Five performance benefits

To be relevant to our target consumer as the performance brand, we have identified five consumer benefits which will form the basis of our innovation pipeline for the next five years. We believe that serving these benefits will keep us at the forefront of the industry, building brand image and allowing us to leverage our technologies and positioning seamlessly across categories. Faster: To help athletes be faster, we will focus on reducing product weight, making the lightest products on the market. The franchise will be built with the AdiZero platform. Already prominent in 2010, this will be a key initiative for 2011 where we will introduce even lighter products in football, basketball and American football. Stronger: With adiPower, we intend to create a franchise to own power enhancement in sport. This platform will include products such as Predator in football, Barricade in tennis and Techfit apparel. Smarter: Through interactive products, we will help athletes and consumers of all fitness levels to be, train and perform smarter. We work with the best athletes and coaches around the world. Through platforms such as miCoach, we will make this knowledge available to every consumer, helping them to define and work towards their individual goals. Cooler: These products will be geared to help the athlete to always have the right temperature (cooler, warmer, wind protection, etc.). This will be served through the Clima franchise, which is already one of our best-known franchises around the world. Natural: Natural motion is a major trend in our industry. Drawing on our long history, experience and understanding of the shape of the foot and movement of the body, we will create a new platform of products around natural motion over the next five years.

Product Life Cycle The product life cycle is basically all the stages that a product passes through, from the original idea, right the way to the decline of the product. The first stage of the product life cycle is research and development, where ideas are put forward and researched, leading to a prototype of the product. Once the product has been developed into the finished article, it is then introduced to the market. In this stage of the product life cycle the branding of the product is decided and the copyright and other product protection schemes are obtained. In the introduction stage the pricing strategy is decided on, which is usually either a low price to obtain a high market share, or a high price to recover development costs. In this stage while the product has yet to develop its reputation,

distribution channels are limited. Generally in this stage sales are low, there is little growth and marketing costs are high to try and establish the product. An Adidas product currently in this section is the Adidas F50, as it has been recently released and yet to establish itself, also the marketing for this product is very high at the moment, which is another characteristic of this stage. Now the product has been introduced to the market, it enters the growth stage, as suggested by the name it is where the market share of the product increases and starts to stabilise. In this section the marketing starts to build the products brand and sales rise quickly, therefore increasing profits. The Adidas Predator Pulse football boots are currently in this section as they are relatively new and are becoming established within the market, as the sales of this particular football boot are rapidly increasing. If products survive the previous stages, they tend to spend the longest in the maturation stage. In this section firms try to differentiate their products from other companies as in this stage competition is high. During this stage, promotions used by the company increase, due to the same reason of high competition. Also, at this stage of the product life cycle, the product has reached its peak in sales, and Adidas product currently at this stage is the Adidas Predator Mania, as the sales have reached their highest point. After the maturation stage, products enter the decline stage, where the amount of sales drops. The drop in sales is due to advances in technology, changes in fashion, or customer tastes have changed since the product was launched. In this section the price of the product is usually drastically cut to maximise sales. The product stays in this stage until production is ceased on the product. The Adidas Predator Precision is currently at this stage, as it is passed its peak and sales and profits are dropping.

Boston Consulting Group Matrix The Boston Consulting Group Matrix uses market growth and market share to determine the type of product, there are four different categories that a product can fall into:

Dogs These are products that have a low market share in a low growth market, these products dont generate any profits for the company and are usually products that have passed their peak and have declined. If a companies product is a dog it is recommended to get rid of the product, for Adidas their product that fits into this category best is the Adidas Predator Precision, as the product has been around for a few years and has passed its peak.

Cash Cows These are products with a high market share in a low growth market, these products generate a high profit, this is when a product is at its peak and there are a lot of products competing with it for market share, companies compete by marketing their product. Adidass product that falls into this area is the Adidas Predator Mania, as it is currently at its peak in terms of sales and is also a very profitable product.

Problem Children These are products with a low market share in a high growth market. They do not generate any profits, however it is advised that you keep these, as they can mature into Stars. Alternatively, these can turn into dogs, which would be bad for the company. Problem Children are generally products that have recently been introduced to the market and have yet to establish themselves. The Adidas F50 falls into this area as it has recently been released and is yet to build its reputation, therefore, it could turn into either a dog or a star.

Stars These are products with a high market share in a high growth market. These bring in large amounts of profits and should be kept. The profits can be used to fund Problem Children so they can mature into Stars. The Adidas Predator Pulse from Adidass range of football boots falls into this area as it has rapidly increasing sales and profits.

High

Star

Problem Child

Market Growth

Cash Cow

Dog

Low High

Market Share

Low

Ansoff Matrix This is a marketing tool used by companies to plan their products futures. There are four main categories that can be chose:

Market Penetration This is using a current product, within the current market, using different forms of promotion to achieve more sales. This is low risk as it costs the least money and therefore, if it fails, the company havent lost much money by doing this. Adidas could use this method by using alternative promotion, aimed at the same market, using a pair of their football boots currently on the market.

Market Development This is where a current product is marketed in a new market, this can be done via branding, advertising and other forms of promotion. This can also be achieved by locating the product in areas where previously the product hasnt been sold. This method is medium risk, Adidas could use market development by selling a current product in a new country, where it wasnt previously sold.

Product Development This is where a new product is marketed at the companys existing customers, this is where new products are made to replace old products. This often occurs with football boots, where each season a company will bring out an updated version of a previous product. For example, Adidas bring out a new version of the Adidas Predator football boot every few years.

Diversification This is where a new product is developed, aimed at a new market. This is very high risk, as the company have no previous knowledge of the product they are producing, or the market they are promoting their product in. Adidas could use this method producing goods such as portable CD players, as this would be producing a product that Adidas arent familiar with and it will be sold in a market that Adidas have no previous knowledge of.

Advertising
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 Adidas has been using endorsement strategies in their brand-building programs. 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. Adidas choice was to experiment with sport events, with which they made great success. Examples of that is the Adidas Streetball Challenge a local 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. (Sourcewww.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 Adidas advanced from $1.7 billion in 1992 to $4.8 billion in 1998. According to sales figures for company, it seems that Adidas has succeeded to create a brand loyal customer who perceives Adidas products as top quality.

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.

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 ESPNs 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).

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.

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.

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.

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.

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"), inflight 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 companys 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.

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.

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.

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.

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 Visionaires Stephen Gan. The shooting took place at Karl Lagerfelds 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 brands 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.

Customized distribution The distribution strategy of Adidas can be summarized in a simple concept: the aim is to be as close as possible to the final consumer. After having analyzed the purchase process of their clients, they came to the conclusion

that the interactive experience and the availability, convenience and the size of products offering are the main keys to a successful distribution strategy. As a consequence, they decided to follow to main objectives: To expand the controlled space (own retail business, exclusive retailers, joint ventures, co-branded stores with organisation or other brands). To improve the retail relationship The final goal is to increase the level of brand control, i.e. to make sure that the product offering fits the consumers expectations and that the presentation is optimum. Ultimately, it allows a better and easier segmentation depending on the location of the retailers and on the given customer base that they can reach, and by improving the relations with the retailers Adidas can improve the flow and the quality of the information exchanged with them. This will allow the brand to improve its market responsiveness. Now that we are aware of the global directions given to the Group Strategy, we will detail in the following paragraphs the particularities of the main brand and the two sub brands strategies.