Adidas Report

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Effectiveness & Marketing

Communication of Adidas

Abstract This thesis discusses how adidas differentiate their communication to reach women and men make the adidas brand more appealing. The adidas brand has always had their main focus on sportswear for men. This has led to the brand being perceived as masculine and it makes it hard for the female consumer to identify with adidas. We have analyzed six adidas adverts from the last five years to see what adidas have communicated to women. The main purpose of this thesis is to understand which branded sport shoes is mostly preferred by people as per their choices in what means. The theoretical chapter is divided into three parts; Brands, Communication and Consumer Behavior. The first part describes what a brand is, how it is built and continues with how a brand can be gendered. A brand is not very likely to keep a strong position if the values connected with the brand are not reinforced through communication. When forming a communication strategy, companies have to understand how consumers behave. When selling a gendered product, companies have to understand the distinction between men and women and how they differ in consumption. Our discussion is based on the qualitative method of collecting data. The qualitative method was carried out through two panel interviews and one personal interview, and we also performed picture analysis on adidas advertisements. Ten open-individual interviews with ten different peoples were conducted to get their opinions on the six adverts. Adidas have presented five different identities over five years, each with diverse focus and with different brand associations. This has led to flexibility in market and therein lays a part of the reason how adidas have been successful in appealing message of brand recognition. Since 2005 adidas have collaboration with Stella McCartney. This is an attempt to add design to adidas functional clothes and to make their brand more appealing. This collaboration will continue until 2010 and this could provide adidas with the uniformity they need.

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Acknowledgement The preparation of Thesis on the topic “Advertisement Effectiveness and Marketing Communication of Adidas” would not have been possible without the valuable contribution of institution of ‘IIPM’. I would like to thank Mr. Rahul Chandra Pal, Chief Executive Officer of Neem Tree Productions and his staff for valuable assistance and with whom all the initials was conceptualized. I would also like to thank all the teachers who worked closely with me and compiled all the information and corrected several times over, so as to incorporate the latest data. My special thanks also to Prof. Alpi Jain (Faculty - Marketing) who ably assisted us in consolidating the several changes that the project underwent in spite of critical deadlines. Thanks again, Sincerely, Rakesh Ramkumar Ram Registration Id No.- DF/08/10-M-138 PGP/FW- 2008/10

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1.1



INTRODUCTION

Adidas is a German sports apparel manufacturer, part of the Adidas-Salomon Corporation. Adidas was named after its founder, Adolph ( Adi ) Das sler , who started producing shoes in the 1920s in Herzogenaurach near Nuremberg with the help of his fellow friend Cody. It registered as Adidas AG on 18 August 1949. The company's clothing and shoe designs typically include three parallel stripes of the same color, and the same motive is incorporated into Adidas' official logos. In 1989 Adidas entered India, license agreement with Bata. In 1996 a joint venture with Magnum International Trading Company Ltd. took place. In 1998 Sachin Tendulkar became a brand ambassador for Adidas; In 1999 Adidas introduced the cheapest range of shoes they had ever sold. In 2001 the first televised advertisement for India: Paes & Sachin were endorsing. In 2004 an advantage for Adidas campaign kicks in 30% growth milestone. In 2005 Andreas Gellner was new MD of Adidas in India. Adidas strategy in India has been consistent over the past few years. The broad elements of the strategy are to target the brand to urban youth with our brand proposition from ‘competition to lifestyle’ using the authentic sports platform and build and reinforce credibility through relevant brand ambassadors and grassroots sports marketing programs. Further, it would target principal consumption centres, namely metros and build significant stand-alone exclusive store presence in significant locations. The strategy would be to play to our strengths, i.e. in apparel and mid to high priced footwear.

1.2

SCOPE OF THE WORK This project takes a look in various kinds of Merchandising activities, Market Share

of different sports shoes and various Sales Promotion schemes, which are followed in the Sports shoes industry. The three major global players i.e. Reebok, Nike, and Adidas dominate the sports shoes industry in India. India is one of few battlegrounds in the world where there is neck-to-neck competition between the three. The companies claim to be in number one sport coating the data produced by two different marketing research companies. Advertisement plays a crucial role in the brand selection, so how much it is impactful in giving the message and attracting the customer to shift and stick to their brand. 3

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1.3



RESEARCH OBJECTIVE 1. To know the personal views of “Delhi and NCR regions” people regarding choices

among various branded sport shoes. 2. To study which branded sport shoes is mostly preferred by people as per their choices. 3. Comparison between various branded sport shoes.

4. To find out factor influencing the people at the time of purchasing sport shoes quality,

durability, variety, price, and use in sport or any other. 5. In a time slot trade, debiting an account of a seller and crediting an account of a buyer

in accordance with the terms of the trade. To analyze the cost on advertisement budget.

1.4

RESEARCH METHODOLOGY

Secondary data:There are basically two sources to collect secondary data: a) Internally: Provided by the company/organization (Neem Tree Production)

b) Externally: Various publication of central, state and local Government. •

Books, magazines, newspapers

•

Internet

After only keeping in mind one can think about what type of data has to be collected during research as our research is concerned I have to gather primary data for Customer preference.

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Primary Data:Primary data collected through sample survey from the selected elements in malls and super markets. So for this purpose I have used the most popular tool of primary data collection through direct communication with respondents. The tools I used are questionnaires. To decide form of data collection:For this project Survey method was selected which will be carried through interviews because information from different customers will be required.

To organize & collect data:Once the researcher has formulated and developed a research design including questionnaire, second thing he has to decide how he has to collect the information from all the targeted customers. Sampling plan Sample Methods - Random Simple Sampling Sample size – 100 Primary data – –

Questionnaire Interview

Sample While deciding about the sample of research, it is required from the researcher’s point to pay attention to these under mentioned points:

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Sample Units: a) A decision has to be taken concerning a sampling unit before selecting a sample,

sampling unit may be a geographical one such as state, district, village etc. so in this research sampling unit is Delhi and NCR area Malls and Showrooms.

b) Source of data: Data required for the study was collected through primary sources

i.e. Market Survey and the market area is: Delhi and NCR

c) Sampling size: This refers to the no. of items to be selected from the universe to

constitute a sample. This is a major problem before the researcher. The size of sample should neither be excessively large not too small, it should be optimum. This size of population must be kept in view for this also limits the sample size .Sample size in this research is 100.

To process & analyze data:After the data was collected it was tabulated, analyzed and interpreted to the conclusion reach. Techniques Applied: •

Bar Chart

•

Pie Chart

Research used:

Exploratory Research

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1.5



HYPOTHESIS

Number of Our Advertising Time Slots Available for Adidas Sales Promotion The number of time slots available for our digital TV screens in Live Media during the period presented is calculated by multiplying the time slots Live Media per week by the number of weeks during the period presented when we had operations in each Live Media and then calculating the sum of all the time slots available for each of the our network Live Media. To analyze the increase in sales figure on strategically advertising through outdoor, print, celebrity endorsement of product Adidas. To interpret the right mix of media that enables advertisers to hit the precise media groups.

2.

PROFILE

2.1

ADIDAS TODAY As mentioned before Adidas’ headquarters are still located in Herzogenaurach in

Germany but Adidas has subsidiaries in 60 countries including adidas USA. The company employs over 14 000 employees worldwide. They export athletic equipment to 160 different countries and produce 120 000 pairs of shoes and 50 000 metres of fabric every day. They strive to have a uniform profile of their brand and all marketing campaigns are globally coordinated. Their advertising agency is called Leagas Delaney and is located in London. Adidas has clothes, shoes and accessories for men, women and children and for almost all sports available. Adidas have three main age and gender based target groups that they focus on, children 7-15 years old, girls/women 15-35 years old and boys/men 15-35 years old. Today, adidas is Europe’s largest supplier of sports apparel and athletic footwear. Even though Adidas is sponsoring top athletes like tennis player Anna Kournikova, the soccer player Zidedine Zidane and L.A Lakers’ basketball player Kobe Bryant, the focus for the company is nowadays towards teams, global sports events and sport associations. Adidas can this way connect itself with emotional events in sport; they sponsor the European football championship, the soccer World Cup and the Olympics as mentioned before. They 7

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also sponsor national and local teams around the globe. Adidas has changed their image from just targeting elite athletes and is now more about participation. (Aaker and Joachimsthaler, 2010)

2.2

COMPANY SEGMENTS The adidas group own several different brands, we will mainly focus on adidas

performance in this thesis but we will give a short presentation of the other brands as well. Adidas has quite recently bought Reebok International and the adidas group is also in possession of the golf brand Taylor Made, adidas Golf and Maxfli. The main adidas brands are however adidas sport performance, adidas heritage and adidas style. Adidas Sport Performance

This brand is aimed at meeting the sport-specific needs of athletes at all performance levels. This line of sportswear is focused on offering functional and innovative products that are designed for sports. The top five priorities are football, running, basketball, tennis and training. Adidas Heritage

This line targets trendsetters who seek sport-inspired street wear with an authentic origin. This division, started in 2000, has become a more than € 1 billion segment for adidas. Selective distribution to prevent dilution of the brand plays a major role in the development of this division. Sports Heritage includes lines designed by Missy Elliott, Ian Brown and remakes of vintage adidas clothes. 8

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Adidas Sport Style

Sport Style focuses on young cosmopolitan consumers who look for exclusive, fashion oriented sportswear products. This division is entering its fourth year in 2006. The brand is created because of the increased importance of niche marketing and that successful brands are those that can reach not only larger audiences but also small and influential ones. The Y-3 collection, developed with designer Yohji Yamamoto, is influential designs combined with the highest quality standards, in other words haute couture by adidas.

2.3

CONSUMER BEHAVIOR

As the young Indian executive class matures in terms of quality, design and brand, the preference will be more towards branded footwear and the growth is expected to be high in this segment with the migration of people from villages to cities for better career and profession. The footwear retail segment is currently one of the most organised sectors within the retail domain. However, this is purely due to the highly organised nature of the men’s footwear segment. The women’s category is largely unorganised, in fact close to 95% of the category is unorganised. With respect to the rest of the world, this is an anomaly as the women’s 9

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category is majorly organised and forms a big chunk of the market. Thus for us as retailers in the women’s footwear category, the market is still largely untapped and hence a big opportunity for growth. At present, almost all of the organised retailers in the women’s footwear category are located in the metros and Tier I cities and towns. The Tier II and Tier III towns have over the last few years seen a spurt in income driven by the service industry boom. Hence these towns definitely are a potential target.

3.

LITERATURE SURVEY

3.1

CONCEPTUAL REVIEW (FIFA WORLD CUP-2010) German sportswear company Adidas AG said Wednesday its fourth quarter net

income declined 64% to euro19 million ($26 million) on rising purchasing costs, currency effects and a drop in demand during the downturn. The Herzogenaurach-based company earned euro54 million in net income during the October-December period of 2008. Revenue for the fourth quarter of 2009 was steady around euro2.5 billion. For the whole of 2009, net income fell 62 percent to euro245 million from euro642 million. Revenue in 2009 fell 6 percent to euro10.4 billion from euro10.8 billion. Adidas, the world's second largest sportswear company by sales after Nike Inc., said rising purchasing costs and currency effects were the main reasons for the decline in net income. “With no doubt, 2009 was the most difficult year during my time as chief executive”, Herbert Hainer said in the report.

However, we rose to the challenge. Despite a 53 percent decline in operating profit, we generated a 141 percent increase in net cash from operations for a record euro1.2 billion. This is definitely the outstanding achievement of the year and a credit to all the hard work and dedication of our employees, Hainer said. Hainer said Adidas was starting the New Year with growing optimism and aiming for a sales increase, partly pushed by this year's football World Cup in South Africa.

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During the last World Cup in 2006, hosted by Germany, Adidas was able to add more than euro1 billion to its top line, through sales of football equipment like jerseys, cleats and balls, as fans snatched up garb during the month long tournament.

Despite the expected sales kick from the event, the company said it expected a slow turnaround in consumer spending in 2010 and only a low to mid-single-digit increase in sales. However, the company forecast some lower operating and interest rate expenses, which should push earnings per share to a level between euro1.90 and euro2.15 from euro1.22 in 2008. Adidas brands include TaylorMade-adidas Golf, Rockport and Reebok-CCM Hockey. The news sent shares of Adidas 5 percent lower to euro36.12 in Frankfurt morning trade.

3.2 ADIDAS PLANS TO MAKE INDIA PRODUCTION HUB Global sportswear major Adidas is looking at India as a global manufacturing hub.

The company has planned to set up a production facility for apparels in the country, which would serve as a base for its global requirements. Christophe Bezu, chief executive officer, marketing and sales division, Asia Pacific, Adidas, said, "As part of the company's global strategy, the procurement division is looking at setting up an apparel manufacturing facility in India. Although we have not yet finalised the details of the centre, a decision will be taken in the near future."

The company has short-listed several locations in the country for setting up the facility, he added. "India has a strong base for apparel manufacturing and along with that there is a cost advantage in manufacturing and exporting products from India," Andreas Gellener, managing director, Adidas India, said.

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Adidas has a large manufacturing base in China, which is currently the main procurement centre for the Asia Pacific region. Adidas is also revamping its marketing strategy for India. The company is planning to reinforce its distribution network by setting up more outlets across the country.

"Our initial strategy did not bring desired results as we felt that our distribution network, range management, asset management and company structure were not very strong. We have formulated a new marketing plan, which addresses all these issues," Bezu said.

The company is planning to set up more outlets to strengthen its distribution network. "We are looking at segmenting our range of products systematically and will introduce new 'localised' models," he added. The company is also planning a recruitment drive to "reinforce our team in India".

Sachin unveils new Adidas shoes

Adidas has included Sachin Tendulkar in its global campaign "Impossible is Nothing" and plans to feature him across cricketing nations and the Asia-Pacific region. Adidas is the first global company to borrow an Indian name to sell its products outside the country. The campaign also features David Beckham, Muhammad Ali, Ian Thorpre among 10-12 other Adidas's global ambassadors. Christophe Bezu, chief executive officer, Adidas, Asia Pacific, said, "Tendulkar has an incredible recognition value in countries where cricket is popular. Therefore we are looking at launching him in these markets as he is perhaps the most popular name in cricket. His inclusion stems from his caliber as a global athlete and his potential to become a global ambassador for Adidas."

The company has launched a new range of cricketing shoes, which will also be marketed through advertisements including Tendulkar. "For marketing the Master Blaster range of cricket shoes in the cricketing regions, we will be providing creative inputs which feature Tendulkar," Andreas Gellner, managing director, Adidas India said. 12

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Although the current campaign will feature Tendulkar only in the cricketing countries and the Asia Pacific region, the company is looking at including him in its other global campaigns.

3.3 VALUES AND STRATEGIES OF THE ADIDAS INDIA MARKETING FRANCHISE

The Adidas India Marketing franchise, as a part of the Adidas Group strives to be the global leader in the sporting goods industry with sports brands built on a obsession for sports and a sporting lifestyle. The sports goods franchise is a consumer focused organization and therefore wishes to continuously improve the quality, look, feel and image of its products. The sportswear business organizational structures match and exceed consumer expectations to provide them with the highest value.

The Group is a innovation and design leader who seeks to help athletes of all skill levels achieve peak performance with every product we bring to market. It is a global organization that is socially and environmentally responsible, creative and financially rewarding for our employees and shareholders. The Group is committed to continuously strengthening its brands and products to improve the competitive position.

Dedicated to consistently deliver outstanding financial results, the Group’s goal is to lead the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. A consumer-driven company that does everything strengthens and develops its brands to maximize the Group’s performance.

The acquisition of Reebok extended its global position, gaining a broader presence in key markets, product categories and consumer segments. The combined strengths aim to widen the profile we have with consumers and enhance brand profitability by execution of a well-defined strategy. The integration of Reebok has given the Group additional insights to the best-in-class techniques and processes across its entire organization. 13

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4. THEOROTICAL REVIEW 4.1 RECENT CONVERSATION WITH DAINIK JAGRAN

Tarun Kunzru, Managing Director, Adidas India Six years into India, Adidas India Marketing has gotten real. A difficult industry climate notwithstanding, the company registered 30 per cent growth last year and is looking to break even next fiscal. The company might not have read the market signals right when it first hit the dirt tracks, but then it did make amends by reworking its India gameplan and making itself available across price points and in more ranges, such as those for women and children. In this interview, 43-year-old Tarun Kunzru, managing director, Adidas India, tells Sumita Vaid Dixit of agencyfaqs! how his company set about correcting its early mistakes and outlines his agenda for Adidas' growth in India. Q. Late last year, Adidas India Marketing embarked on a retail initiative under which it roped in Retail Management Consulting (RMC) to manage its exclusive stores. As part of that plan, Adidas opened its first RMC-managed store at Brigade Road (Bangalore) in October. What was the logic behind the move? How does it fit into the long-term brand building efforts of Adidas in India? A. I will pull back on this question a bit and say that retail in India has not come of age as yet. And sports retail is even farther from that. However, we realised that if Adidas has to provide a good retail opportunity to customers, we need to create something new. So we started our retail stores in the significant cities and locations. 14

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Right now we have about 80 exclusive stores in India. Of these, 30 are Adidasmanaged stores. But having great real estate is not enough. The quality of service is equally important. It is a big challenge in India to provide good customer service along with effective management of stores on a day-to-day basis. We thought one of the ways of doing this was through a professional organisation like RMC, which would undertake the task of hiring the right kind of people, put them on the job, train them right and deliver the needs we have. So we decided to hire the services of RMC as an experiment. And the reason to open an outlet at Brigade Road (Bangalore) was just to grab an opportunity that happened to come along at that point in time.

Retail investment is an integral part of our brand image strategy. It is not about selling; it is about growing the number of people who visit the Adidas stores.

Q. Do you plan to replicate the RMC model elsewhere? A. We do not believe in putting all our eggs in one basket. We are going to use what works. And it will be tailor-made for that situation. While it is still early days for us, the response (to the RMC-managed store) has been positive. However, I must say that this is not the only format that we use for retailing. For example, we use entrepreneurs, who have a great drive to succeed. Despite not having a large organisation, they do manage to get a couple of people aligned with them because of their zeal. A case in point is our extremely successful store at Ansal Plaza (an upmarket shopping mall) in Delhi. They are doing a great job! But yes, if the experiment at Brigade Road is successful, we would talk to RMC for more such stores.

Q. What about your investments in the retail business and expansion plans? A. A significant amount of investment has gone into our retail business. I would not like to quote the exact number, though. We understand that retail is a very important part of our business. About 55 per cent of our annual turnover comes from the 80 Adidas stores. Our products need a certain amount of interaction with the consumer in an environment that is 15

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conducive to his purchase decision - especially since our product is not an impulse purchase product. From that standpoint retail investment is an integral part of our brand image strategy. It is not about selling; it is about growing the number of people who visit the Adidas stores and getting them to know Adidas in the right way. Our strategy has been to cover all important cities and significant locations. Having said that, we also understand that locations are moving targets. Significant locations come up over time. We are going to try to get into these new locations as well. But we do not plan to have a thousand retail outlets for Adidas. It is not part of the plan as of now.

We entered India with very basic die-cut shoes and there wasn't much excitement around the brand either. I would say it was a back-burner operation.

Q. Adidas was the first among the major international sports shoe marketers to have entered India through a licensee agreement with Bata. Despite having a headstart - in terms of having prior knowledge of the market - Adidas seems to have fallen behind later entrants like Reebok in terms of marketshare. How would you explain this? A. Let's put it this way. Yes, we were the first to have come into India, but we were the last to have come in in a really aggressive way. We entered India through a licensee arrangement (Nike is still a licensee), but that was a weak representation of Adidas. The rules and regulations at that point in time were very different. Our Hong Kong team had done this deal with Bata. We entered India with very basic die-cut shoes and there wasn't much excitement around the brand either. I would say it was a back-burner operation. We merely existed; nobody actually noticed Adidas in India. Till one day Adidas decided that it needed to do something about this market. The economy was opening up and that represented a big opportunity. That's when we started getting our act together. We realised that we needed to take control of our destiny - basically take equity position and present Adidas the way it is seen in the rest of the world.

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That entailed a lot of homework because Adidas was actually carrying a negative image in India. Old, fuddy-duddy, it's-my-grandfather-kind-of-brand etc. And we have been successful in wiping out the negatives.

Q. So how have you gone about wiping out the negatives? A. First of all, we laid out the Adidas range very aggressively and kept on building on the range. For example, two years ago, we had about 30 to 40 kinds of shoes. Today, we have close to 180. Initially, we were linking ourselves strictly with serious sports. Now we have covered the whole expanse - from serious sports to lifestyle. When we were with Bata we did not have apparel; today we have the whole range of apparel - serious sports, performance wear to equipment apparel and lifestyle. Indeed, today we cover virtually every significant sports category that exists in India. Plus all the designs are contemporary. Whatever is being sold elsewhere in the world is being introduced in India at the same time. Alongside, we've worked on revamping our association with sports stars. We've signed on the biggest sports personalities in India - Sachin Tendulkar, Leander Peas and Mahesh Bhupati - as brand ambassadors of Adidas. Our retail push has also been very successful. Clearly, we have the best retail locations in India today. The ambience of our stores is very attractive. We started setting up our retail stores some four or five years ago and we've kept changing the interiors of our stores to avoid fatigue. We have recently added accessories - like sunglasses and watches - to our collection. There is much more excitement around the brand today and it is more lifestyle driven. Apart from these, we have done things that are not visible to the consumer. But as a management guy I can tell you we have hired some very good people recently. We have a strong and youthful organisation. And our youthfulness has started showing in our customer service.

We do not take our eyes off the ball when it comes to giving the right value for money. We want to make products that sell.

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Q. Referring to your earlier comment that your licensee arrangement with Bata was but "a weak representation of Adidas", are you saying that the arrangement didn't benefit you at all? A. I will make a one-line answer to this. No, we did not gain any consumer insights from our association with Bata. Whatever consumer insights we have built, we have built over the last five years and in-house.

Q. One big problem that most MNC shoe marketers face in India is their perceived expensiveness vis-à-vis local brands. And it is not uncommon to see these marketers flogging excess inventory at seconds' outlet. Doesn't this end up arousing consumer suspicion about the actual price of the product? Also, when you retail your product at a third of its original price, doesn't it undercut the 'premiumness' of the brand? A. You are absolutely right when you use the word 'perceived'. But the concept of perceived expensiveness is changing quickly. People no longer perceive our offering as expensive but understand the value for money. At the end of the day we are selling a technology product. We are making a product for sports performance. It's got everything you can ask for. Consequently, the cost of manufacturing is that much higher. Therefore, people are getting what they are paying for. And people who are looking for real comfort and real performance know they are not paying unreasonable amounts of money. One of the classic lines I recall is about this customer who came to an Adidas showroom and inquired, "A pair of sports shoes I bought earlier lasted more than two years. Will your shoe last that much?" I replied, "No, I cannot guarantee you that. It depends on how much you use it." He persisted, "Well, I paid one-third the money compared to the cost of your shoes and it lasted me for more than two years." To that I said, "Have you not seen Schumacher changing his tyres after every 28 laps of the race. He could have bought a truck tyre instead. But then his car might have crashed and he would have got hurt. And he wouldn't have won the race." The point is we do not make shoes to last more than three years; we make shoes for you to perform. Having said that we do not take our eyes off the ball when it comes to giving

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the right value for money. We obviously do not want to make expensive products; we want to make products that sell. Agreed we are not 'cheap' relative to some local brands, but the reality is that you cannot compare apples to oranges. The local manufacturers are catering to a different set of consumers. They make shoes for a different reason and therefore they are priced differently. Now coming to you second question, selling at seconds' outlets is a worldwide phenomenon. In India, the concept is relatively new. To that extent you are right. And it does not give me great pleasure to sell products through the seconds' outlet. I would really like to sell my products in the regular stores. Unfortunately, it does not work like this. Our business is about sizes and colours and we have a huge number of variants. It is impossible that every variant is going to be as successful as the other. So we need to have factory outlets to get rid of the unsold stuff. To remain current we have this back up system of seconds' outlets.

About 80 per cent of Adidas India's sales is purely for its lifestyle value. So next year our communication will move away from serious sports.

Q. Another issue is the average Indian's queer apathy towards sports or any kind of physical activity. Do you see the average Indian's attitude changing with the entry of so many specialised shoe marketers? In which age group have you seen the biggest change happening? A. 'Apathy' is not the right word. I would say there is no passion for fitness. However, that is changing. People are coming round to the view that it is very important to be physically fit if you have to deliver mentally. In our urban environment, exercising is becoming a way of life. And you might as well enjoy doing it. Wearing a nice, full of colour, comfortable shoe that makes you look smart can actually change the experience of exercising. And brands like Adidas deliver that 100 per cent. I think affordability is a big criterion. While the awareness level of footwear like Adidas has significantly risen in the 10-plus age group, the purchasing population is skewed

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towards a higher age group. But yes, teenagers are increasingly driving their parents into the store.

Q. What has been the crux of Adidas' advertising strategy in India? When one talks to advertising agencies one gets the feeling that though Adidas is a very prestigious account, the company does not splurge so much in terms of sheer advertising spends. Has Adidas deliberately gone low-key so far as mass-media advertising is concerned? Don't you think this lack of visibility has impacted the image of Adidas as a happening brand? A. The fact that the Adidas account is prestigious is true and that we do not spend much is also right. Adidas India's ad spends are proportionate to the size of the business. Had the Indian operations been a billion-dollar company, we would be spending bigger amounts of money. But as of now, we are spending about 2 per cent of our annual turnover on advertising. But we are very smart with the way we spend our money. The comment that we are not visible on TV lately is also true. In fact, last year we had planned a big campaign but we pulled out because of September 11. Since all programmes that we wanted to be on were not getting the desired viewership, we did not see any point in wasting our money. Therefore we redirected our efforts into retail and focussed on grass root level activities like organising visits of Sachin Tendulkar, Leander Peas to various Adidas stores in the country. Our advertising has been more serious and puritanical in the past. It's been more like perspiration, blood, success and win. The first Sachin film was very serious…cricket and black and white colours etc. But now we have changed all that. Our new advertising is more fun. It is pitched on lifestyle. The recent Sachin-Leander ad is an example of that. In short, both domestic and international advertising of Adidas is changing to lifestyle and attitude. What's going to happen next year is that we may tweak our strategy slightly. While the focus will remain on the brand's image - that Adidas is trendy and fashionable - our communication will move away from serious sports. Because about 80 per cent of Adidas India's sales is purely for its lifestyle value.

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We advertise to communicate with a certain age group - between 14 and 24 years but the central theme of our advertising is to capture 'youthfulness' irrespective of biological age. You could be 80 years and be young. And if you are, you would relate to the brand.

Our advertising aims to capture 'youthfulness' irrespective of biological age. You could be 80 years and be young. And if you are, you would relate to the brand.

Q. What works better for marketers of your kind of products - high decibel top line advertising, event sponsorships, celeb endorsements or plain vanilla promo efforts? A. It is a heady mix of all of this. Each one plays its own role. A consumer can experience the brand in different ways. We use thematic advertising through TV to build the brand image and tactical advertising to talk sales, introduction of new products etc. Both are equally important. We also realise that a significant part of the brand impression is created at the time of purchase. So when we have a fresh introduction every quarter, there is a definite need to make sure that the POP is very exciting. At the end of the day you are not buying a product like shampoo which is going to last you a month or a few weeks. Buying a pair of Adidas shoes requires a higher outflow of cash. For that, it is imperative to make an informed decision. We want to help consumers achieve that. Even if the consumer does not buy your product, at least he should go back with the feeling that it was an interesting retail experience. So that there is more than a fair chance that next time, when the consumer wants to buy shoes, he would think of Adidas. The other element, which is very relevant for the sports industry, is the brand ambassador. We have done that quite effectively by signing on the best sports personalities.

Q. Internationally, Adidas has changed its advertising agency recently. However, in India, the company shifted its ad account last year from RK Swamy/BBDO to McCannErickson. Do you think another round of realignment in such a short span of time makes sense? 21

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A. The reason why we shifted from RK Swamy/BBDO to McCann-Erickson was not because we were terribly unhappy with RK Swamy/BBDO. We ran our full course with them. They did a good job. It's just that we wanted to change the way we dealt with the brand. So we thought McCann-Erickson would be an interesting association to drive down that agenda both below the line and above the line. As for now, we are very happy with McCann-Erickson. They are passionate about the brand. However, there has been a global realignment in favour of TBWA. Which means we may have to move the business to TBWA Anthem here. But, as of now, there is no change; though we are in discussions with TBWA internationally. We will see what the risks and the benefits are and we will deal with the issues accordingly. In all fairness to TBWA Anthem, we know nothing about them in India. We have not met them and they have not even made a pitch. The fact is that Adidas and McCann-Erickson know each other pretty well. And we have struck a good deal; so it is obvious we would want to keep that going provided we can help it.

Adidas and McCann-Erickson know each other pretty well. We have struck a good deal; so we would want to keep that going provided we can help it.

Q. How do you assess your long-term future in India? Where do you see future growth of Adidas coming from - shoes or apparel? A. Simply put, bright. I think we will be bigger and better as we go forward. We want to pride ourselves as the best customer service provider, the best in retail experience and one of the best places to work for in this industry. And probably one of the coolest brands. And we will be able to achieve all this if we continue to operate the way we are doing right now. It's not just an issue of market share and turnover; at the end of the day, we want to be profitable. Right now we are not. But next year we hope to break even. All I can tell you now is that we are averaging a growth rate of 25 per cent year on year. Last year we grew by 30 percent, and that too under very difficult conditions. So are we are pretty pleased with our performance. 22

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Advertising Activity Monthly Ad Budget

Total Clicks/Month

Average Ad Position

Average Cost/Click

Rs. 67,51,845

1,21,606

2190

Rs. 55.52

The above table gives a picture of Advertising effectiveness in making profit through brand recognition in masses. Retail footwear segment in Indian is very price sensitive and has been steadily growing over the year. Major part of the demand is met by the unorganised sector and still there is a shortfall of 300 million pairs. Branded shoe market only account for 20% of the entire market. While international brands largely dominate the higher end of the spectrum, the lower end of the market is dominated by home-grown players as well as unorganised players. While men's footwear is the biggest target category (contributing almost 48%), children's (11%) and women's lifestyle footwear (41%) is not behind in the race.

4.2

SALES AND MARKET SHARE

FIG 1: Source: Euromonitor-Footwear-India-October 2010

The sales and market share of Adidas India Marketing Pvt. Ld. was found of about 3.4% which is 0.6% less of the Reebok India Pvt.Ltd. It has spontaneous growth from the Previous Fiscal Year.

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4.3



TRENDS AND STRATEGIC INITIATIVES

Adidas lines up a series of campaigns across its 350 stores in India for Euro 2008; plans to launch an apparel and accessories collection named after Sania Mirza– June 06

Sportswear and Apparel Company adidas is betting big on the Euro 2008, as the largest soccer tournament in Europe began on June 7, 2008. The company tied up with music channel MTV India to bring 'The Finger Football' tournament at adidas stores in five major metros of Delhi, Mumbai, Kolkata, Chennai and Bangalore. From fig.1 ‘The Finger Football tournament’ involved playing the game with little paper footballs with two fingers in a miniature field put up inside the stores. The campaign included a retail splash with Euro 2008 products such as footwear, lifestyle articles, outdoor hoardings, messaging, and prize contest for customers making purchases of more than Rs 2,800 from an adidas store. Adidas, which is one of the official sponsors of Euro 2008, considers football as another sport after cricket that can help enhance brand value in India.

The company will also undertake major expansion by establishing nearly 160 new stores and setting footprints in 140 cities across India in 2008. The company is also planning to launch an apparel and accessories collection named after Indian tennis player, Sania Mirza. To be introduced in September 2008, the products under the Sania brand will be sold worldwide through adidas stores. The collection will target customers in the 15-27 age groups, and comprise apparel, bags, sporting gear, headgear and accessories. Source: The Press Trust of India Limited, The Economic Times, Indian Business Insight

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5. DATA ANALYSIS AND INTERPRETATION “WHICH BRAND DO YOU PREFER”

Brand Reebok Adidas Action Nike Others

Percentage 34 28 9 26 3

Frequency 34 28 9 26 3

COMMENT: Most of the people prefer to wear shoes of Reebok brand but on the slighter down side Adidas is on race to grow.

A. “ARE YOU SATISFIED WITH THE QUALITY OF PREFERD BRAND”

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Brand Reebok Adidas Nike


Percentage (%) 65 44 42


Option Yes Yes Yes

COMMENT: Most of the people in surveyed region were satisfied with their brand.

B. “ARE YOU SATISFIED WITH THE PRICE RANGE”

Option Yes No No Comment

Percentage 64 19 17

Frequency 96 29 25

COMMENT: Price does not seem any obstacle in the way of consumers. Most of the people were happy with given price range.

C. “IF PRICES OF YOUR PREFERED BRAND INCREASES WILL YOU

PURCHASE AGAIN”

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Brand Same Brand Cheaper Brand Any Other Brand


Percentage 58 16 26


Frequency 87 23 40

COMMENT: Increment in price affects the trend and market of the “branded sports shoe”.

D. “HOW DO YOU CONSIDER THE IMPORTANCE OF SPORTS SHOES”

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Importance Comfort Price Durability Use in Sports Any Other




Frequency 102 6 25 15 2

COMMENT: The main ground on which shoe being purchased is the quality of the shoe. This indicates the quality preference among consumers, rather than price, durability etc.

E. “WHAT FACTORS INFLUENCE YOU TO GO FOR A PARTICULAR BRAND”

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Influence Quality Price Durability Variety Any other




Frequency 111 8 20 11 0

COMMENT: People in the surveyed area mostly preferred the quality of the brand instead of price and durability.

F. “DO YOU NORMALLY SWITCH OVER THE BRAND”

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Option Yes No


Percentage 44 56


Frequency 66 84

COMMENT: Most of the people were not ready to switch over from their brand.

G. “IS THERE ANY EFFECT OF ADVERTISEMENT ON SELECTION OF BRANDS”

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Option Yes No


Perentage 69 31


Frequency 104 46

COMMENT: Advertisement plays a crucial role in the brand selection

H. “WHAT KIND OF PROMOTIONAL TOOL YOU PREFER”

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Option Lucky Coupon Free Gift Discount Buy One Get One Free


Percentage 11 14 60 15


Frequency 14 22 91 23

COMMENT: Respondents were more inclined towards the discounts package in company’s promotional tools.

I. “WILL YOU BUY PREFERED BRAND AT LOW COST OF NEGLIGIBLE QUALITY”

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Option Yes No


Percentage 23 77


Frequency 34 116

COMMENT: Most of the people do not want to leave their preferred Brand at the cost of “low prices”

J. “IS THERE ANY IMPACT OF CELEBRITIES ON YOUR PURCHASING”

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Option Yes No


Percentage 52 48


Frequency 79 71

COMMENT: Celebrities have a special impact on the mind of the consumers that affects the purchasing sense of consumers.

K. “WILL YOU PURCHASE ANOTHER BRAND OF SAME QALITY WITH

LESS PRICE”

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Option Yes No


Percentage 70 30


Frequency 106 44

COMMENT: Consumers look more brand loyal as they are not ready to leave their brand for other brand of same weightage.

L. “DO YOU THINK WEIGHT IS A FACTOR FOR CHOOSING A BRAND”

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Option Yes No

Percentage 83 17


Frequency 125 25

COMMENTS: Weight proved its importance in purchasing of the shoe. Most of the users Preferred to wear lighter shoe.

6. CONCLUSION 6.1

RESEARCH REVIEW 36

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After assessing the overall market scenarios what came in picture was as follows: 1. Consumer reactions suggest that Nike is the market leader among all its close counterparts in the sports shoe and apparel segments. 2. 34% market capture is still under its kitty. 3. After its sponsorship to major sports events and Teams like soccer in Europe and cricket in India give it an extra edge. 4. People are still expecting something more from Nike. 5. Adidas is chasing its position most aggressively so now it requires maintaining its position with new stuff. 6. 28% customers are still pro adidas believer. 7. Nike has been the major competitor for adidas. 8. The new stuff of the adidas is attracting the consumers more which might lead adidas

at the top spot in the pack in coming financial year. 9. Consumers are not showing that kind of craze in Reebok for past few years . 10. Probably it could be because of the aggressive attention snatched by brands like

“Nike” and “Adidas” especially in India. 11. Only 8% market has been covered by Reebok in Recent past. That is miserable as per

its Standard. 12. Reasons being its restrictive manufacturing in India, and the cost of the products are

not affordable as compared to European and US market.

6.2

SUGGESTION

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“The bottom line” of the market research speaks that branded shoes in india has been increasing on day by day basis. That sounds good for international as well as domestic market.

6.3

LIMITATION

1. A brand is not very likely to keep a strong position if the values connected with the brand are not reinforced through communication. It is vital to our purpose to find out how and why companies choose to communicate their brands. 2. When forming a communication strategy, companies have to understand how

consumers behave. The company can only satisfy their target group once they know how the consumer thinks and react to the conveyed message. When selling a gendered product, companies have to understand the distinction between men and women and how they differ in consumption.

6.4

FUTURE SCOPE

The average growth in the industry has been estimated at 12% and is estimated to touch Rs 47000 crore by 2025. Presently the Indian organised foot wear market is dominated by men’s footwear segment that contributes for nearly 60% of the market where the casual footwear has been better off with two thirds of the share in the men’s segment. The unorganised players have the lions share in the ladies and kids segment with 80 percent share. The organised footwear brands have less penetration in the ladies footwear segment mainly due to the complex buying behaviour of Indian women. The ladies and kids segment is one of the fastest growing segments in the branded footwear market and many foreign brands like Catwalk have ceased the opportunity and have set their footprints in this segment which has been untapped by major traditional Indian footwear brands.

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Considering this many of the Indian footwear brands have seen growing opportunities in the segment to widen their product portfolio, widen their risk appetite and increase their market share in the footwear segment by contributing to newer growing consumer segment which will boost the bottom lines of the retail players.

6.5

CONCLUSION The business models of the Adidas have been different with a wide popularity of

stores in high streets, malls and new formats such as store in store has been catching up even with international brands having gone the store in store model which has been the most cost effective model in terms of testing the markets. Thus it improves its advertisement effectiveness and marketing communication in better understanding of changing generation.

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ANNEXURE

QUESTIONNAIRE Q.1 Do you prefer wearing sport shoes? 40

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(a) Yes


(b) No

Q.2 Which brand you prefer? (a) Nike (c) Reebok (e) Any other

(b) Adidas (d) Action

Q.3 Are you satisfied with the quality of preferred brand? (a) Yes

(b) No

Q.4 Are you satisfied with the price range of preferred brand? (a) Yes (c) No comment

(b) No

Q.5 If the price of your preferred brand increases will you purchase again? (a) Same brand brand (c) Any other brand

(b) Cheaper

Q.6 How do you consider the importance of sport shoes? (a) Comfort (c) Durability (e) Any other

(b) Price (d) Use in sport

Q.7 What factors influence you to go for a particular brand? (a) Quality (c) Price (e) Any other

(b) Durability (d) Variety

Q.8 Do you normally switch over the brand? (a) Yes

(b) No

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Q.9 Does the advertising play any role in selection of brands of shoes? (a) Yes

(b) No

Q.10 What kind of promotional tool you prefer? (a) Lucky coupon (c) Discount

(b) Free gift (d) Buy one get one

free Q.11 Are you willing to buy the preferred brand at lower price with Negligible quality? (a) Yes

(b) No

Q.12 Is there any impact of celebrities on your purchase of sport shoes? (a) Yes

(b) No

Q.13 Will you purchase another brand of same quality with less price? (a) Yes

(b) No

Q.14 Do you think weight is a factor for choosing brand? (a) Yes

(b) No

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BIBLIOGRAPHY

BIBLIOGRAPHY

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The lists of reference for the purpose of completing this marketing project are as given below:

BOOKS: Marketing Research Marketing Research Marketing Management

By: G. C. Beri By: Boyd and Stasch By: Philip Kotler

INTERNET: www.google.com www.bambooweb.com www.wikipedia.com www.adidas.com

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Adidas Report

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