what it means to go ‘all in’. The campaign is the biggest marketing push in our brand’s
history.” They are using digital media as well as TV to attract customers, especially younger
audiences. Younger audiences will be better reached through digital and social media
instead of TV and this is what Adidas is trying to do.2
2 http://blog.adidas-group.com/2012/03/insights-into-adidas%E2%80%99-new-all-in-campaign-we-all-run/
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The commercials show Adidas top athletes working hard to improve their game and inspire
the average everyday athlete to do the same. In a few commercials they have a mix of their
top sports like soccer, football, running, and basketball and also feature alternative activities
like fashion, skateboarding and even biking. Other commercials focus on soccer and feature
top stars like Messi, Alves, Suarez, and Ozil. The commercials feature music from Kanye West
who is an Adidas artist, which ties in the music industry as well but could be a bigger focus.
Overall, Adidas does a good job reaching out to all target groups and sports.
Improvements to Current Promotional Campaigns
With our new suggested strategic plan Adidas needs to
focus more on alternative sports like cricket, rugby and
hockey as well as continue to be the leader in soccer.
The use of the Adidas originals logo is popular among
younger consumers and Adidas can capitalize on this
interest by creating more commercials and ads focusing
on that logo with athleisure wear. Their slogans could also
be unified better. Nike may use different catch phrases or
campaigns but everyone knows them by, “Just Do It.” Adidas doesn’t have a slogan or
motto that makes them stand out. They have a few slogans but need a main slogan that
supports their main brand and can link to the other sub-brands. Adidas also needs to tie in
their athleisure wear and athletic apparel in their promotions. Linking the Adidas athletic
wear with the Adidas Originals athleisure wear will help build unity within the Adidas brand,
similar to Nike’s “Just Do It.”
Critiques on Current Social Media
Adidas does a good job in creating posts that show off their product lines and mention their
athletes. They also have created profiles such as Adidas Football, Adidas Running, Adidas
Basketball, etc. for consumers to go more in depth on their favorite sport. The content that
Adidas provides is good but lacks qualities that make the products memorable. Adidas
needs engage with its audience more through social media and build a reputation that
consumers appreciate. Through TV and other digital advertisements, Adidas needs to
leverage its social media presence and learn to promote multiple items through multiple
platforms. It is key for Adidas to use their endorsed athletes as a way to promote their
superstar ability and share that ability with followers on social media. Followers want to keep
up with what their favorite athletes are doing on the field and Adidas is currently not doing
enough to keep their followers satisfied.
Improvements to Social Media
Adidas needs to use creative post designs and expand into interacting with followers in
multiple ways. They should include posts that mention motivational quotes, especially those
quotes that come from Adidas athletes. Also include the hashtag #allin on all of their posts in
order to create that same continuity that #justdoit has for Nike. That will tie in both athletic
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Adidas apparel and the Adidas Originals that include the new athleisure and casual lines.
The new #allin slogan will also add the memorable touch that #justdoit has for Nike. Adidas
also needs to show they are responding to their fans by including them in public messages
that show that Adidas is involved with their fans. Public information via social media can
attract a larger viewer base and build a positive image in the eyes of the audience. More in
sync messages with what is happening in the day to day lives of Adidas athletes will
contribute to a positive image. For example, if Lionel Messi scores his 400th goal in a UEFA
Champions League game (sponsored by Adidas) they could tweet a video showing the
goal, and congratulating him on the win. Adidas has products that can compete with best
in the market, and has the right type of style when it comes to their Adidas Original
collections. With more interaction through social media, they could get people to become
more brand loyal and create a positive brand image.
Recommendations for Promotions and Social Media
New Marketing Communication Vision
Adidas new marketing communication vision is to link the athletic side of the company with
the athleisure side. By accomplishing this, Adidas will create a sense of “family” within the
two sides of the company. Each side will be unique in their own way but at the same time
will connect to the Adidas “all in” campaign.
New Promotional and Social Media Initiatives
Adidas must continue to build the social media following by creating an incentive for
consumers to connect with them on social media. Once you create a sense of belonging for
a company, consumers become emotionally connected to the brand. One promotional
strategy would be to use the “all in” campaign with sponsored top-of-the-line athletes like
Lionel Messi. Showing Messi on the field wearing Adidas athletic gear then showing Messi
again off the field wearing athleisure, Adidas gear will give the consumers a sense of
connection with that athlete because they can wear that same athleisure wear. If Adidas
can show the consumer that they can be just like the athlete, whether on the field or off,
they will be more likely to purchase these athletic and athleisure products. In addition, the
athletic gear will be the current Adidas three-stripe logo while the athleisure Adidas gear will
be the Adidas Original throwback logo. This will create a differentiation of the two product
lines.
Social Media Engagement
Adidas will connect with the consumer by engaging with them through social media,
specifically through their hashtags. If a consumer tweets Adidas or posts about Adidas,
employees will engage with them, to either meet their needs or just simply engage with them
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in a positive manner. By engaging with fans and consumers, Adidas can build a “cult like
following” similar to what Nike has created.
Promotional Summary
Social Media Recommendations
Adidas’ new vision for marketing communication and social media is to brand everything
together with the “all in” campaign. When you have everything in your organization
branded as one image, brand recognition is at its highest level. Adidas plans to use social
media to branch out to consumers by using specific hashtags such as #allin and
#therewillbehaters along with
specific keywords to link all posts
together, again “all in,”
“greatness,” and “competitive.”
Connecting with the consumers
through social media can go a
long way in producing brand
loyalty. If you connect with the
consumer on a personal level they
are more likely to continue to be
loyal and buy new products.
Promotional Plan of Action
Adidas plans to cash in on not only continuing to dominate the soccer market, but in the
niche markets of cricket, hockey and rugby. To do this, the “all in” campaign will be used
with the athletes of these new sport lines, along with the best soccer players in the world.
Promotion will be the major marketing mix variable because that is where Adidas can
quickly gain market share in the athleisure as well athletic and footwear apparel industry.
Recommendations for Advertisements
Adidas’ promotional campaign will include the “all in” print ads, as shown below, along with
commercials to be targeting our niche markets. These TV commercials, like stated in the new
promotional incentives section, will have the athlete running off the field wearing Adidas
athletic gear, then, changing into the Adidas Original athleisure gear. This will provide
consumers with a sense of belonging to the entire brand of Adidas, no matter if they are on
or off the field. The print ads are intended to show that consumers can wear the Adidas
brand no matter if they are on the field or off. The funds for these promotions and
advertisements will come out of the marketing department and will be produced by a
professional company. Adidas must brand all of its advertisements in a similar way, using
#allin, to create overall brand loyalty among consumers.
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