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Comprehensive Study of Adidas
The brand with three stripes. 
Greesha Gupta

Content
Introduction
Objectives
Human Resources
Marketing
Finance
External Influences
Conclusion 

Introduction 
Adidas is a multinational corporation based in Germany founded in July, 1924 by Adolf Dassler. Adidas designs and manufactures footwear, clothing and accessories. The company’s estimated revenue in 2016 was 19.291 billion and the number of employees as of 2014 were 53,731. The adidas logo, which is three stripes is used to market the products. This increases their customer base since it creates a brand image that leads to brand loyalty.  The company consists of two sub-sections. Adidas original focuses on a line of casual sports clothing whereas Adidas sport focuses on advanced products that help enhance sport techniques. Adidas sport is further split into four categories: football, cricket, running and training. For my project I will be focusing on adidas sport. The company is the second largest manufacturer of sportswear after Nike.  

OBJECTIVES
Visions and Missions of Adidas
Vision: Corporate Responsibility
The adidas group focuses on striving to the be the global leader in the sports industry. The brand is built on the main ____ of passion. Passion, performance, integrity and diversity are the main values the brand is ingrained around. Corporate responsibility is extremely important for a brand like Adidas that has launched a sustainability strategy known as ‘Sports needs a space.’ The main purpose of this strategy is to tackle the spaces of sport. The three main products that the company focuses to provide the population with is: water, materials and energy. However, the three main characteristics that the people that are in charge of this strategy need to have are: empowerment, concern for the health of the consumers and inspiring action. 

Mission: Be the global leader of the sport industry 
The brand with the three stripes focuses on improving the quality of their products thereby increasing their market share. Increasing their market share would help them achieve their mission which is to be the global leader of the sports industry. Adidas continuously tries to achieve this mission, the high competition helps them strive and provide the consumers with the best products they can. The brand is more market oriented than product oriented and they prioritise the wants and needs of their consumers before anything else. The quality, feel, look and image is changed to anticipate the wants and needs of the customers. 

Joint Ventures 
On March 25th, 2008 Adidas and Vulcabras announced that would form a joint venture company to distribute Reebok footwear, apparel and accessories specifically in Brazil and Paraguay. 

Market Share
The Adidas group market share nearly doubled from May 2016 to May 2017. The brand went from a 6.3% to 11.3% market share during that period of time. 
 
CSR
Other than focusing on entirely their business and products, the group puts in an effort to produce their products sustainability. The group maintains an annual report that contains their sustainability targets.
HUMAN RESOURCES
Recruitment policy
The recruitment policy of adidas is similar to most companies. They start off by reviewing the application to see if criteria set adidas is met by the applicant. If the requirements are met, the applicant will receive a phone call within two weeks. Based on the interaction, the application will be chosen. The HR department and the hiring manager will then assemble a pile with the people that are chosen, the finalists. After this the interview is conducted, the interview could be a Skype call or a face to face interview. All the candidates are given a fair opportunity at this stage because it is extremely crucial for them. Most times, a second round of an interview is taken, sometimes even a third round. This happens because Adidas wants to make sure their employees meet the exact requirement. 

Motivational factors 
One of the main methods of motivation is employee volunteering. “Employee volunteering is any unpaid work, facilitated, encouraged or supported by the business, which helps a not-for-profit organisation.” By using employee volunteering, Adidas aims not only for engagement of employees but also strives for achievement. Employee volunteering helps them work on their team skills. It enhances their leadership skills, helps them make smart and quick decisions, communication between staff is improved and much more commitment to the company. 
Another motivation factor that Adidas uses is, it builds childcare facility to take care of the children of the employee. The company also provides safety courses for the employee, where they have to take a training course for the first aider. They provide emergency procedures and fire safety measures to make the workplace a safe environment. 
The employees of adidas are also offered 120 classes and events where they can be motivated. They also have a variety of sport facilities such as volleyball courts, tennis courts, a running track and a football stadium. Adidas also has a cafeteria for their employees called “stripes.” Adidas thinks it is extremely important for their workers to improve at a gradual but constant rate. To help their workers adidas redesigned their goal setting programs to support “New Ways of Working.” This helped them achieve new goals they had set and the document made it clearer to apply motivation techniques. Overall, adidas is very dedicated to motivating their employees. They provide them with healthcare, education and along with a long list of fringe benefits for them and their family. 

Organisational chart: 
 

 

MARKETING
Products
Adidas sport has four sports it mainly focuses on. Running, football, training and basketball. Each of these sports then has three sub-sections. Accessories, clothes and shoes. Adidas has a vast audience to cater to therefore, they have split their products into three further sections: Men, women and kids. Adidas footwear is extremely athletic based. Adidas also has a vast range of clothing and accessories they produce for consumers. While Reebok’s strength is their footwear, Adidas’ is both, their clothing and footwear. 
The 3 most popular adidas football shoes are: 
1. Adidas ACE 17+ Purecontrol Firm Ground Boots
2. Adidas X 17+ PureChaos FG Men’s Laceless Football Boots
3. Adidas messi 15.1

Price
Adidas uses competitive pricing to make sure they can sell their products to customers since there are a number of firms that sell similar products. Keeping in mind the competition, Adidas chooses to use competitive pricing. However, when a new product is launched, Adidas focuses on using the skimming price strategy. Adidas targeted their audience back when the company was started and they decided that they would sell their products in the niche market, however, till date a lot of their products are also sold to the mass market. One thing that Adidas makes sure they don’t do, is use penetration pricing because they fear that it will affect their brand image. As a matter of fact, Adidas increases their prices since psychologically the customers will think that since the product is being sold at a higher price, the quality has improved too. Therefore, Adidas does not drop their prices often. 
Skimming pricing: Price skimming is a pricing strategy in which a marketer sets a relatively high initial price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination/yield management.
Competitive pricing: Competitive pricing is setting the price of a product or service based on what the competition is charging.

Place
Since Adidas is a huge firm that sells their products globally, they have a huge supply chain. Adidas has outsourced most of their production. They have 1,000 factories in over 63 countries. To some of their business partners, Adidas directly sends the products over. However, since Adidas’s supply chain in global as well as multi-layered, there are few business partners that Adidas does not supply directly to.
In 2016, the top five countries per region by number of supplier sites were: 
– The Americas (26%): United States, Brazil, Argentina, Canada, and Mexico
– Asia (64%): China,  Vietnam, Korea, Indonesia and Japan
– EMEA (10%): Germany, Turkey, Italy, Spain and South Africa

There are five types of suppliers: 
Main supplier: They have direct relations with the Adidas suppliers. They export the products as well as promote market consumption.
Sub-contractors: These are factories that have been subcontracted by suppliers to help perform the manufacturing operations the main suppliers are incapable of performing in their own facility. 
Material and other service providers: These suppliers may not be directly related with adidas but they supply goods and services to their main suppliers.
Licensees: These companies design, produce and distribute specific products, under adidas. In 2016, Adidas worked with 61 licensees whose suppliers sent products from 377 factories in 48. 
Agents:These are independent companies that act as negotiator to source product manufacturing, manage the manufacturing processes and sell finished products to the company. 
 

Promotions 
Adidas uses various methods of promotion to promote their products. The few main ones being, the limited edition strategy. Adidas targets an audience and then launches a product they know the market would buy. The group focuses on AIDA. The above the line promotions that are the basic methods of advertising, such as billboards, newspapers. This is comparatively more expensive. A niche audience becomes harder to reach through advertisements, because, for example, a large number of people watching TV record and fast-forward the adverts. Adidas used product placement to help promote their products. This advert contained products placed well while David Beckham, Wretch 32 and Derrick Rose featured in the ad. This helps engage the audience and helps increase sales.
Below the line promotion, aims to reach more targeted groups of consumers. For example, through sponsorship deals, direct marketing, public relations and social media. This type of promotion targets the younger audience. It used a wide range of promotional activities to create a deeper engagement with its audience. 
Adidas has a lot of creative campaigns as well as events marketing. Sales promotions and trade promotions are also offered by Adidas. To increase their sales, adidas ties up with the top ten players across the globe such as Lionel Messi, Sachin Tendulkar, Ronaldhino and various others. Adidas also aims to sponsor the top teams such as Real Madrid, France and England.   
  
Problems Adidas faced while entering a new market:
Adidas faced a child labour scandal in 2000. Since their ultimate goal was to lead the sports industry, they assumed they would have to produce more. Back in 2000, they did not have many employees therefore they chose to force children into producing the products. According to the parliament of Europe, Adidas had two factories that had child labourers. They were forced to work overtime and sexual harassment was a problem that these workers faced as well. This took place in Jakarta, children as young as 15 years old were expected to work for 15 hours a day. They were expected to further work for 70 hours a week and were punished if they refused to work overtime. They were paid less than $60 a month that is below the international labour organisation’s demand for a living wage. The workers were penalised for demanding for medical difficulties and they had illegal deductions from their wages. There were children that were as old as 7 years being used to produce goods worth 13 million. Most adidas goods are produced in third world countries since labour is cheap. However, workers in Thailand were deprived of basic clean working conditions. 
Another problem that not just adidas, but all sports companies faced was the exploitation of workers from various countries. The storm before the 1998 World Cup led to labourers from India earning as little as 6p an hour when the minimum wage rate was declared at $4.45 per hour. 

EXTERNAL INFLUENCE
Political 
– Government intervention to support prevention of counterfeit and pirated goods
– Removing restrictions that impact the supply chain and support international trade
– Cooperation to promote fair trade and increase sport participation
– Product safety and standardisation

Environmental Approach: Good
Since Adidas is a firm believer that the goods they produce need to be produced sustainably their environmental impact negatively, isn’t much. They have committed to setting goals that help them reduce the pollution and product good sustainably. They focus on prioritising water impacts and recently partnered with an organisation ‘Parley for the Oceans’ to produce a range of products made from recycled waste. Ultra Boost trainers are made from 100% recycled material. 

Labour Conditions: Better
The labour rating based on the 2017 Australian Fashion Report, gives Adidas an ‘A-‘ grade in the report since they have come a long way since the child labour scandal. Adidas has also improved their working conditions drastically since 2016. Despite, these progressive working conditions the brand still has goals they have to achieve in terms of worker empowerment initiatives. 

Animal Welfare: Almost there
Adidas is a firm that believes that one mustn’t use angora, cashmere or any other exotic animal skins or hair, which is a start to improving animal welfare. Although they do use leather, wool and down feather. This is a slight problem since it is hypocritical of adidas to use these materials while saying they don’t. However, there is no guarantee that these are exploited from animals. They are working with the ‘Leather Working Group’ to improve their sustainable use of leather. 

Conclusion
I would like to conclude by saying that Adidas overall is a firm with great potential and they aim to produce their goods using sustainable methods. The adidas recruitment policy also makes sure that the beat of employees are hired for the benefit of the consumers. They also choose to focus on the CSR to ensure that we leave the world better than we found it. Adidas is a firm in an industry with a lot of competition, this does nothing but increase the incentive for the firm to work harder. They use various pricing strategies but never penetration pricing since their brand image could deteriorate if prices fall too low. Overall, I would like to say that Adidas is a firm that used their resources efficiently and does nothing but provide the consumer with the best quality of products they can produce. 

Bibliography: 
Bhasin, Hitesh, et al. “Marketing mix of Adidas – 4P’s of Adidas – Adidas product marketing mix.” Marketing91, 15 Dec. 2017, www.marketing91.com/marketing-mix-adidas/.

“Adidas Market Entry Strategy.” UKEssays, www.ukessays.com/essays/marketing/adidas-entering-into-an-emerging-market-marketing-essay.php.

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