What enabled Adidas to be the Market Leader in

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What enabled Adidas to be the Market Leader in
How has Adidas evolved since it was
founded?
Timeline of Adidas
•
1920-1925
•
•
Innovators in Marketing – gave away shoes to German athletes
competing in Olympic games. By 1936 most athletes would compete
only in Dassler shoes.
•
Bitter family feud, company dissolved. Rudi established Puma. With
his departure Adi renamed company Adidas & registered the
trademark 3rd strip to Adidas shoes.
•
Adi expanded spikes concept in track shoes to soccer shoes. Partial
credit was given to the soccer shoes for Germany’s World Cup
Championship that year.
1928-1936
1948-1949
1954
Fouded 1920 by Adi Dassler – wanted to design shoes for athletes in
soccer, T&F, & tennis.
The Dassler brothers (Rudi & Adi) made their first major innovation in
athletic shoes, integrating studs & spikes in track & field shoes.
Timeline of Adidas
•
Adidas is the clear favorite among athletes – 75% of T&F
athletes wear them in Olympics. ’63 started producing soccer
balls, ’67 athletic apparel
•
Adidas became leader in consumer jogging shoes in the US. Tshirts and apparel bearing the 3 stripes became popular
among teens.
•
Adi Dassler dies, Adidas remains worldwide leader in athletic
footwear but they are losing market share fast to Nike in US.
Market share loss continues through the 80’s and mid 90’s.
•
Through cost cutting, new model launches, and endorsement
contracts with popular athletes Adidas increased sales by 75%
over prior year in US. Becoming 3rd largest athletic footware
company in US – trailing only Nike and Reebok.
1960-1967
1970’s
1978
1994
Timeline of Adidas
•
Acquisition of Salomon SA – diversified beyond shoes &
apperal to ski, golf, bicycle, & winter sports.
•
Stock price takes a hit possibly due to Salomon acquisition.
Adidas mgt divested all of Salomon’s winter sports & bicycle
equipment.
•
Acquistion of Reebok, included Rockport footware, Greg
Norman apparel, & CCM hockey equipment.
1998
1998-2005
2006
What enabled Adidas to be the
Market Leader in the past?
Product
Innovation
Analysis – Adidas was an
early entrant into athletic
shoe industry. They
developed many of the
features still present in
shoes today.
Created a strong brand
based on high quality,
innovative products that
top athletes choose to use
in training and
competition.
Track and Field
• 1925:studs
and spikes
• Arch
support
• 1949 –
molded
rubber
cleats
• 1952 screw in
spikes
Soccer
• 1954 –
screw in
spikes
• 1963- Began
producing
soccer balls
• 1967 –
athletic
apparel
Results
• Over 700
patents
• Strong
reputation
among top
athletes
• 1970 –
leading
brand in
consumer
jogging
shoes
Marketing
Innovation
•Developed strong following with
top track and field athletes.
Gave shoes to
German
athletes in 1928
Olympics
•Applied this same model years
later with soccer shoes and
apparel.
75% of track and
field athletes
wearing adidas in
1960 Olympics
•Successful because adidas was
creating innovative, high quality
products.
•Product innovation enabled
marketing innovation.
•Different than Nike –
marketing is what set them
apart from the start.
2 stripe (and
later 3 stripe)
brand
78% of athletes
wearing adidas
at 1972
Olympics
Has Adidas positioned itself well
in developing markets?
Adidas is a global player
•43% of sales from Europe,
which is slowest growth
market
•Encouraging that #1 in
developing eastern
European market, Russia
expected to be most
profitable market in
Europe by 2010
•2006 acquisition of Reebok
not enough to overcome Nike
in North America
•Growing number of sales in
Asia market, fueled by adidas
success in China.
•Strong demand and
large population
Net Sales in Emerging Markets
Analysis – strong growth trend in sales in two very attractive emerging
markets. Growth may be result of Adidas brand strength in soccer, world’s
most popular sport.
Regional Footwear/Apparel Markets
Region
Size
Market
Growth
Rate
Adidas Sales Adidas Sales
Growth
Adidas
Position
North
America
$42.5 billion
3%
$2.9 billion
5%
#2 behind
Nike
Europe
N/A
2% (20%
Eastern
Europe)
$4.3 billion
8%, mainly
in Russia
#1
Asia
3.2 billion
people
13% (South
and Central)
15% (China)
$2.2 billion
17%
#1
Latin
America
N/A
N/A
$657 million
39%
#2 behind
Nike
Analysis – Adidas is strong in several developing markets (Eastern Europe,
China) but its focus and acquisitions have been geared towards overtaking
Nike in the large, but slow growth North America market.
Has the Acquisitions helped position
Adidas against its competitors?
Salomon Acquisition: Was it
Successful?
Product Line Before
Product Line After
Athletic Shoes
Athletic Shoes
Athletic Apparel
Athletic Apparel
Ski Equipment
Golf Clubs
Bicycle equipment
Winter Sports Apparel
•Analysis:Paid 1.5bn to diversify product line. Surpassed Reebok world’s
2nd largest sporting goods company, however…
Adidas’s Stock Price
60
Stock Price (in euros)
50
40
30
Adidas Stock Price
20
10
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
•Stock price fell soon after acquisition in 1998, Salomon divested
except for Taylor-Made Golf line. Adidas overpaid for acquisition.
Adidas after Salomon was divested
Product Line
Before
Athletic Shoes
Product Line
After
Athletic Shoes
Product Line
After Divestiture
Athletic Shoes
Athletic Apparel
Athletic Apparel
Athletic Apparel
Ski Equipment
Golf Clubs*
Golf Clubs
Bicycle
equipment
Winter Sports
Apparel
•Only added Golf Clubs to product line
Should Adidas be concerned with losing North
American market share to Nike?
Retail Store Strategy
2006
2007
Adidas Retail
Locations
875
1003
Reebok Retail
Locations
283
430
Adidas AG Geographic
Revenue Performance
€ 5,000
€ 4,500
5.0%
31.5%
€ 4,000
€ 3,500
106.4%
3.2%
€ 3,000
-9.4%
Europe
North America
€ 2,500
11.6%
€ 2,000
32.6%
17.6%
€ 1,500
Asia
Latin America
27.8%
€ 1,000
1229.2%
€ 500
56.4%
31.7%
€0
2004
2005
2006
2007
Key Growth Potential:
Europe – continue focus on soccer (including endorsements) and build brand
loyalty
Asia/Latin America – increase distribution network and brand awareness
- All three regions averaging double-digit growth rates
TaylorMade Advantages
Shift to International
Markets
Strength in
Metalwoods
Revenues from Asia:
1999 – 13% of total
2007 – 35% of total
Metalwoods currently
hold number one
ranking.
Decreasing reliance
on U.S. Market:
1999 – 69% of total
2007 – 52% of total
Irons hold less than
half market share of
industry leader
Strong Apparel Presence
Over 70 touring pros
lift apparel presence.
Golf balls have seen
limited success
Conclusion – TaylorMade should hold U.S.
market share in U.S. given the brand’s
strenghts, however, TM is only 8% of Adidas
AG global revenues. TM cannot help Adidas
overtake Nike in U.S. market
TM
8%
Reebok
23%
Adidas
69%
Adidas Global Revenue Sources (2007)
6.4%
Remaining regions =
71.3% of revenues
22.1%
42.8%
Europe
North America
Asia
Latin America
Conclusion – The majority of
Adidas’s revenue streams are
outside U.S. market and are
growing significantly – let Nike
lead U.S. market but dominate
Europe and emerging markets.
N.A. market 28.7% of
revenues
Reebok Global Revenue Sources (2004)
11.4%
21.4%
12.5%
Europe
United Kingdom
United States
Other Countries
54.7%
Conclusion – Use Adidas’s
control and production
efficiencies to enhance Reebok’s
distribution network in U.S. to
increase U.S. revenues.
U.S. market 54.7% of
2004 revenues
Is there another corporate strategy Adidas
should be pursuing?
Alt Strategy Options
• Use Adidas as revenue driver outside of U.S.
market – restructure Reebok strategy to
capitalize on historic revenue performance in
U.S.
– Decrease number of Adidas retail outlets in U.S. convert to Reebok retail
– Increase Reebok U.S. endorsements
• Use Adidas global distribution to further
increase TaylorMade international revenues

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