Adidas’ Image Problem – Strategy with RS

Adidas dominance of the sports market is under threat. Its sales is slowing down & Nike’s sale it is galloping at a rapid pace.

However, Adidas Originals, a sub-brand of Adidas is growing at a faster clip & will continue its canter aided by their latest release – on 21st March’15 – Yeezy Boost Design by Kanye West – was released to a rapturous response, at least on social media. Kanye West is a American rapper, musician & fashion designer.

What could be the thinking of Adidas behind the recent launch? Most of the customers who buy sports shoes do not ever wear it to the sports ground for which they were designed but wear it to make a fashion & lifestyle statement. If it is finally ending up as fashion & lifestyle brand then why take the circuitous route? Why not focus on fashion & lifestyle itself?

What is the problem with pursuing this strategy? Adidas derives 70% of its global sales from sports segment. Its image as a sports brand is likely to get dented if Adidas Originals, which is positioned as fashion & lifestyle brand become more popular.

If you are still not convinced about the extent of problem then let me get John Horan, founder of Sporting Goods Intelligence to explain the gravity of the situation, “Think of it like a glass of beer. Your fashion business should be your foam. The performance business has got to be the beer. What they have is a lot of foam and not enough beer.”
If Adidas focus on froth – fashion & not on the body- sports performance segment, then Nike will have a easier time overtaking Adidas.

If you were the CEO of Adidas what strategy would you pursue to get it to rock again?

 

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rajesh-srivastava-insideiim

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

14 comments

Rajesh Srivastava

Mohit the Image of Adidas is of a sports brand … and that is what it should try & protect. If it starts getting perceived as a fashion brand then it will compete with brands like Diesel, Jack & Jones which are authentic fashion brand. And is this situation it will be in severe disadvantage. Noe it will leave its sports heritage & not gain a strong footing as a fashion brand.

soumitra

Adidas should focus on creating sports shoes with fine touch of current fashion statement. It would serve both the purposes – retaining their position in sports market and attracting customers who want fashionable shoes.

Rajesh Srivastava

Soumitra I would differ from you. Strategy means saying yes to a few things & no to every thing else. A brand which is everything to every body is nothing to anybody. For a brand to be world-class it has to own a unique Position in customers mind. Adidas is synonymous with sports & it should focus on owning this in customers mind & heart. As mentioned in the post – sports is the beer, fashion is the froth! Should Adidas focus on Beer or froth? I think ‘beer’.

Elisan Talukdar

If Adidas wants to b d “beer” and nt d “foam” it must target d audiences in sports/cricket/tennis etc crazy countries such as india, pakistan, bangladesh, germany etc.. I think being a sponsor in any of such countries will bring revenue to them as a sports shoe maker and the costs of establishments 2 b borne by d adidas originals. once u make up d image unload adidas original in d same countries where it will make more revenue than sports shoes. ultimately it’s d decision of managers 2 make hw much originals 2 b unloaded n hw much sports shoes..4 d brand 2 b intact. n obvio the market scenario should b judged before hand… 🙂 plz say if dis cud b done.. 🙂

Rajesh Srivastava

Elisan my apology fr not responding to you so late. I had missed your comments. 1. Adidas had sponsered Sachin’s bat & several other cricket players too. But it did not have the desired result.
I am not able to understand the other points you have made … can you please post your comment again.

Utsav Pandey

Adidas should continue the way they are working now focusing on making sports shoes, the beer is the main content it is people who made foam out of that beer for their fashion and lifestyle statement. Adidas should stick to the original business along with little fine tuning according to the the market demand, and from a personal point of view i think the sporty look of adidas product itself is the biggest style statement and USP of the business.

Rajesh Srivastava

Elisan your strategy is good. Very good. Then why has Adidas not pursued tis strategy? Adidas till recently focused only on football to drives its Image & franchise globally. It had the top football stars endorsing it … it also has the best national team with it. Hence they do not have expertise in cricket. And when they started focusing on cricket in India, Nike had already taken a lead. Most cricket stars are endorsing Nike & it benefited Nike.

09inft57

I think they need to focus own there major business model from where they are generating most of there revenue. and keep of revamping business model according to changing customers taste. apart from this they need to keep eye on what others competitors are heading towards . This strategy may help them to achieve there slowly fading image of sports brand.

Rajesh Srivastava

Abhishek that they are doing all that you are suggesting. But unfortunately their competitor – Nike & Under Armour are doing a better job. Hence Adidas is losing ground to them.

khushal gupta

I think we need to renovate all the showroom that looks ordinary and simultaneously require product innovation. we have seen many local shops designed sophisticated, based on themes and that looks attractive. people are willing to enter in these shop. Moreover companies marketing efforts matter allot i think there are some loophole in proper segmenting, targeting and positioning. we need to retrospect that what are the factors or decisions or policies that made us going downward and then we reset short term objectives, new planning and marketing campaign.

khushal gupta

I think we need to renovate all the showroom that looks ordinary and simultaneously require product innovation. we have seen many local shops designed sophisticated, based on themes and that looks attractive. people are willing to enter in these shop. Moreover companies marketing efforts matter allot i think there are some loophole in proper segmenting, targeting and positioning. we need to retrospect that what are the factors or decisions or policies that made us going downward and then we should reset short term objectives, new planning and marketing campaign.

Rajesh Srivastava

Kushal Gupta I agree with the main points you have made:
1. Product innovation
2. Show room innovations / revamp
3. Redo STP again – Segmentation, Targeting & Positioning
4. Set short term goals & acheve them …