BRAND IN THE HANDMOBILE MARKETING AT ADIDAS

Alex Dorward, Liam McGean, Matthew Tomlinson, Yixi Yao

BSAD 331DR. B. MUKERJI

Target Market

Through its “brand in the hand” campaign, Adidas is looking expand its reach to target 12-24 year olds

Hopefully reaching customers outside the sporting sphere

Adidas also targets soccer segment in Europe, basketball and Hip Hop (or “Urban Cool”) segment in North America

Porter’s 5 Forces - Competition High Adidas faces stiff competition from

numerous smaller competitors (NewBalance, Asics, Columbia), as well as from very large players (Nike, Reebok)

Threat of New Entrants

How severe is the threat of new entrants?

Threat of New Entrants

Medium Although is it relatively easy to produce

sportswear and accessories, it is difficult to effectively compete in such a market

Promotional costs are very high for this market

Power of Suppliers

How much power do suppliers have?

Power of Suppliers

Low There are very many suppliers and

therefore lots of choice and little supplier power

Power of Buyers

How much power do buyers have?

Power of Buyers

High Since there is such competition, all of

which are competing for brand recognition, buyers have a lot of choice and power

Threat of Substitutes

How severe is the threat of substitutes?

Threat of Substitutes

Very Low There are no substitutes for clothing and

shoes There are different types of

shoes/clothing, however, if somebody requires soccer cleats, they cannot substitute these with another type of shoe

PEST Analysis - Political

What are some political factors that may affect the industry?

PEST Analysis - Political

Regional laws regarding unsolicited mobile marketing

PEST Analysis - Economic Dot Com stock market decline in 2000 may make

people doubt the importance of mobile marketing Price of newer technology phone features are

more expensive therefore affordability issues arise

Increased online advertising popularity resulted in increased online advertising cost

PEST Analysis - Socio-Cultural

Increased use of internet Frequent use of cellular phones More than half of the media

consumption will be digital by 2007 (estimate)

Consumers became hostile towards perceived intrusion on their lives by advertising

PEST Analysis - Technological

2.5G and 3G mobile phones Transfer speeds similar to wireless

broadband 2.5G usage is estimated to go from 8% -

68% from 2003-2006 (Europe) 3G usage is estimated to go from 0% -

28% from 2003-2006 (Europe) Personal Mobile Gateways

SWOT Analysis - Strengths

Strongly recognized brand image Growing customer base within the USA Global Revenues more than $6 billion Largest supplier of sportswear in Europe Advertisements available in a variety of

languages Adidas spends more of its marketing

budget on new media than its competitors, 25%

SWOT Analysis - Weaknesses

Adidas does not have the majority of market share in US Nike held 40% market share

Adidas was not the leader in the European soccer market in 2003 Nike edged out Adidas for the first time

Adidas spends less on advertising each year compared to its greatest competitor (Nike)

SWOT Analysis - Opportunities What are some potential opportunities?

SWOT Analysis - Opportunities In 2003 70% of Europeans had mobile

phones In 2003, 23% of Europeans had mobile

phones with newer technology, allowing for more innovative advertising strategies

A lag in the US mobile phone market gives companies an opportunity to test their strategies first on the European market

Youth spending on mobile media is rapidly increasing

SWOT Analysis - Threats

What are some potential threats?

SWOT Analysis - Threats

Limited bandwidth within the US Regulatory delays and diverging delayed

the introduction of 3G into the US Increased competition in domestic

market Consumers recognize minimal amounts

of traditional advertising Ie. 8 minutes a year of Adidas advertising

per person

Competitive Analysis

Nike is the global leader in athletic footwear

In the US Market: Adidas 16% of athletic footwear market

share (16% Reebok, 40% Nike) Companies compete by signing pro-

athletes such as Michael Jordan (Nike), Kobe Bryant (Adidas), Allen Iverson (Reebok)

In 2003, Nike had 60% of basketball segment, Adidas had 20%, and Reebok 15%

Competitive Analysis (cont’d)

Nike spent $1.4 billion on advertising and promotion compared to Adidas’s $900 million (2004)

Adidas sponsored 2004 EuroCup Nike sponsored Manchester United

in 2002, and increased advertising during the World Cup.

Competitive Analysis (cont’d)

Both Adidas and Nike began “new media” advertising

Nike charged users for all content downloaded to cellular phones

Adidas, as part of “Urban Cool”, partnered with MTV to bring ringtones, wallpapers, and games

Marketing Mix

Price Varies depending on product Run DMC shoes cost $70 Missy Elliott Remix Boots cost $120 Consumers are price insensitive

Product Sportswear and accessories

Place No applicable information found in the case

Marketing Mix

Promotion Significant amounts of promotion required

This includes traditional promotion techniques such as print, billboards, TV, and cinema

Internet marketing Also includes innovative promotion techniques

such as “live billboards” and mobile marketing Mobile marketing seen as the future of

Adidas marketing in order to break through the clutter of advertising

Pros and Cons of Mobile Marketing

Pros….?

Pros of Mobile Marketing

“Breaks through the clutter” There is an abundance of traditional advertisements

More personal, richer advertising possible More meaningful and effective

Is not as intrusive as traditional media since consumers have to give consent

Data can be collected that can help study what consumers want

Attracts consumers outside the sporting sphere Broadens their brand image

Pros and Cons of Mobile Marketing

Cons….?

Cons of Mobile Marketing

Potential for intrusive, unsolicited, unpopular marketing (spam SMS’s)

Difficult (and possibly expensive) to develop compelling content that users want

Does not reach everybody Content isn’t always available due to possible

service interruptions Possibility of increased use of mobile marketing

and consequently getting “lost in the clutter” again

Fragmented and complex due to many different handsets and carriers, different types of functionality, and different preloaded apps

Conclusion

Should Adidas continue with mobile marketing?