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Advertising Strategy of Adidas: A comparative Study

ADVERTISING STRATEGY OF ADIDAS


A COMPARATIVE
STUDY

Prepared
As a course
Requirement of
(Advertising
and Public
Relation-mkt 424)

M. Atiqur Rahman
Patuakhali science and Technology University
Bangladesh
atik.bdpalo@yahoo.com
www.pstu.ac.bd

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Advertising Strategy of Adidas: A comparative Study

EXECUTIVE SUMMARY
Adidas Inc. is a marketer of sports apparel and athletic shoes. The German manufacturer,
through its marketing strategy which rests on a favorable brand image, has evolved into a
large multinational enterprise. In keeping with the
brand image is its association with the distinctive logo
and its advertising slogan, "Impossible is Nothing." In
order to maintain and sustain this image, the company
makes huge investments in advertising and brand
promotion. At the critical time of global economic
crisis, Adidas will react to the consumers’ pessimistic
attitude and stressful emotion during this period. It may
become a good chance for Adidas because it can take
advantage of its previous advertising way of
“Impossible is Nothing” campaign by sponsoring
sports stars to express the corporate philosophy of grit,
determination, passion and humor, giving people more courage and psychological comfort in
face of economic crisis. But besides that, we also focus more about family function
especially in Asian countries which emphasize a lot on family, which can provide caring
emotional communication. Therefore, from both strong-willed hero worship and water-like
fork environment, customers can easily link Adidas image with not only strength, but also
warmth. The preferred media we choose are TV, specific magazines, outdoor and internet.

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Advertising Strategy of Adidas: A comparative Study

1.1 INTRODUCTION
Adidas was formed by German sports apparel by the founder Adi Dassler during the 1920’s.
While Dassler was in his mother’s wash room he decided to begin an athletic shoe. After he
made the shoe he had help from his brother and
twelve other people to produce around 50
handmade shoes per day. These athletic shoes
were made for running and training.

“For over 80 years, Adidas has been part of the


world of sports on every level, delivering state-
of-the-art sports footwear, apparel and
accessories. Today, Adidas is a global leader not
only in the shoe industry, but also in the sporting
goods industry. Shoes from the Adidas are
available in virtually every country of the world. Oddball is proud to carry quality large size
Adidas,” (www.oddballshoe.com).

Recently Adidas and the NBA joined forces and made “The Brotherhood”. “The
Brotherhood” consists of Tracy McGRady of The Houston Rockets, Dwyane Wade of The
Miami Heat, Tim Duncan of The San Antonio Spurs, Chauncey
Billups of the Detroit Pistons and Gilbert Arenas of the Washington Wizards. When it came
down to it Adidas and the NBA came up with the slogan called “Basketball is a
Brotherhood.”

The main focus of “The Brotherhood was Adidas to sponsor the NBA. The way these six
players were selected was by their athletic ability which is why they are also known as all
stars. Then these six players decided to form a series that would help kids to discover their
dream by playing with NBA Stars.
A strong advertising and public Relation events makes adidas as a worldwide recognized
brand and it would be more sustainable in the world market.

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Advertising Strategy of Adidas: A comparative Study

1.2 HISTORY OF ADIDAS


The company Adidas was founded in the early 1920s as Gebruder Dassler Schuhfabrik, in
Herzogenaurach in Germany. Adolf Dassler designed a pair of sport shoes in 1925 and few
years later he and his brother Rudolph were selling special shoes for tennis players and began
design specific shoes for different sports. The family
company split in 1948. After the split, Adolf (Adi)
Dassler founded Adidas and his brother Rudolph founded
Puma. The three-stripe logo was designed in 1941 by Adi
Dassler and he registered it as a trademark for Adidas
after the split.
The strength of Adidas was its product innovation. Adi
Dassler registered more than seven hundred patents.
Adidas began selling its shoes in the United States after
1968 and in few years the company dominated the
American market. The most important marketing
breakthrough was the active promotion of global sporting
events, especially the Olympics. The connection of
Adidas to the Olympics has a rich heritage. At the 1972
Olympic game in Munich, every official wore Adidas.

Activities: manufacture and distribution of textiles, shoes and appliances for sport and related
products. Adidas has 107 subsidiaries in 20 countries, and exports to 160 countries.
Exploitation of the registered trademark “Adidas” is made where ever it is an opportunity.
Activities of the company and its subsidiaries are directed from Adidas-Salomon AG's
headquarters in Herzogenaurach, Germany.

Products: Adidas - Footwear, apparel, and


hardware such as bags and balls. Salomon -
Winter sports incl. skis, snowboards, snowblades,
ski boots and bindings, inline skates, hiking,
apparel. Mavic -Cycle components, Bonfire -
Snowboard apparel. Arc'Teryx - Outdoor apparel,
climbing equipment, Cliché - Skateboard
equipment, footwear and apparel, Taylor Made-
Adidas Golf - Golf equipment, golf apparel, golf
shoes and finally, Maxfli - Golf balls, irons and
accessories.
In 1990, Adidas was holding on to just a two to
three percent share of the U.S. market. Between 1988 and 1992 Adidas total sales dropped
from nearly $2 billion to $1.7 billion. In the same period, Nike’s sales went from $1.2 billion
to more than $3.4 billion. From being the U.S. market leader in the late 1970s, Adidas’s
market share dropped to 3 percent in 1992. The European market shares dropped while
Nike’s shares grew.
Adidas also have had problems with the upstream value activities in their value chain.
Traditionally, the company have their own factories and wholly owned subsidiaries. What
happened in the '70s and forward, during the Adidas recession, was that Adidas was unable to
ship products when it was needed, and they had a long supply chain - it took 18 months to get
a new shoe into the market.

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Advertising Strategy of Adidas: A comparative Study

2. SITUATION ANALYSIS
Adidas AG (pronounced [AH-dee-'dahs]; often in English, FWB: ADS) is a German sports
apparel manufacturer and part of the Adidas Group, which consists of Reebok sportswear
company, Taylor Made-adidas golf company, and Rockport. Besides sports footwear, the
company also produces other products such as bags, shirts, and other sports and clothing
related goods. The company is the largest sportswear manufacturer in Europe and the second
biggest sportswear manufacturer in the world, to its US rival Nike. The company's clothing
and shoe designs typically feature three parallel bars, and the same motif is incorporated into
Adidas's current official logo. The company revenue for 2008 was listed at €10.799 billion
and the 2007 figure was listed at €10.299 billion, or about US$15.6 billion. The situation
analysis consists of the market trend analysis and competitor analysis.

2.1 Market Trend Analysis


Adidas earn from EU 877 million in worldwide sales to EU 9.2 billion in the ten years
between 1988 and 1998. The market demand from teenagers who should be Adidas and most
important target market increased very fast and Adidas started to expand its targeting market
to younger consumers because of its severe competition with Nike and Reebok. Therefore,
since the late 1980s, Adidas has worked to transform itself from a brand of sneakers to a
product integral to the sports culture. During this stage, the Adidas brand has become so
strong as to place it in the rarified air of recession-proof consumer branded giants, in the
company of Coca-Cola, Gillette and Proctor & Gamble. Consumers are willing to pay more
for brands that they judge to be superior in quality, style and reliability. A strong brand
allows its owner to expand market share, command higher prices and generate more revenue
than its competitors. With its “Impossible is Nothing” campaign and strong product, Nike
was able to increase its share of the domestic sport-shoe business from 18 percent to 43
percent.

Chart-1: Adidas Net Sales data in Euro (million)


2 002-06 (Source-www.adidas.com)

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Advertising Strategy of Adidas: A comparative Study

2.2 Competitor Analysis


Adidas has two lager competitors Nike and Rebook. Besides that it would have several small
competitors. A SWOT analysis would be helpful to understand the competitive environment.

SOWT Analysis:
A SWOT analysis comprise of strength, Weakness, Opportunity and Threats. This four trends
are analyze below.

Figure: Adidas expence to advertising (billion Euro), (Source-www.wekipedia.org)

STRENGTHS
• Largest International portfolio of sport ambassadors.
• Sponsors football teams with maximum fan following in India and USA.
• Highest brand image in India according to our survey.

WEAKNESSES
• Rigid pricing structure.
• Our survey shows Nike behind Reebok & Adidas in market share in India.
• Has not do well in Indian subcontinent market.
OPPORTUNITIES
• Has a great opportunity to expand international market.
• Increasing demand on the sportswear.
• Positive and increasing market trends can increase through the effective advertising.

THREATS
• Adidas larger competitor Nike has a grater market share and having a big budget in
marketing activity.
• The newly born several brands like CAT, GAP has increase their advertising budget in
recent years.

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Advertising Strategy of Adidas: A comparative Study
• Amount of competitors increasing day by day.
2.3 Comparative Analysis Trough The Equity Model
Review of the equity model
Let’s make a short review to remind the reader what the separate blocks or keywords mean in
the equity model. See figure below.

Brand

Brand Perceived Brand Brand


Awareness Quality Associations Loyalty

Brand equity can be defined as the brand assets linked to a brand’s name and symbol that
add to a product or service. This asset can be created and analysed trough the four
dimensions, brand awareness, perceived quality, brand associations, and brand loyalty.

Brand awareness is the base to affect the consumer perception and even taste. People like
the familiar and are prepared to ascribe all sorts of good attitudes to the items that are familiar
to them. According to D. Aaker perceived quality is a special type of association, partly
because it influences brand associations in many contexts and partly because it has been
empirically shown to affect profitability as measured by ROI (Return On Investment) and
stock return. Perceive quality, is basically how the customer perceive the brands quality
status. Brand associations can be anything that connects the customer to the brand. It can
include user imaginary, product attribute, use situations, organizational associations, brand
associations, and symbols. Brand loyalty is at the hart of any brand’s value. The concept is
to strengthen the size and intensity of each loyalty segment.

Comparative analysis
Nike centred their brand equity model on the platforms, the endorsement focus strategy,
creating a dominant media presence, development of Flagship stores, NikeTown and sub-
branding. The Adidas strategies were based on, endorsement focus strategy, advertising,
sponsorship programs focusing on major global events, sports associations, and teams, and
sub-brands.

To create brand awareness both companies have been using endorsement strategies in their
brand-building programs. What differs is that Adidas focuses on sponsorship of teams and
events e.g. national teams and big sport events like the Olympic Games and different World
Championship events. This will help them to create awareness with help from different types
of media. In contrast Nike has their focus on individuals like M. Jordan and T. Woods and
their success stories.

About the second strategy, advertising. Nike’s advertising strategy was to create dominant
presence in media. Nike created media presence in several trend setting United States cities.
TV ads linking Nike to a city were used, but real drivers were huge oversized billboards and
murals on buildings that blanketed cities with messages featuring key Nike-sponsored
athletes, not products. Adidas took up the competition with Nike through raising their
advertising budget to a level that made it possible to compete with Nike on the same

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Advertising Strategy of Adidas: A comparative Study
conditions and the same strength as Nike did to capture the consumer interest. Adidas did not
just spend more money; they made an impact with brilliant executions. They made TV and
other advertising campaigns. The company communicate their heritage of innovation,
technology and big success stories with personalities like Emil Zatopek, Mohammad Ali.
Adidas tried to spread meanings like “We know then- we know now” and “There is nothing
between you and success, so exceed your own expectations and limitations” and “ Earn it”.
The success was obvious and after hard work and striving toward a top position in the
industry Adidas was back in
business. 28.24
30 25.29
Nike’s third strategy was to 22.94
25
develop, flag ship stores, Nike
Town shops in bigger city’s, first 20
national, and then abroad. Nike 13.53
was the first company to establish 15
flagship stores and it turned out to
7.65
be a sensation. Adidas choice was 10
to experiment with sport events, 2.35
with which they made great 5
success. Examples of that is the
Adidas Streetball Challenge a local 0
Nike adidas Reebok Pow er Puma Others
three-person team basketball
tournament, this event started out
as a trail in Berlin in the beginning Chart-03: Adidas market Share comparison
of the 1990s as one time occasion. (Source-www.adidas.com)
In the mid 1990s it had become a huge sport event with about 500.000 participants all over
the bigger cities in Europe. In the finals in Germany it attracted 3200 players and 40.000
spectators. Adidas made hereby a brand-building success.

The Nike customer associated the Nike brand with words like sports, attitudes and life style.
Reasons for that is one can relate to or identify one self to Nike’s marketing campaigns like
“Just do it” and the companies front athletes like Michael Jordan and Tiger Woods. For
Adidas one image study of consumers found the brand very trendy, modern and cool. The
survey was made in late 1990s.

All marketing actions that both companies are implementing will hopefully result in loyal
customers. Adidas introduced a subbrand in 1990 to serve the high-end products for all
categories of shoes and apparel. The “Equipment” subbrand would represent the best,
whatever the product was. The low-end products, for the “normal consumer” still have a high
technology and level of innovation because of their inheritance of the older innovations and
technology from the Equipment line. This strategy made the Adidas brand take on a different
meaning; it still meant participation, emotion and performance. This was a success strategy
for Adidas so successful that Nike copied their idea and introduced their own line, the Alpha
line, based on the same idea.

Nike advanced from $1 billion dollars in 1986 to $ 9.9 billion in 2002, Adidas advanced from
$1.7 billion in 1992 to $4.8 billion in 1998. According to sales figures for the both
companies, it seems that both Nike and Adidas companies have succeeded to create a brand
loyal customer who perceives the Nike and Adidas products as top quality.

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Advertising Strategy of Adidas: A comparative Study
3. ADVERTISING METHOD & MEDIA SELECTION
The media that was used of “The Brother Hood” will be television, magazines and Internet.

3.1 Core Advertising Consideration


The core advertising factors of Adidas are as follows. Besides that a huge amount of data
about Adidas advertising related activities. As a multinational company Adidas have separate
advertising strategy in different area of the world.

3.1.1 Media Vehicles:


The media vehicles that were used for television will be ABC
basketball games, TNT basketball games, ESPN basketball
games and ESPN 2 basketball games and ESPN’s Sports
Center. The media vehicles that were going to be used for
magazines were Sports Illustrated and ESPN Magazine. The
media vehicles that are use for Internet were ESPN website
(www.espn.go.com), NBA website (www.nba.com), Adidas
website (www.shopadidas.com), Sports Illustrated website
(sportsillustrated.cnn.com).

3.1.2 Advertising unit:


When it came to the advertising unit for television Adidas only runs: 30 seconds ads since
most of these ads are played during NBA games. The ads in magazines are full page. When it
came to the Internet ads are a top banner. For example, on page five you will see the ad which
it a top banner.

3.1.3 Seasonality:
Since “The Brotherhood” is made up of The NBA the seasonality will be during the fourth
quarter. The reason for this is that the basketball season begins in October which is in the
fourth quarter. The time of day in which “The Brotherhood” would be run on television is
during the evening while the NBA is holding their regular games. When it comes to the
Internet “The Brotherhood” is advertise daily and at all times.

3.1.4 Target Audience:


When it came to any product the audience is very important. You need to know who are
going to be interested in the product. When it came down to this “The Brotherhood” is mostly
for boys ages 8-20 and for older males. For example, on page four you will see TMAC jersey
for boys 8-20 and older males.

3.1.5 Advertising Media Consideration


The reason that this media was selected was because television, magazines and Internet were
the best way in which Adidas were able to show there customers their products. As you see
below the picture on the third page that says “Adidas NBA Shop,” in order for Adidas to
promote the “The Brotherhood” they had to come up with a slogan in which they called it
“NBA is a Brotherhood.” Besides Adidas have several technique in media selection which
have discussed in the following sections.

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Advertising Strategy of Adidas: A comparative Study

3.2 Advertising Media


Commercial advertising media can include wall paintings, billboards, street furniture
components, printed flyers and rack
cards, radio, cinema and television
adverts, web banners, mobile telephone
screens, shopping carts, web pop-ups,
skywriting, bus stop benches, human
billboards, magazines, newspapers, town
criers, sides of buses, banners attached
to or sides of airplanes ("logo-jets"), in-
flight advertisements on seatback tray
tables or overhead storage bins, taxicab
doors, roof mounts and passenger
screens, musical stage shows, subway
platforms and trains, elastic bands on
disposable diapers, stickers on apples in
supermarkets, shopping cart handles (grabertising), the opening section of streaming audio
and video, posters, and the backs of event tickets and supermarket receipts. Any place an
"identified" sponsor pays to deliver their message through a medium is advertising.
One way to measure advertising effectiveness is known as Ad Tracking. This advertising
research methodology measures shifts in target market perceptions about the brand and
product or service. These shifts in perception are plotted against the consumers’ levels of
exposure to the company’s advertisements and promotions. The purpose of Ad Tracking is
generally to provide a measure of the combined effect of the media weight or spending level,
the effectiveness of the media buy or targeting, and the quality of the advertising executions
or creative.
Adidas use several advertising media to promote their product in the marketplace. Different
advertising media use in the in the market like commercial advertisement, Print media
advertisement, covert advertising, Infomercials, Celebrities advertisement, Online
advertisement, Public transport advertisement, e-mail etc.

3.2.1 Covert advertising


Covert advertising is when a product or brand is embedded in entertainment and media. For
example, in a film, the main character can use an item
or other of a definite brand, as in the movie Minority
Report, where Tom Cruise's character John Anderton
owns a phone with the Nokia logo clearly written in
the top corner, or his watch engraved with the Bulgari
logo. Another example of advertising in film is in I,
Robot, where main character played by Will Smith
mentions his Converse shoes several times, calling
them "classics," because the film is set far in the
future. I, Robot and Spaceballs also showcase
futuristic cars with the Audi and Mercedes-Benz logos
clearly displayed on the front of the vehicles. Adidas also use this advertising technique.

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Advertising Strategy of Adidas: A comparative Study

3.2.2 Television commercials


The TV commercial is generally considered the most effective mass-market advertising
format, as is reflected by the high prices TV networks charge for commercial airtime during
popular TV events. The majorities of television commercials feature a song or jingle that
listeners soon relate to the product. Virtual advertisements may be inserted into regular
television programming through computer graphics. It is typically inserted into otherwise
blank backdrops or used to replace local billboards that are not relevant to the remote
broadcast audience. Adidas has a large amount of TV commercial advertisements in the
worldwide TV network like BBC, CNN etc.

3.2.3 Infomercials
There are two types of infomercials, described as long form and short form. Long form
infomercials have a time length of 30 minutes. Short
form infomercials are 30 seconds to 2 minutes long.
Infomercials are also known as direct response
television (DRTV) commercials or direct response
marketing.
The main objective in an infomercial is to create an
impulse purchase, so that the consumer sees the
presentation and then immediately buys the product
through the advertised toll-free telephone number or
website. Infomercials describe, display, and often
demonstrate products and their features, and
commonly have testimonials from consumers and
industry professionals. Adidas arrange several infomercials in the sports based program.

3.2.4 Celebrities
This type of advertising focuses upon using celebrity power, fame, money,
popularity to gain recognition for their products and promote specific
stores or products. Advertisers often advertise their products, for example,
when celebrities share their favorite products or wear clothes by specific
brands or designers. Celebrities are often involved in advertising
campaigns such as television or print adverts to advertise specific or
general products. Adidas use David Bekham as their brand ambassador
and many more celebrities in every region to promote their product.

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Advertising Strategy of Adidas: A comparative Study

3.3 Advertising approaches


The positive impact on the market of the adidas Originals communication approach makes
adidas Originals continue their successful new creative marketing tonality. The Fall/Winter
2005 campaign is, as the one from Spring/Summer 2005, photographed by Karl Lagerfeld
and underlines adidas Originals’ lifestyle relevance.
To Celebrate Originality, and in a playful opposing manner to last season, adidas has
switched from the black and white SS05 executions, highlighted only by the iconic blue
Trefoil, to bright and energetic colours in FW05 ads; an engaging creative idea supervised by
adidas Global Creative Director Michael Michalsky and Visionaire’s Stephen Gan. The
shooting took place at Karl Lagerfeld’s studio in Paris.
The frame of the ads shows humour and translates the freshness of the “High Energy High
Style” concept. The result is a new advertising campaign that clearly communicates adidas
Originals’ street relevancy. Adidas Originals contemporary street wear collections are
inspired by the brand’s historical anecdotes.
The Fall/Winter 2005 ads will break globally in July 2005 issues of key lifestyle and fashion
publications such as Kult, Pulp and Black book as well as magazines such as Arena Home
Plus and Teen Vogue.
All adidas Originals marketing communication efforts will evolve around three pillars in
2005: to energize, globalize and contemporize adidas Originals.

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Advertising Strategy of Adidas: A comparative Study

CONCLUSION
Both Adidas and Nike have used the same theoretical systems to create their brand building
programs. The companies are benchmarking each other, using the techniques from each
others successes, when Nike launched their subbrand product Alpha line which was
benchmarked on Adidas already launched subbrand of the Equipment product line for the
elite of sports men. We can find many similarities like endorsements strategies and the
companies advertising strategies. What differs in the endorsement strategies is that Adidas
focuses in sponsoring teams and global events, while Nike have their center of attention on
stars in specific sport like basketball and Michael Jordan or in golf and Tiger Woods.

About advertising do both companies have about the same scale and scoop of advertising but
they try to communicate different messages. These messages from Adidas is; the only one
you compete with is your self whereas Nike communicate a provocative, aggressive winner
attitude which can be related the American sports attitude “You don’t win silver, you lose
gold”. As we can understand the two companies are aiming at nearly the same targeted
customer group but with a slightly differentiation of attitude. Adidas stand for a competing
and winning over your self-attitude, and Nike stands for a winning over everyone attitude.
We in the group think this differentiation is based on the differences in culture between the
two companies and between Europe and USA.

As an overall reflection one can see that Adidas had to overcome, that the both companies
had the same target group. Adidas choose a brand-building strategy that built on the same
theoretical criteria’s as Nike. But they created a differentiation in identity of the brand (see
comparing analysis in the Kapferer Prism Model above) compared to Nike.

Adidas had the same strategy within creating equity value to their brand. They challenged
Nike in endorsement strategy, and in advertising, but with a slight difference in
communicated message, by doing it trough the same medias. To differentiate them self and
make totally own awareness activities, events like Adidas Streetball Challenge was created.
Events like those communicated the Adidas brand around the world.

According to the results and positions the brand-building programs have given both Adidas
and Nike in the sport industry, one can say that branding have been a totally determining
factor. On top of that they made it so good that they are used as models in higher education.

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Advertising Strategy of Adidas: A comparative Study

REFERENCES
http://www.press.adidas.com/en/ Retrieved 7th June 2008

http://www.jdsports.co.uk/whatsnew.aspx?id=5375 Retrieved 7th June 2008

http://www.press.adidas.com/en/DesktopDefault.aspx/tabid-4/79_read-8621/ Retrieved
7th June 2008

http://www.fashiontrendsetter.com/content/fashion_events/2008/Adidas-Denim-by-Diesel-
in-store-event-p1.html Retrieved 7th June 2008

http://www.jdsports.co.uk/whatsnew.aspx?id=5508 Retrieved 7th June 2008

http://www.champion.ie/

"Adidas Orginals - Extended House Party Film". http://www.adidas.com. Adidas. 2009-


02-25.

`http://www.adidas.com/campaigns/originalsss2009/content/#/lifestyle/full-length-film.
Retrieved on 2009-03-20.

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