Global Marketing and Digital Business Practices Assignment

Global Marketing and Digital Business Practices Assignment for adidas

Global Marketing and Digital Business Practices Assignment

 Introduction

Task 1

1.1 Selection of Industry

In the present era, the global market of Sports Apparels has witnessed a significant growth due to health awareness and increasing in health activities. The interest of human beings has increased their interest towards sports activities. For sports industry, the market is further expanded due to increasing participation of women in sports and fitness. It is also predicted that Asia-Pacific will be the leading revenue generating region in the year 2020. Adidas has been selected for the purpose of developing an understanding of the global market.  Adidas is engaged in serving its consumers in the global market and is a German multinational corporation operating in Apparel and accessories industry. It was founded by Adolf Dassler in the year 1924 (Adidas, 2017). 

Sports Apparel Market

1.2 Company Background:

It is operating in Apparel and accessories industry and serves consumers at the global level with footwear, sportswear, sports material and other accessories. It is engaged in the designing and manufacturing process of shoes, clothing and other accessories. It is one of the leading sportswear manufacturers of the world. Headquarter of Adidas is located in Herzogenaurach, Germany (Adidas, 2017). There is a wide opportunity for Adidas to expand its business globally. In the year 2015 Adidas had made sales of amount 16.92 billion euros.

Global market of Adidas

Nike and Puma are the biggest competitors of Adidas in the global market. In the year 2015 Adidas captures only 21 % market in relation to Puma. The motive of Adidas is to achieve its goals which are to become a global industry leader in the sports goods industry and strengthening its brand image, improvise its operational and financial resources. To attain these goals company, frame its strategies and tactics which are focusing on the value creation and customer satisfaction. Currently, Adidas is focusing on its marketing strategy for enhancing the brand image at the global level and the cities where it is focusing are New York, Shanghai, Paris, Tokyo, and London. 

Number of retail stores of Adidas available worldwide

Revenue of Adidas:

Revenue chart of Adidas

It faces some fluctuation between the years 2013-2016. In the third quarter of the year 2016, Adidas was earning 6.042 billion.

 Sales and profit trend chart:

Sales and profit trend chart

1.3 Situation Analysis and Environmental Scanning for Adidas:

1.3.1 SWOT Analysis:

Strength

  • Company have the wide range of product for online selling.
  • Company have association with many online distributors like flip kart, Amazon etc.
  • Company is also sponsor of many big sports events.
  • Company uses celebrity endorsements in marketing its product globally (Ommani, 2011).

Weaknesses

  • High product prices due to use of latest technology will affect online selling channel
  • Less product range in comparison to competitors.
  • Tough competition and availability of similar brand show customer switching towards higher brand.

It operates in a global market with on the concept of "Impossible is Nothing". Adidas is famous for its sports shoes and apparels worldwide after Puma and Nike. SWOT analysis for analysing the strengths, weaknesses, threats and opportunities of Adidas is as follows:

SWOT Analysis

1.3.2 Porter’s Five Forces Model:

Compiled by author based on Adidas

1.3.3 PESTLE Analysis:

Macro environment analysis helps in identifying the issues related to macro factors which Adidas is facing in its global marketing and online business practices (Birnleitner and Student, 2013). PESTLE analysis is conducted by the company which identifies the impact of various factors related to the macro environment.

Table 1: Pestle Analysis

Macro environment factor

Description

Political Environment

Adidas is facing many issues due to the political factors. These issues include tremendous changes in trade policies and civil unrest. While framing strategies, Adidas considers the political factors like War, terrorism, expropriation etc. Due to these political factors, Adidas fails to serve its customer on time. However, they also provide the advantage of low labour salary (Gupta, 2013).

Economic Factors

Adidas is facing economic issues like change in per capita income, inflation, deflation, and unemployment rate which affect the marketing strategy and online business practices of the company. Change in money value and taxation policy affects the purchasing power of consumers and increase firm capital cost (Gupta, 2013).

Social Factors

Social factors include a change in the taste of people with reference to the sportswear and sports accessories. Social factors affect innovation and buying nature of individuals (Gupta, 2013).

Technological Factors

Adidas uses its own unique technology for manufacturing and producing goods. Technological factors contribute to creating brand loyalty which helps the company in doing less marketing efforts (Gupta, 2013).

Environmental Factors:

 

Adidas do not produce any restricted product which has a harmful impact on the environment. The company encourages production of a sustainable product which will increase quality and functionality of goods. The company also mention these points in its marketing strategy and help in increasing online business practices (Gupta, 2013).

Legal Factors:

 

While framing marketing strategy for every store and for online business practices company must aware about all legal proceedings related to trade and description of goods, sale and supply of goods, intellectual property right, and advertisement standards etc. (Gupta, 2013).

Pestle analysis

Task 2 Critical analysis of global marketing practices of Adidas.

2.1 Competitive Advantage of Adidas:

Michael Porters develop a model called diamond model for the business organisation. With the use of such economic model, the company can understand their competitive positions in the global market. Such model helps in gaining an advantage at the global level.

Porters Diamond model

Porter’s Diamond model

2.2 Global Presence of Adidas- Strategy and Entry Mode.

Adidas group is having a strong brand image in the local market. Adidas group launched e-commerce sites in Russia, Europe, Canada and South America, India etc. Online selling activity helps the company in entry into the global market. Adidas adopts e-commerce for expanding its business at international level. Further, Adidas also operate through physical stores. The focus of Adidas is on enhancing the presence of the business through the digital market. It has started offering products all around the globe with the websites of the company. Adidas is planning to enhance its presence in the digital market (Dusto, 2013). A multi-brand strategy has been adopted by Adidas for offering a wide range of choices to the customers. For the expansion of the area of operation, Adidas has made an investment in the markets where it has identified long-term growth and profitability opportunities. 

Share of different companies in market

2.3 Market Selection and entry mode- Adidas

  • Adidas serves high-quality products to its globally available customers.  There are many reasons due to which Adidas serves in many countries:
  • The flow of human resources becomes cost effective.
  • Availability of new market
  • Change in technology
  • To become global industry leaders

For doing business at the global level company should adopt the model of internationalisation. That increases the involvement of the company in the global market. Model of internationalisation help companies in increasing their market share at the global level (Jones, Coviello & Tang, 2011). 

Model of internationalisation

Model of internationalisation include following steps:

  • No regular export activities
  • Export through independent representative
  • Establish foreign sales subsidiary
  • Starts foreign manufacturing.

Adidas enter into global through incurring knowledge about the nearby market then explore its activity and set their sales subsidiary to serve the market of the specified region. Online business activity is part of the strategy for internationalisation. Serving need of customers online will help Adidas in the expansion of its business which leads to economic growth and growth in its market share (Jones, Coviello & Tang, 2011).

2.4 Segmentation, Targeting and Positioning in the Global market:

Segmentation: Adidas wants to create a strong brand image in the market. It creates a new market segment to increase its sales (Goat, 2011).  Adidas divide into four segments:

Segmentation of Adidas

Targeting: Adidas uses differentiated target strategy. It targets customers include children and adults of the 13-40 years’ age group. The strategy behind it that children and adults are more passionate and sports lover so they are love to buy innovative and luxurious sports product at affordable prices without going on physical shopping ( Lynn, 2011).

Positioning: Positioning: Available number of users and benefit based positioning is adopted by Adidas. It uses digital market for promotion its product and ties ups with online distributors for providing products to a final buyer (Lynn, 2011).

Positioning

2.5 Market Mix:

Global marketing also includes the concept of the marketing mix. Marketing mix structure adopts by the company helps in analysing the marketing business practices and online business practices (Pour, Nazari & Emami, 2013).

Table 2: Market Mix of Adidas

Marketing Tools

Description

Product

Adidas provide a quality product to its customers. To create brand loyalty of consumers. Company, provide the latest product with innovative design through online channel (Pour, Nazari & Emami, 2013).

Prices

To increase online business and promote digitization Adidas offers its product at discounted prices.

Promotion

Adidas uses digital marketing tools for the promotion of its product. Adidas uses an online channel like media, websites etc. for marketing its products (Pour, Nazari & Emami, 2013).

Place

Adidas places its stores at every area where it serves consumers through the online channel so that they could not face any delay in delivery.

Packaging

Adidas must offer its product in attractive packages. Improvement in packaging style will create impression on customer (Pour, Nazari & Emami, 2013).

Positioning

The company should frame its strategy to establish itself in the consumer's mind. Adidas offers new and attractive products through online business practices may help in increasing its business.

People

Adidas not only think about the comfort level of its customers but it also offers attractive commission and pays to its distributors which help the company in selling a product online (Pour, Nazari  & Emami, 2013).

Task 3: Critical Analysis on online Business Practices of Adidas.

3.1 Company Background on online presence:

Adidas moved towards global business after establishing itself in the sports shoe industry to increase market area at the global level and to increase in sales. The company started to take use of online business channels for its brand promotion. Adidas makes strategic plans and uses social media to promote its product and also sales its product through online distributor channels (Grewal, et. al., 2011). Adidas uses social media marketing for marketing of its products and in recent years a rapid growth can be seen in the online business of Adidas.

3.1.1 Use of Social Media for promotion: Adidas use Facebook, twitter and other online channels for promoting its product and attract more and more consumer.

Tools for online promotion

3.2   Mode of online Business:

Web presence and e-commerce: Adidas sells its product to an ultimate consumer by using its own website. Adidas has its own website through which it offers a wide range of product to the final consumer. Through this company has not to incur cost related with distribution channel and it can easily make contact with the final consumers (Grewal, et. al., 2011). Adidas uses KPI s measures for measuring its performance of the online business.

Search engine marketing and pay per click attributes: The company can enter into an agreement with online distributors like Flip kart, Amazon etc. and sell the product to final consumers. These distributors also offer discount schemes for increasing the sale of company's product on festive seasons. Adidas has also pay per click attributes through which it is able to reach directly to its customers (Grewal, et. al., 2011).

Social media: Adidas uses social care for the promotion of its products. With the help of social media sources, Adidas is able to generate its sales through advertisement of products through social media sources. In this concern, Adidas contributes specific parts of its profits towards social media sources such as Facebook, twitter, YouTube etc.

Mobile App of Adidas: Adidas also offers its product with the help of mobile applications. It makes easy to shop for every consumer because mobile is most common instrument available to every individual. With the help of mobile applications, customers of Adidas can access to the products of Adidas anywhere and anytime.

3.3 Key Performance Indicator in Digital Marketing:

Key Performance Indicator in Digital Marketing

Table 3: Key performance Indicators

Particular

Description

Engagement on Website

Engagement and use of websites of the Adidas indicate its performance in the global market. Higher visit of people on the website shows that company is more preferred by the Consumers. This reflects the favourable performance of Adidas at the global level. (Velimirovic, et. al., 2011).

Traffic Sources

Traffic sources include identifying the traffic sources which drive consumers directly to the website of Company. Traffic sources include:

Direct Traffic

Referral Traffic

Campaign Traffic etc.

Online Campaign

Cost Per Mile

Cost Per Click

Cost Through Rate

Cost Per Acquisition is the measurement tools which measures the performance of Adidas for the online campaign (Graça and Camarinha-Matos, 2016).

Social Interactions

Interaction with the consumers with the use of social media brings a positive engagement of consumers and improve the overall performance of the company.

Mobile Traffic

Maximum use of mobile applications indicates the positive performance of the company. Increased number of downloads indicates the positive performance of Adidas.  (Graça and Camarinha-Matos, 2016).

3.4 Compare current position with future objectives:

In order to compare and identify loopholes in the performance of the Adidas. Key performance indicators like revenue, profit and market shares are analysed below.

Predicted performance in the form of revenue, profit of Adidas

Above figure shows the actual and predicted performance of Adidas. This figure explains the key performance indicator of Adidas (Velimirovic, et. al., 2011).

  • Revenue: It can be predicted that revenue of the company from its selling activity may rise because company going to explore the online market for its product.
  • Profit: The main aim of Adidas is to generate more income through using cost-effective technologies. Use of digital technology reduces cost which arises in the form of opening new branches and stores of Adidas (Velimirovic, et. al., 2011).
  • Market share: Adidas has a good market share in the global market. It is second largest sportswear company that serves customers at the global level (Velimirovic, et. al., 2011).


Predicted performance in the form of revenue, profit of Adidas 1

Growth in revenue and profit contributes in meeting the future goals and objectives of the company.

Task 4: Recommendations

4.1 Recommendations for Global Business Practices:

The performance of Adidas is quite good in the global market. It comes at the second position after Puma. Adidas faces threat from the external market as there is a various competitor in the market who are involved in the same online business as Adidas. In order to improve its performance level, Adidas should adopt following strategies.

  • Management of Adidas should use Porter’s Diamond model which is helpful in gaining a competitive advantage at the global level.
  • Adidas must produce female sports accessories in order to target new area of the market. It should focus on female sports accessories.
  • Adidas should offer its product at affordable prices.
  • Adidas should take sponsorship of sports event like football cup, cricket world cup in order to promote its products at the global level.
  • Adidas should develop an understanding to identify local market needs of each country and promote the product as per the requirements.
  • Adidas should offer products as per different culture which is prevailing in different countries so that it is able to meet the expectations of customers of various cultures.

4.2 Recommendations for Online Business Practices:

Offline business practices are not enough for an organisation. Adidas is doing a great business through managing its digital business model. If Adidas wants to promote its business practices at the global level it has to make some changes in its online service distribution channel and marketing strategies:

  • Adidas can launch its own mobile app for online shopping and provide as this will reduce the cost of distributors.
  • Adidas should promote its product through internet advertisements.
  • Adidas should make available a search page where consumers can get all the information that is related to product range offered by Adidas.
  • The company should have good online payment system which does not cause any difficulty to buyers while making payment of their transactions.
  • Adidas should make the best use of search engine marketing and pay per click advertising.

Conclusion:

This assignment has explained the market analysis and internal analysis of Adidas. This analytical study has helped in identifying the opportunities and threats that are available to Adidas in the global market. This Study analyzed that with the use of online means the company can not only explore its market share but also can meet its long-term objectives and sustainable development. Adidas Starts online selling of product and makes effective use of digitalisation. For long-term concern, Adidas needs to identify external factors and internal strength and weakness which affect its performance at the global level. This will also help in increasing the sustainability of Adidas. The company should adopt growth strategies, product differentiation strategies for its global development.

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