Discuss about the Strategic Management and Marketing Segmentation.
Marketing is one of the vital and necessary aspect of the business. To ensure the profitability in the m market through the successful selling of the products to the consumers the marketing is considered to be the key tool. Marketing can be defined as the management process which conceptualizes the transfers of the products and services to the customers. The marketing of any product is necessary for sustaining the products in the market in terms of acceptancy of the same by the consumers. In addition, the marketing helps the company to understand the target market along with the demand trends of the consumers. Therefore, marketing activities are considered to be the primary tools of the business. On the other hand, the marketing includes various activities from the market research to the promotion of the products. It needs to be mentioned that the marketing of the products and service is based on the strategies which enables the company to ensure the effective establishment of the products as well as the brand for successful business activities. The following report is concerned with the marketing plan of Adidas in the target as well as global market. Along with this, the following report also discusses the market research of the sportswear industry in terms of identifying the position of Adidas in the international market. Therefore, the structure of the report includes the complete company information with the necessary information for the marketing activities of the same in the competitive market.
The marketing objective of Adidas is that it is a global brand in the industry of sports good wherein the strategic objective is to increase the share of market as to be the leader of the market. On the other hand, the financial objective of Adidas is to decrease the cost by 10% and improving the sustainability of the performance of the entire company as this will increase the net income annually by 15% (Guo et al., 2013). The basic objectives of Adidas are:
The goal of Adidas Company is to create a supply chain that will be flexible in nature and this will help them in maximizing the operational as well as financial performance of the company. Proper identification of the marketing goals of Adidas along with the set of objectives of marketing of Adidas is as follows:
The market size of Adidas is the largest manufacturer of sportswear in Europe as well as the second largest in the entire world. The employment level of Adidas is approximately 60000 employees worldwide in the year 2016. The net sales of the entire Adidas group are amounted to 20 billion Euros in the year 2016 as well. The size of the market of Adidas is more than 25 billion Euros whereas the total market size of the sports industry is 90.9 billion Euros and the rate of growth in the market of Adidas is 15% (Mahdi et al., 2015).
The market growth for sports and fitness industry is expected to reach US$231.7 billion by the end of 2024 as estimated by Global Industry Analysts. This growth can be attributed to the change of perception of a large segment of the population. The people are now living a healthier life style with increased participation in sports and fitness activities. It is assumed in the report that the Asia-Pacific region will reflect the fastest growth in the international market with a CAGR of 6.9% over the above stated period. The 2016 report reflects a registered growth of 10% and 6% respectively in the sports inspired footwear and apparel. However, the performance sportswear holds the top position in the industry in terms of market size with a market value of US$78 billion in 2016 (businessinsider.com (2017).
In the year 2016, Adidas has improved the desirability of the brands as well as different products around the globe. As a result of this, Adidas has been able to increase the revenues strongly and this helped them in achieving net income that is more than I billion Euro for the first time in the entire history. The developments and the sales performance in the financial year of 2016 are as follows:
Considering the fact of performance of the sportswear industry in the global market it is found that the Adidas is leading in the second position in the fiscal year 2017. The total brad value of the company is 7.9 billion U.S Dollars whereas Nike is leading the industry with 29.6 billion U.S Dollar brand value in the global market (Appendix 4). The awareness within the people regarding the sportswear is increasing gradually, which is leading the sportswear industry to expand the market in the global context. For example, the brand Nike has been showing remarkable growth in its sales and business as the leading company of the sportswear industry. On the other hand, Adidas is lacking the strategic growth unlike Nike.
The trend of sales of Adidas has increased in the last few years specially in the year 2014 and the sales has reached a limit of more than 19 billion Euro that is a huge hike in the year 2015 and 2016 wherein in comparison to the other brands, Adidas has stood first and in regards with the category of the different products namely apparel, footwear as well as hardware, Adidas has scored the highest as well (Venter, Wright & Dibb, 2015). There has been huge increase in the number of employees as well in Adidas as the employees in the year 2012 was 46,306 but in the year 2016 there has been huge rise in the number of employees to 60,617 employees (Turner, 2015).
Adidas has been able to create proper competitive advantage in the competitive market and they have been able to create a proper brand image in the minds of the target customers as well. The social trend that has been created by Adidas has gained lot more publicity than other brands such as Nike and Puma. Adidas basically focuses on the trends of the customers that is followed by them as this helps them in creating proper value of their brand.
The segmentation of the demographics helps in dividing the entire market into the basis of the group that is based on different variables like age as well as sex. Adidas has branded male range along with the clothing of female, shoes, body care along with eye care as well. The originals, performance and style help in providing different products for the particular segment. The psychographic segmentation helped Adidas into dividing the entire market into different groups that are based on social life as well as the characteristics of personality.
Adidas generally focuses on the social class of individuals as the people within the social class have same kind of pattern of behavior. Adidas uses the strategies of user as well as benefit based strategies that will help in creating distinctive image in the minds of the customers. By properly providing value to the product quality Adidas is being able to maintain proper essence of the brand over the customers who are the target customer of Adidas (Baker & Saren, 2016).
The main audiences who are the target audiences of Adidas is of the age of around 15-30 years old who are involved in any kind of discipline of sports. Adidas is one of the leading brands who prepare high quality and high end products for different sports and this will help in making the audiences’ interest about the different sports products at an affordable rate (Rudolph, 2016). Along with the audiences, there is smaller audience those who are not into sports but they shop in Adidas due to the logo and the brand name of Adidas and they purchase such shoes for the fashion statement as well. These are the individuals who are between the age group of 17-25 years of age both males and females of the middle class families. The target audiences of Adidas is more than Nike as the varieties of clothing along with accessories are more than in Nike and this attracts large group of individuals as well (Murti & Sugiarto, 2014).
The targeted group of Adidas come from upper middle class, middle class as well as the upper class family wherein the monthly income of the individuals should be more than 20,000 at least and the target audiences are the youngsters as well as the middle aged individuals who wear such Adidas shoes or other clothes for brand image and the big logo of Adidas as well.
A proper mixture of the different plans as well as ideas that is followed by the representative of marketing as this will help Adidas in promoting proper brand or product that is defined as the marketing mix. The proper analysis of the marketing mix of Adidas helps in elaborating the different pricing, distribution as well as the advertising strategies of the products and services that has been used by the respective company (Robusti, 2017). Adidas has to properly analyze the different issues or the threats along with opportunities of the company as this will help the respective company in satisfying the demands of the customers along with providing them proper services in the future as well (Cordón, Leleux & Lennox, 2017). There are different elements of the marketing mix of Adidas that are described as follows:
There are different competitors of Adidas that are Nike, Puma, Fila, Umbro wherein Adidas is the first largest competitor in the sporting brands companies and this will help them in maintaining proper establishment of the strong brand for the different apparels for the sports. The brand ambassadors of Adidas are ore in comparison with the other brands in the competitive market and this helps in becoming the leading companies in the whole world.
The financial plan as per Adidas annual report 2015 seeks to increase the sales development at a stable rate between 10% – 12%. The expected capital expenditure for the year 2016 is to be around €750 million. The figure 5 reflects the complete finance plan for 2016 (adidas-group.com, 2017b).
The 2015 annual report in the figure 6 reflects successful outcome of the implementation of financial plan. Their gross capital expenditure was below the expected margin. Moreover, they successfully decreased their gross bowworing by 12%.
The success in finance plan for the year 2016 can be attributed various implementation process that was previously introduced in 2015. They continued the already implemented strategies along with some of the new ones. Implementation of the modified corporate governance regulations of the code helped them better monitoring the organizational performance. The second attribute can be given to the executive board for successful implementation of the management, determining group’s strategic orientation and agree with the supervisory board. They further implemented the law of equality for the participation of women and men in leadership that potentially increased the employee performance by motivating the female employees in the organization. They sold their Mitchell & Ness brand and are planning to sell the golf brands TaylorMade, Adams Golf and Ashworth. These two were major strategic decision made by Adidas allowed the company to center its focus even more strongly on the core competencies in the areas of footwear and apparel. This helped them in achieving their target ofr the year 016. Moreover, Kasper Rorsted was assigned as the Chief Executive Officer of Adidas, which ensured the transition at the helm of the company to be as smooth as possible. It further ensured the position of the company for the financial year of 2016 and many more years to come. The success of the financial success for 2016 can also be attributed to the partners of Adidas in the world of sports and the consistent customers (adidas-group.com, 2017a).
Conclusion
Therefore, it can be inferred that Adidas is one of the leading markets in the entire competitive market wherein there are major players such as Nike, Fila, Puma and Umbro. The share of the market of Adidas is the highest in the entire market and the sales has increased to a great extent of about 9% and the revenues has increased to 17% in the first quarter for a record of 4.1 billion Euro. There has been a different kind of innovations that has been made by Adidas wherein the other competitors do not have such innovative strategies and this has created a huge impact on the entire customers’ base as well as the competitors. From the market analysis along with the market goals as well as strategies, it can be concluded that Adidas is tailored for the trendy, comfortable as well as active lifestyle of the adults as well as teenagers that are conclusive in nature.
Lastly, it can concluded that Adidas can strengthen the presence in the entire target group through social networking sites as well as through other online mediums as this will help them in gaining strong customer base in the near future.
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