Analysis of the Marketing Strategy of Adidas
Xinyu Li
1,a,*
1
University of Exeter, Stocker Rd, Exeter EX4 4PY, United Kingdom
a. xinyu952892@163.com
*corresponding author
Abstract:
A well-developed and well-executed marketing strategy is important for a
company, especially for Adidas in the highly competitive sporting goods industry. Therefore,
this essay analyzes Adidas’ marketing strategy with the help of the 4Ps marketing theory and
proposes relevant strategy optimisation. The result shows that Adidas’ current marketing
strategy focuses on incorporating sustainability to drive product innovation. This marketing
strategy is beneficial in helping the company to engage consumers and build a credible brand
image. However, this marketing strategy also faces problems with product innovation lacking
competitiveness, product quality and pricing. Therefore, Adidas could optimise both its
product strategy and its pricing strategy. Specifically, Adidas could focus on product
innovation, drive digital transformation and increase its control over suppliers in order to
expand its product strength and optimise its product strategy. At the same time, Adidas could
optimise its pricing strategy by increasing its sensitivity to changes in competitors’ prices,
consumers and market demand.
Keywords:
Adidas, marketing strategy, digital transformation, sustainability, The Marketing
Theory of 4P
1.
Introduction
Marketing strategy is one of the most important components of a business. A successful marketing
strategy will help a company to build good relationships with consumers, increase sales and gain a
competitive advantage through the identification of target markets and the right mix of marketing
channels. As one of the world’s leading manufacturers of sporting goods, Adidas became the second
largest manufacturer of sporting goods in the world after Nike in 2018 [1]. Currently, there are some
studies on Adidas’ marketing strategy through SWOT analysis, comparative analysis with its
competitor Nike, and by investigating the factors that influence consumers’ purchasing decisions. For
example, Mahdi, H. A. A., Abbas, M., Mazar, etc., in their comparative analysis of Adidas and Nike,
point out that Adidas and Nike have similar strategies but different priorities, with Adidas focusing
more on cost reduction and market expansion than Nike, which focuses on marketing and innovation
[2]. In this essay, the main focus is on the strengths and areas of improvement of Adidas’ marketing
strategy in recent years through The Marketing Theory of 4P. At the same time, optimisation is
proposed in terms of Adidas’ product strategy and pricing strategy. This study will help Adidas, its
competitors and other companies in the same industry to expand their competitive advantage and
succeed in the marketplace by driving product innovation and development in line with changing
consumer needs, while maintaining sustainable development in the digital era.
Proceedings of the 2023 International Conference on Management Research and Economic Development
DOI: 10.54254/2754-1169/23/20230346
© 2023 The Authors. This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0
(https://creativecommons.org/licenses/by/4.0/).
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2.
Background of Adidas
Adidas AG is a German sports brand founded by Adolf Dassler in 1949 and based in Herzogenaurach,
Germany, which produces sports shoes and sportswear [1]. Meanwhile, Adidas sells its products
under the Adidas and Reebok brands mainly through retail shops, department stores, franchised
distributors and online retailers [3]. Moreover, Adidas’ global operations are mainly located in
Europe, the Middle East, Africa, North America and Greater China. According to Adidas’ financial
statements for 2019 to 2021, it can be seen that although Adidas was more affected by the pandemic
in 2020, it was able to recover in 2021 and Adidas’ gross profit and revenue has been growing steadily
[4].
3.
Marketing Strategy of Adidas
Adidas is committed to “owning the game” as part of its marketing strategy to guide the company
through 2025 [5]. “Owning the Game” guides Adidas in putting the consumer at the heart of its
marketing strategy. At the same time, Adidas’ marketing strategy is not only focused on strengthening
connections with consumers, social media and partners through digital channels, but also on
enhancing the consumer experience, improving brand credibility and driving sustainable growth
through personalization and product innovation.
3.1.
Products
Firstly, the product itself is the most direct reason why customers choose a brand. At the core of
Adidas’ business has always been the design and production of products that meet the needs of our
customers and help them perform better. The proper design and innovation of the product not only
help to increase Adidas’ revenues, but also its competitiveness and brand influence among sports
brands. Meanwhile, product quality is also a direct factor affecting Adidas’ economic performance.
3.1.1.
Innovation
Innovation is the foundation that drives Adidas’ success. Product design has a greater impact on
purchasing decisions than product quality and price [6]. Adidas applies innovative thinking to all
levels of its business. To begin, Adidas’ product innovation is centered on developing advanced
performance products with core technologies to provide consumers with more comfortable,
personalized products. For example, in collaboration with its partner BASF, Adidas has developed
BOOST™, a cushioning material that creatively combines contradictory performance benefits to
enable users (especially athletes) to experience a new way of running while exercising [7]. The
innovation of BOOST™ not only enhances consumer comfort, but also provides the basis for
innovation in performance footwear in the running industry. Secondly, Adidas is committed to product
innovation to meet the changing needs and preferences of consumers. With the development of the
times, consumers and investors are placing more and more emphasis on the environmental protection
and sustainability of the company. Adidas adheres to the motto “Through sport, we have the power
to change lives” and continues to promote sustainability through innovation [5]. For example, since
2015, Adidas has been working with Parley for the Oceans to innovate to protect the marine
environment, and by the end of 2020, Adidas will have recycled and used more than 60% of its
polyester and worked with partners to develop vegetable leathers, such as the Adidas Stan Smith,
which is a vegan version [8]. All of these contribute to improving the reputation of the Adidas brand,
winning the hearts and minds of consumers and increasing the competitiveness of the brand. Thirdly,
Adidas uses digital technology to improve the customer experience and enable faster product
innovation. This includes using virtual reality (VR) solutions to enable customers to customize their
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products, and providing an online platform that allows customers to track their orders in real time.
However, Adidas’ focus on strategic product innovation also suffers from a high cost of investment
and the assumption of innovation failure. For example, the closure of the Speed Factory was a famous
case of innovation failure for Adidas, and its shutdown led to a waste of the construction and
operational costs invested by the company, which not only caused financial losses but also affected
the brand’s innovative image. Meanwhile, Adidas’ product innovation had to face fierce competition
from companies in the same industry. For example, Nike and Under Armour are both strong rivals of
Adidas. Specifically, Nike has innovated its design to improve product performance and reduce
waste, and Under Armour is constantly introducing new and advanced products [9]. However, Adidas
has not developed innovative technologies and designs that could outperform its competitors, which
is not conducive to long-term market competition.
3.1.2.
Product Quality
Adidas outsources close to 100% of its production to independent third-party production partners [3].
The most important advantages of outsourcing production include cheap overseas labour [9]. By
outsourcing production, Adidas could reduce the costs associated with production and increase
efficiency. Meanwhile, a skilled workforce in production outsourcing could facilitate Adidas’
flexibility to face market changes and improve its ability to meet customer demands. However, Adidas
has little control over product quality due to its over-reliance on third-party suppliers [3]. In addition,
if third-party manufacturers fail to meet specified quality standards, Adidas may be liable for losses
resulting from product recalls and production interruptions as a result. Furthermore, the over-reliance
on outsourcing production may increase the bargaining power of suppliers. Specifically, both supplier
defaults and strikes can lead to an incomplete supply chain for the company and affect Adidas’ normal
operations. For example, the epidemic caused the factory in Shanghai to not be able to open normally,
which led to disruptions in the supply chain and was detrimental to Adidas’ normal operations.
3.2.
Pricing
Product price can have an impact on consumers’ purchasing decisions. According to research,
Adidas’ target audience is mainly young people and athletes between the ages of 20 and 30 [6].
Compared to Nike, Adidas needles take advantage of low costs to adopt a market-predatory pricing
strategy [2]. Although Adidas’ pricing is well accepted in the market and lower than Nike’s pricing,
Adidas’ prices are high compared to other sports brands. For example, Adidas’ basic shoe models are
typically priced between £85 and £100, while Nike’s basic models are typically priced between £110
and £135. Under Armour, meanwhile, has a wider choice of prices for its products, with shoes
focusing on prices between £30 and £140. Adidas’ pricing ignores lower income consumers, which
not only leads to the loss of a segment of consumers, but also makes it easier to lose pricing
advantages to competitors. With the number of brands available to consumers, they can easily switch
between brands because of the price. Adidas also adopts a skimming pricing strategy, which means
that the value of a product decreases when it becomes obsolete. This strategy is good for relieving
inventory pressure, but the presence of high prices for new products and late price reductions may
not be conducive to higher sales of new products in the first instance. As well, it may lead to lower
satisfaction among consumers who purchased the product at its original price.
3.3.
Promoting
For a sports brand, the trademark is one of the most valuable assets it owns [10]. Adidas is commonly
referred to as “the brand with three stripes” due to its famous and recognisable brand logo [1].
Moreover, Adidas pays great attention to the protection of the brand’s trademark. Adidas regularly
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monitors products for any potential infringements and they are proactive in taking legal action against
companies that are found to be infringing their trademarks. In addition, Adidas enforces strong
protection of their trademarks in their contracts with suppliers and distributors. Adidas’ high level of
trademark protection helps to make it easier for consumers to identify the authenticity of products
and avoid the proliferation of counterfeit goods. It also helps Adidas to protect the high recognition
of their brand and to maintain the value of their trademark. However, Adidas’ use of litigation to
protect its trademarks may not be popular. Specifically, it could easily be perceived as trademark
bullying, which is detrimental to Adidas’ brand image within the sports industry. Moreover,
protecting the intellectual property rights of trademarks is costly and Adidas needs to invest a
significant amount of capital and labour each year to protect and prevent infringement of its
trademarks.
Advertising as a promotional tool is also an important marketing strategy for Adidas. Packaging
could be considered a type of advertising. According to research, Adidas’ interesting packaging is
more appealing to consumers than Nike’s [11]. Moreover, Adidas incorporates strong slogans into its
advertising to help motivate consumers to shop and increase their liking for the brand. However,
Adidas is not as successful as Nike in terms of advertising. Firstly, consumers are not as receptive to
Adidas’ slogans as they are to Nike’s [11]. Furthermore, compared to Nike, which has exclusive
contracts with famous athletes (such as Michael Jordan), Adidas has not chosen to invest in getting
spokespeople to endorse its products [2]. While this has helped Adidas to reduce costs and invest
money in improving product performance, it has resulted in a less relatable, smaller and less
recognisable advertising campaign than that of competitor Nike.
The collaboration between Adidas and celebrities is also one of the promotion tools. Firstly, by
collaborating with celebrities, Adidas could leverage the celebrity effect to increase the exposure of
the brand and increase the sales of related products. For example, Adidas collaborated with artist
KANYE WEST to launch the Yeezy line, which directly created a global consumer wave and became
a sought-after and high-volume product line. However, collaborations between Adidas and celebrities
may also be influenced by the partner’s own image.
4.
Optimisation and Improvement
Overall, Adidas has now established a credible sports brand image. There is a large potential market
for Adidas as people pursue a green lifestyle and the demand for sports goods increases. However,
Adidas also faces serious competition from rivals Nike and Under Armour. Therefore, Adidas can
optimize both its product strategy and pricing strategy to drive the company’s growth and capture
more market share.
4.1.
Product Strategy Optimisation
Firstly, Adidas should focus on developing new and innovative products to meet the needs and
preferences of their customers, which will help them stay ahead of the competitive market. As
environmental awareness grows, Adidas could continue to focus on innovation in sustainable
materials, which would help to attract potential consumers who are environmentally conscious and
enhance the brand image. It is also important to innovate on product types. Adidas’ main product
focus is on football, so Adidas could add sporting goods for basketball, baseball and other sports to
its product innovation.
Secondly, Adidas could extend its differentiation advantage by focusing on product
personalisation while driving digital transformation. Adidas could do this by investing in modern
technology development, such as artificial intelligence and big data analytics. This will not only help
to drive Adidas’ digital transformation, but also to improve the customer experience. Specifically,
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customers could increase their interaction with the brand by trying it on online through a programme
provided by Adidas. For example, the Adidas app is currently only available on iOS, so Adidas can
accelerate its efforts to make the app available on other systems to better serve consumers.
Meanwhile, Adidas could take advantage of data to better understand customer preferences and
behaviours and create personalised experiences for customers. In addition, Adidas could expand its
use of digital channels. Adidas can use social media to interact with customers, increase brand affinity
and improve brand loyalty. For example, Adidas could launch a poll on INS to select the most popular
athlete among consumers to be the brand’s spokesperson.
Thirdly, it is also important for Adidas to improve control over its suppliers. To start with, Adidas
could increase competition by increasing the number of suppliers and distributors. In studies, it has
been found that when competition between suppliers or distributors is increased, the total supply
increases [12]. Also, increased competition among suppliers helps to reduce production prices and
costs and improve product quality. In addition, efforts to maintain symmetry between suppliers and
distributors also contribute to the efficiency of the supply chain [12]. Furthermore, Adidas could
enhance the regulation of its suppliers. Specifically, Adidas could randomly send different employees
to inspect the production status of suppliers.
4.2.
Pricing Strategy Optimisation
The optimisation of pricing strategies could help Adidas to better stimulate customers’ purchasing
decisions. Firstly, Adidas could pay attention to the product prices of competitors such as Nike and
compare them. Secondly, Adidas could use big data to analyse the consumer behaviour of its target
customers and set prices that are attractive to its target market. Simultaneously, Adidas should
monitor price trends in its industry to stay aware of market changes. In addition, Adidas could offer
discounts and promotional offers to drive sales based on customer and market changes. At the same
time, Adidas could improve the disadvantage of skimming priced products by extending the time to
reduce the price of new products. Meanwhile, Adidas can choose product price reductions according
to product cycles and product characteristics, and implement flexible pricing. In addition, for some
classic models, Adidas can reduce the frequency of discounting.
5.
Conclusion
Overall, Adidas’ marketing strategy is analyzed in terms of product, price, and promotion, and it can
be seen that Adidas has established a mature and credible image as a sports brand. Some suggestions
are also made for optimizing the future development of Adidas in a climate where environmental
protection is valued. Adidas’ current marketing strategy focuses on incorporating sustainability to
drive product innovation, focusing on a younger consumer segment in the middle and upper tiers, and
protecting its brand image. This marketing strategy is beneficial in helping the company engage
consumers and build a credible brand image. However, this marketing strategy also faces problems
with product innovation lacking competitiveness, product quality, and pricing. Therefore, Adidas
could optimize both its product strategy and its pricing strategy. Specifically, Adidas could focus on
product innovation, drive digital transformation, and increase its control over suppliers to expand its
product strength and optimize its product strategy. At the same time, Adidas could optimize its pricing
strategy by increasing its sensitivity to changes in competitors’ prices, consumers’ preferences, and
market demand. Overall, Adidas could maintain and expand its competitive advantage by improving
its product competitiveness and while adhering to the premise of sustainable development. In the new
digital age, Adidas’ adherence to sustainability and digital transformation will help the company
remain competitive and successful in the highly competitive market of the future. These
recommendations may not be new to Adidas and other competitors in the sports industry.
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Furthermore, this paper lacks an analysis of Adidas’ distribution strategy and global development,
which is an area it will concentrate on in the future.
Acknowledgement
I wish to express my sincere gratitude to the teachers and professors who provided me with valuable
guidance and feedback throughout the research and writing of this thesis. In addition, I would like to
thank my friends and family for their encouragement and emotional support. Their unwavering faith
and constant motivation have been an indispensable source of strength throughout my journey.
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