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					Brand Management Assignment




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Brand Management Assignment




                                Executive Summary
‘Brand Management’ has emerged as an important area of research in the recent past
decades. This Report has been prepared for the brand Adidas. Adidas has been taken up
because it is a globally established brand and therefore, has several areas of brand
management that can be explored. The research on the brand has been carried out through
literature review and by studying the official web site of Adidas- www.adidas.com.

Adidas was started in 1920 by Adi Dassler because of his passion for sports and shoemaking
and with three guiding principles in mind - to produce the best shoe to serve the needs of
sport, to protect the athlete from injury and to make the product durable. With profits and
with more family members joining in, the company expanded in the next decade.

Adidas has streamed into three divisions- Performance, Style and Originals. With these
divisions, Adidas diversified into fashion and style for the general public. Adidas, as a brand,
is quite popular especially among sports persons/ athletes. It boasts of an attractive
consumer value proposition. The tangible and intangible resources of the company are
integrated with the brand in terms of brand image and reputation.

Adidas has a strong brand image in the terms that it is recognised as a company that
provides durable and sporty products. The three stripes logo of Adidas is well recognised
and the consistency in the use of this logo has created a strong association of three stripes
with Adidas. The clothing and accessories of Adidas are not so popular in the general public
as its footwear. This is because the brand image is mainly related to footwear, especially
sports footwear.

Therefore, it is recommended that the company explore new vistas and expand into the
wider market that is available to it right now. The present profits of Adidas have increased in
the past one year by around 8%. With further development of the company’s marketing
strategy and business plans Adidas can grow to be the largest brand in the market, not only
the sports market but also the general market of footwear, clothing and accessories.

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Brand Management Assignment




                                       Introduction
A brand is usually linked to the identity of a product and its differentiation from
competitors. Because of the growing importance of brand, ‘brand management’ has
emerged as an important area of research. Brand management is a relatively new
phenomenon. Since the 1980s, researchers and practitioners have been exploring the
domain, nature and potential of brand. Heding, Knudtzen & Bjerre (2009) list seven
approaches to branding-

  i.    The economic approach
  ii.   The identity approach
 iii.   The consumer-based approach
 iv.    The personality approach
  v.    The relational approach
 vi.    The community approach
vii.    The cultural approach

These brand approaches are neither mutually discreet nor mutually comprehensive; but
brands usually involve more than one of these approaches.

Adidas is the brand for which this report has been prepared. Adidas has been taken up
because it is a globally established brand and therefore, has several areas of brand
management that can be explored. Investigating brand management and making
suggestions requires a study of various factors/ elements like brand identity, endorsements,
target market, brand value, product range etc. Adidas has a long history of evolution and
hence, its brand and brand image can be seen growing and adapting with times. From a
small unit of production, Adidas is today a name known by one and all. Everybody can
identify the three stripes as the official logo of Adidas.

The research on the brand has been carried out through literature review and by studying
the official web site of Adidas- www.adidas.com. The report has thus been formulated
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Brand Management Assignment



based on both primary and secondary research. Recommendations have been
made in the last part of the Report.


                                       Brief History
(Source: http://www.adidas.com/in/shared/aboutadidas.asp)

Adidas is a very well known brand name worldwide. It was an initiative by Adi Dassler (from
whom the company gets its name) in the 1920s. Adi Dassler started Adidas because of his
passion for sports and shoemaking and with three guiding principles in mind - to produce
the best shoe to serve the needs of sport, to protect the athlete from injury and to make the
product durable. He started with no machinery and no electricity and manufactured a few
handmade leather shoes with the help of two hired shoemakers. Gradually with profits and
with more family members joining in, the company expanded in the next decade. It was Adi
Dassler’s innovative and thoughtful designs that persuaded people to join his team and
customers to buy Adidas shoes. In 1928, Adidas spikes shoes made their Olympic debut.
Olympic success in 1930 fuelled the company further.

By 1935, majority of German athletes were donning Adidas shoes. With more success at
Olympics, Adi collaborated with the Olympics Committee for designing shoes in 1937. It was
actually in 1943 that the company name Adidas came into being, after Adi’s brither split
with him and developed Puma (before that, they were together known as Dassler shoes). In
1949, the three stripes were officially registered as the Adidas logo. In 1954, a total of
450,000 pairs of shoes were produced. From mid 1960s, Adidas diversified into sports
clothing and balls. Sports items further developed with the manufacture of tennis rackets
and other sports equipments in the 1970s. In 1980, Adidas became a corporation but
retained its family ownership.

In 1995, Adidas went public by starting to manufacture for the general market. 1998 FIFA

World Cup was sponsored by Adidas. The year 2001 saw the record breaking sales of 6.1




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Brand Management Assignment



billion pounds for Adidas. In 2006, Adidas expanded by acquiring Reebok

International. Adidas is still making innovations and growing with each passing year.




                                 ADIDAS as a Brand
Brand has three basic components (McDonald, 2007)-

  i.    Brand Strategy- It stems from the position of the brand in the portfolio of the
        organization.
 ii.    Brand Positioning- It is concerned with what the brand actually does and with what it
        competes.
 iii.   Brand Personality- It is a useful descriptor of the perception that consumers have
        about the brand.

Adidas is known as the largest and the most popular company for sportswear and
accessories. Adidas started as a sports footwear company and went on to make associations
even with the Olympics Committee. With time, it has also expanded for the general public,
but the principle remains the same- providing comfortable and durable products. The
designs of Adidas are always innovative; they are still reflective of Adi Dassler’s thoughtful
designing. From footwear, Adidas has diversified into sports equipment, clothing and other
accessories.

Adidas has managed some high profile endorsements and associations. David Beckham,
Andre Agassi and Michael Ballack are some of the many celebrity sportspersons who are
promoting Adidas. Adidas has tried to balance street credibility with sports performance by
developing three streams (Haig, 2004)-

  i.    Sport Performance- Focuses on functionality and innovation
 ii.    Sport Heritage- Range of Adidas originals



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Brand Management Assignment



 iii.    Sport Style- For the fashion conscious consumers, produced with
         fashion designer Yohji Yamamoto

Sport Performance division still accounts for 70% of overall sales while Sports Heritage and
Sport Style account for 25% and 5% respectively.

So, Adidas is a brand that is looking both forward and backward.


                                       Brand Value
A brand is also a value creating resource for a firm. Creating value for a brand requires four
factors (Marr, 2005)-

  i.     An attractive consumer value proposition
 ii.     Integration of the brand with the firm’s other tangible and intangible resources
 iii.    Market economics permitting returns over the capital
 iv.     Brand strategies related to value creation

For luxury goods, brand accounts for 70% importance according to sales/ resource creation
in firms. Adidas can also come under luxury products; therefore, the importance or value of
brand for Adidas is quite high. Adidas, as a brand, is quite popular especially among sports
persons/ athletes. It boasts of an attractive consumer value proposition. The tangible and
intangible resources of the company are integrated with the brand in terms of brand image
and reputation.

Total assets of Adidas in 2008 were worth € 9533 million. The net sales for Adidas at the end
of 2008 were € 10799 million and gross profit was worth € 5256 million (Source:
http://adidas-group.corporate-
publications.com/2008/gb/en/konzernabschluss/consolidated-income-sheet.html). As has
already been discussed the three divisions of Adidas- Sport Performance, Sport Heritage and
Sport Style- account for 70%, 25% and 5% of the total sales respectively. Adidas has
witnessed a continuous rise in its profits throughout the years and is still in its growing
phase.

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Brand Management Assignment



These figures are demonstrators of the market economy’s capacity to produce
returns on investment or assets. Further, the value of brand is also determined. As pointed
out, brand is very important for Adidas and therefore, its value is quite high. The logo,
image, reputation and perception all add to the brand value. There are certain qualities
associated with the brand Adidas and they accentuate the brand value.




                                     Target Market
Target market refers to that section of the market which the company has in mind while
developing the product and the market strategy and which the company believes will form
the majority of its customers. Marketing plans are formulated according to the target
market, taking into account their demographics, demands and specific needs. The brand
also integrates the target market and the market strategies. Managers understand brand
equity in terms of the target market (Elliott & Percy, 2007). Brand claims are established
strongly in the customers’ minds for each specific product, but the perceptions may vary
according to variation in different segments of the market.

Adidas, as has already been described, started as a company manufacturing footwear for
athletes/ sportspersons. Then it expanded to sports equipment and sports clothing. With
time and increasing popularity of Adidas, it has also opened up to the general public. The
three divisions of Adidas have therefore, developed as- Performance, Originals and Style.
The Performance division catering to sportspersons still accounts for the largest portion of
sales- 70%.

So, the main target market of Adidas is sportspersons/ athletes/ sports teams. But with its
diversification, Adidas is also targeting the young ‘sporty’ or ‘adventurous’ market.




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Brand Management Assignment




                                   Product Range
Adidas was started as a shoe making unit in 1920 but grew to marketing a large number of
products like sports equipment, clothing, accessories etc. At first, all the manufacture was
meant for sportspersons/ athletes. However, with growing popular demand, Adidas went
public and began marketing products for the general market, especially the young segment.
For smooth functionality and convenience, Adidas has divided itself into- Performance,
Originals and Style (these divisions have already been discussed).

The official website of Adidas, segments its products into Men and Women. These are then
further diversified as footwear, clothing and accessories. The products meant for sports are
divided as football, tennis, swimming, basketball, running equipments. Accessories include
eyewear, watches, bands etc.




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Brand Management Assignment




                                       Brand Image
Brand Image refers to the cumulative impact of all the associations with a particular brand
(Mullin, Hardy & Sutton, 2007). For success, the key is to make these associations strong and
profitable. Some examples of sources of brand associations are owners, logo, specific
products, endorsements, publicity etc. The companies that are well known with established
brands are the companies that have managed to build up a strong brand image that forms
associations specific only to them. Thus, companies should try to develop brand image
based on their unique features.

Adidas has a strong brand image in the terms that it is recognised as a company that
provides durable and sporty products. The three stripes logo of Adidas is well recognised
and the consistency in the use of this logo has created a strong association of three stripes
with Adidas. The clothing and accessories of Adidas are not so popular in the general public
as its footwear. This is because the brand image is mainly related to footwear, especially
sports footwear. The wallpapers given below present the brand image as ‘strong’, ‘durable’
and ‘sporty’.




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Brand Management Assignment




                                                 Identity Elements- Colour and
                                           Logos
Brand Image consists of the following components (refer to figure)-




                         Source: http://www.modernmind.com/brand.htm

Adidas is basically in black and white colours and has a simple logo which has a deeper
meaning. The logo of Adidas came into being after three stripes were used on the designs of
many shoes manufactured by the company. It was in 1948 that the three stripes were
officially registered as the Adidas logo. The basic Adidas logo, to this day, comprises of just
three slanting stripes and the brand name. However, as Adidas expanded into three
divisions- Performance, Originals and Style, it developed new logos and experimented with
different colours. The original logo was reserved for the performance division as
performance and functionality were the original goals of Adidas products. A light blue flower
logo was designed for original Adidas products and a grey ball for Adidas Style. However,



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Brand Management Assignment



care was taken to incorporate the original three stripes in all of these logos. It is
this consistent use of three stripes that has maintained a strong brand identity for Adidas.




    Adidas Performance               Adidas Originals                          Adidas Style




                                      ADIDAS’ Style
As has already been discussed, Adidas started manufacturing shoes for sports persons/
athletes, but diversified for the general public on popular demand and also started
marketing clothing and accessories apart from footwear. Adidas enjoys a ‘cool image’
among the general public and is viewed as a brand that guarantees comfort and durability.
Adidas keeps ahead because of its determination and innovation. The products of Adidas
are uniquely styled and earn winning points for the brand. Adi Dassler was the first to come
up with ideas like fitting shoe soles with studs, spikes etc to deliver better performance, his
tradition is still being followed in the company.

Adidas has been sponsoring major sports events like the FIFA World Cup. Apart from that,
the company has also signed up agreements with sports teams for providing footwear,
clothing and accessories. Many games use Adidas equipments. Also, popular and famous
celebrity sports people like David Beckham, Andre Agassi have also signed contracts with
Adidas.
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                         Big Five by Jennifer Aaker
 Brand personality and values can be defined with the help of Big Five by Jennifer Aaker
 (1997). These big five are- sincerity, excitement, competence, sophistication, ruggedness.

 Adidas can be evaluated in these terms. Adidas has been sincere in its approach of providing
 comfortable, useful and durable products. With innovation and diversification, the company
 has added to the excitement quotient. It has a competitive edge over other brands in the
 market because it is unique in its designs and its products are high in terms of quality.
 Sophistication is expressed through the careful and classy designs of Adidas. Ruggedness is
 inevitable associated with Adidas because of its sporty and durable image.

             Brand Personality                                       ADIDAS
Sincerity                                         Comfortable, useful and durable products
Excitement                                        Innovation and diversification
Competence                                        Uniqueness and quality
Sophistication                                    Careful and classy designs
Ruggedness                                        Sporty and durable image

                                  Brand Endorsements
 Since Adidas has penetrated into the general market, publicity and endorsements have
 become quite significant. Fortunately, Adidas does not need to struggle for endorsements.
 Having already sponsored major sports events, big sports teams and famous athletes; spots
 celebrities are easily ready to form associations with the company. Adidas has endorsers
 from all main sports. Football has always been its biggest marketing space. Football players
 like David Beckham, Zinedine Zadan, Michael Ballack etc have signed agreements with
 Adidas. Andre Agassi is another big name. An advertisement with David Beckham is given
 below.




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Apart from sports personalities, Adidas has also developed alliances with fashion designers
like Stella McCartney and Yohji Yamamoto.




                                Brand Effectiveness
Brand seeks to create an emotional band with the customers and to create strong and
positive associations. Branding strategy is very significant because it targets the market
segment that the products are created for and promotes sales. The figure given below
demonstrates the intentions of an organization and their application. The brand can be
called the voice of the organization.




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 Brand Management Assignment




                            Source: http://www.modernmind.com/brand.htm

 A simple method to measure the brand effectives is what is called the 4 Ds method. The
 four Ds stand for-

   i.    Distinctiveness- The brand and brand communication should be very distinct as
         compared to other visual and audio communications.
   ii.   Differentiation- The offer made should be more attractive than all other
         competitors.
  iii.   Defendable- The brand should have proprietary strength to avoid approximations.
  iv.    Digitable- Electronic communications have become very important and should be
         implemented properly.

             Brand Effectiveness                                       ADIDAS
Distinctiveness                                    Use of specific logo and promotions through
                                                   celebrities
Differentiation                                    Comfort and durability of all products,
                                                   especially meant for sports
Defendable                                         Particular quality
Digitable                                          Well developed web site offering e-shopping
                                                   and comprehensive catalogues



                                     Brand Personality
 Brand personality is developed to enhance the appeal of a brand to consumers (Gelder,
 2003). The brand personality is constructed by the brand’s underlying character or the
 transmission of imagery to the consumer. Brand personality is actually the impression that
 customers have about the brand. Thus, brand personality may vary from region to region,


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Brand Management Assignment



person to person and time to time. However, it is largely controlled by
companies in order to promote positive personality to market the products.

Adidas has a strong brand personality which is described in the figure below-




Sports is the first association that customers usually make with Adidas. Adidas products are
known to be very durable (having been manufactured for athletes). Also, they have
innovative designs for comfortable use which other competitors do not offer strongly. These
factors together comprise the brand personality of Adidas. However, there may be other
aspects that may develop with time and with the differentiation and different publicity/
promotion of Adidas products.




                          Strengths and Weaknesses
Adidas is a strong brand in the market. However, it is not without its flaws. Though the
development of Adidas is indeed inspirational, there have been hiccups on the way. The
new diversification and expansion that Adidas has undertaken may also pose as speed
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Brand Management Assignment



breakers on the way. Therefore, an analysis of the strengths and weaknesses of
the brand is necessary.

Strengths

    Adidas is a globally known brand name.
    Adidas is popular for sports footwear, clothing and accessories.
    Adidas is the biggest brand in the sport market, especially so because it enjoys long
       term relations with the Olympics, FIFA World Cup etc.
    Adidas is known for its innovative and functional designs.
    The electronic communication of Adidas is well developed. Its website is also user
       friendly and promotes business.

Weaknesses

    Adidas is usually known as a sports brand. It has not yet made its way to the general
       public in a massive way.
    Product differentiation causes narrowing down of the market.
    Fashion segment of the brand is largely missing or obscure. The designs are all
       mainly meant for functionality.
    The publicity/ promotion also stresses on the sports aspect of the company, thus
       neglecting all other areas. Its competitors are, on the other hand, diversifying into
       many other segments.




                                    Building a Brand
Professor David Jobber identifies seven main factors in building successful brands, as
illustrated in the diagram below:

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Brand Management Assignment




             (Source: http://tutor2u.net/business/marketing/brands_building_brands.asp)


There may be several stages associated with brand building (Elliot & Percy, 2007). They are
illustrated in the diagram below-




As pointed out, trust is the underlying factor for all stages of brand development. A
customer should feel cared for and it is the customer’s need that should be taken into
consideration to build up this trust. Brand awareness mainly depends upon the promotion
and through differentiation and quality, a brand manages to create an emotional bond with
the customers which makes the demand for the product rise and be maintained.




                                 Company’s Situation


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Adidas has been surging forward with diversification and expansion. However,
it still has a lot of potential to succeed in the given environment. The gross profits of Adidas
in 2008 marked a change of 7.7% over its gross profits in 2007 (sales increased by 4.9% from
2007 to 2008) (Source: Consolidated Balance Sheet, www.adidas.com). Adidas is still trying
to grab hold of the market segments where it has not reached till now, like the fashion
industry. Therefore, it needs to implement newer policies and promotion strategies.


                                 Recommendations
Adidas is a reputed brand in the sports world and broadly speaking, does not have any
competitors to match its strength. The company began as a small shoe making unit for
sports persons and athletes. But with growth of demand in the market, Adidas opened up to
general public. Obviously, the public is not just concerned with sports equipments and
accessories. Hence, Adidas has tried to penetrate the market of fashion and style as well.
However, the brand is still not known as a fashion brand and people largely associate it with
sports and durability, not fashion and style.

Therefore, Adidas must try to incorporate its new business strategies with its brand as well.
This would imply a change in promotion strategies, advertisements, nature of products,
distribution channels etc. The advertisements of Adidas feature sports celebrities and
various sporting events. There should be a shift towards more fashion oriented
advertisements. Also, Adidas can try to widen its market by designing products for older age
segments and those not interested in sports. This will result in further development of the
clothing and accessories departments of Adidas.

Adidas has always been an innovative and strong; a little push in different areas will help it
expand further and beat all other competitors.




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                                List of References
   1) About Us, Consolidated Balance Sheet, Consolidated Income Sheet. Retrieved on 26th
      May 2009 from www.adidas.com.
   2) Brand Image. Retrieved on 26th May 2009 from www.modernmind.com.
   3) Building a Brand. Retrieved on 26th May 2009 from www.tutor2u.net.
   4) Elliott, R. & Percy, L. 2007. Strategic brand management. Oxford University Press,
      Oxford.
   5) Gelder, S.V. 2003. Global Brand Strategy: Unlocking Brand Potential Across
      Countries, Cultures & Markets. Kogan Page Publishers, New York.
   6) Haig, M. 2004. Brand royalty: how the world's top 100 brands thrive and survive.
      Kogan Page Publishers, New York.
   7) Heding, T., Knudtzen, C.F. & Bjerre, M. 2009. Brand Management: Theory and
      Practice. Taylor & Francis, London.

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   8) Marr, B. 2005. Perspectives on intellectual capital. Butterworth-
      Heinemann, London.
   9) McDonald, M. 2007. Marketing plans: how to prepare them, how to use them.
      Butterworth-Heinemann, London.
   10) Mullin, B.J., Hardy, S. & Sutton, W.A. 2007. Sport marketing. Human Kinetics, New
      York.




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Description: brand is an identity