Situation Analysis

TO: Chris Sagan (Sales Manager)

CC- Peter Armstrong (Director)

FROM- (Student Name)

DATE- November 05, 2018

Goal or vision of the company

• The main aim of the company to cater better quality, feel, look and representation of their product in order to satisfy the expectation of consumer and to offer them with the uppermost worth.
• The Adidas has a great brand image in the market. The company has a goal to enhance the brand image in the competitive world (Huttner & Brem, 2017).

Adidas holds 22% of market share in the competitive world. Adidas has created distinctive image in the intelligence of the potential consumers through focusing on their quality of product from a trustworthy brand name. Adidas is able to uphold its brand essence. But at some point, Adidas dropped behind Nike in term of innovation. Adidas has not able to introduce new and refined product in the market within every six months. The positing of Adidas in the marketplace has after Nike in term of fashion, as well as sales and profits (Holtbrugge & Schuster, 2017).

• The company cover with the strong group of brand such as Adidas, Reebok, and Taylor made which benefited the company to build as a leading marketing position in the world (Kempf & Franklin, 2016).
• The financial year of 2009, the whole profits of the company was 10,318 million with the net earnings of 245 million.
• Adidas was the official sponsor of FIFA 2010 world cup. The running segment of Adidas has a main motive is to achieve growth in the market with market share by constructing credibility amongst the athletes (Tomlinson, 2008).

• Managing External Supply

The company confront strategic challenges of weak distribution network. Adidas operates in all countries which in turn difficult for the company to manage and operates with a strong distribution channel (Agarwal & Durga, 2016).

• Being Competitive

In the USA, Adidas is behind the Nike and also shooting around under Armour, still at only third place.

• Being Environmentally responsible

The environmental sustainability poses a huge number of challenges for the Adidas and its functions, whether for the management of product, innovation, development teams, management facility, or their manufacturing partners (Tacconi, 2016).

Product

• It has catered by the company in a mixture of designs and fashion, the footwear of Adidas is vigorous and sporty.
• Adidas has also introduced appeal and accessories which are the secondary products for the company. The Apparels include T-shirt, sweatshirt, jackets; shorts which are in great demand (Ang & Rusli, 2018).

Pricing

• Adidas use skimming pricing pattern when product are recently launched in the marketplace and are exclusively designed else for run of mill merchandise.
• Adidas mostly use aggressive pricing with the maintenance in the intelligence of competitors such as Nike, Puma, and Reebok.

Place

• The company has its own private stores in which the product is provided straight form Adidas.
• Moreover, numerous multi brand outlets also have Appeals and footwear of Adidas on exhibit.
• The company also use online channel to sell their product such as Myntra, EBay, Amazon, as well as the online website of Adidas.

Promotions

• Majorly company rigorous on television and manufactured goods placement.
• The innovative group of Adidas is known to pump adrenaline in their clients through ads which are well prepared, very inventive, and packed with energy.

Size

The global market of footwear has seen as a diversified crossways diverse geographic region such as Europe, Asia pacific and Worldwide. Adidas have spread their roots at greater level and have number of retail showrooms, strong division channel, and large user base at global level (Breedveld & Scheerder, 20160

There are certain restrain faced by the company which are slowing down the expansion of the international footwear market such as growing concern towards environment and increasing price of footwear are the major reasons for restrain in the global market of footwear (Shashina & Olentsova, 2016).

The market of footwear has been categorised into three parts which include by type of footwear, by customer group, and by characteristics. Additional, this type of footwear involves

• Athletic footwear – Shoes, sports shoes, hiking shoes and backpacking shoes
• Non-athletic footwear – Casual footwear, fashion footwear and formal footwear

Existence of high barrier to the entry field

The sporty footwear business in the US created the high barrier to entry in the field. The brand name character and customer faithfulness which gives probable beginners set an indistinguishable blockade for the company (Rothaermel, 2015).

The bargaining power of the supplier is weak. The main reason is the inputs are homogeneous in the industry of athletic footwear, more than 90% of the making are determined in low-wage, manual labour excess countries far.

Positioning

The cost of the shoes matters for the customers or the end users as well as more insightful to the fashion style, but the earnings scope of the business cannot affect negatively because of the profit scope of the business affect then they would reduce the production in developing countries.

The company can face the problem alternative to athletic footwear because some of the companies such as Nike have a same product quality with variety of substitute in the market. But some of the other shoes are not appropriate for games; therefore it is not a comprehensive alternative to sporty footwear.

The sporty footwear marketplace of US is seen as a demanding and drenched which is packed with stern rivalry and slow expansion. Nike, Reebok, and Adidas are the main brands which occupy more than half of the marketplace share and remained comparatively constant.

Political

• Risk starts from unexpected increase of import restriction
• Germany is the most important exporter to United States and any obligation of trade duty may force the German wealth and Adidas (Cruz & Karatzas, 2016)

Economic

• Global economy out of recession
• One of the leader economies LVMH’S impact on globalization
• Large presence of workforce

Social

• Boost in trend such as body fitness and yoga between millennial
• Perception of prestigious items
• Major of population has liberal mind set but rising intolerance is a serious concern

Technological Factors

• Technological innovation within the private and educational sectors
• High percentage of research and development expenditure

Legal

• Low level of labour
• US ban misleading advertisement
• Counterfeiting reduce prestige

Environmental

• Change in arable lands
• Wastage of energy affect the cost of distribution
• Carbon footprints

Market Segment 

• Geographic

The market is divided into diverse units of place such as region, area, cities, and countries.  Adidas bold 2009 have operated in metropolitan and non- metropolitan cities of India (Vajarodaya & Fernando, 2017).

• Psychographic

The scrutiny of the diverse personalities of each consumer, the solitary key is to be diverse: Hard workers, Goal achievers, Achievers, Well-experienced.

• Behavioural

In this segment, the consumer is divided according to their acquaintance, answer, attitude, and utilization of the products such as benefits, athletes, brand freaks, gym regular user, sports lover, image seekers.

• Demographic

It is divided into the segments that depend on the variable of income, family size, family life cycle, gender, age such as

• Age 15-36
• Income level: $16000
• Societal Class: upper, middle, and lower class
• Gender: both male and female

• The target market of the company is the inhabitants between the ages of 18-35 years old
• The objective of the company is to obtain as much as sports instruction personalities into using their apparel also
• The next target of the company is to get hold of the market control in a number of other new markets.  

In the competitive market, Adidas focus on producing and selling of sports goods which involve footwear, apparel and some sports equipment therefore, the company need to invest huge amount to main sports events and key sports club around the globe to endorse and positioning the image of the Adidas’s sports product at the globe leading high excellence and most admired sports producer. Nike is barely strong rivalry in sports gear as well as in apparels for Adidas. They mutually have played prominent role in the industry of sports in term of sales and consumer satisfaction. Adidas strive to have availability of product to a extensive diversity of venues and they desire to make their manufactured goods accessible to all the group of customers.

 Specific

• To increase the customers satisfaction ‘
• To reenergize brand
• To gain market share
• To establish a raw competitive advantage over rivals

Measurable  

The company has an objective to achieve 80% of customer’s satisfaction in the market and try to reenergize the brand up to 70 per cent and have an objective to gain market share up to 50 per cent which is require to achieve the target within five years.

Company analysis

Achievable

The staffs of the company have agreed that increasing sale by 20 per cent would help the company to achieve overall 70 per cent of the targeted objective.

Realistic

The current economic climate of the company is positive therefore, the consumers have discretionary income available which helps the Adidas to increase the production of products and help in achieving the desired goal.  

Timely

The objective of the company has a time limit of five years which is sufficient to meet the requirement of establishing a deadline to meet the marketing objective of the Adidas.

Planning

Pricing strategies

• Brand Value

1. Price should be Moderate
2. It should match the psychology of the consumers.

• Appropriate for the aim clients

1. The value of the product should counterpart the targeted clients                            
2. To target upper class customer, value will be superior
3. For central point class clients, value should be reasonable

Promotion strategy

• The company have to improve and focus on their communication with present and prospective customers.
• The company must also concentrate and give more promotional offers to their loyal and existing customers to retain them.
• Adidas should increase their advertisement in other media to attract more.

 Channel Strategy

• The company should concentrate the products to the profitable customers segments to increase their sale.
• The company can expand their roots in the regional market.
• The company can also expand their business in the international market.

Product strategy

• The company should concentrate on improving the design of product and endorsement, get better product pleasant appearance to customers, competitors struggle for market split and taking the best product market point.
• The calculated alliances are not only deliberate to be reflected in the brand name but also from the spread of trade name appearance. The idea of value novelty, product, and sale more successful (El Sabour & Mohamed, 2016).

• The training and recruitment process of Adidas should be individuals who truly appreciate and can foresee the marketplace, this dynamic talent. Then the company can expect the marks of these re-shape their market fragment to meet the needs of Americans consumers.
• The company have long been well-known as a strict superiority control system is known. This scheme guarantees the elevated quality of Adidas merchandise at nominal price.
• Adidas cover the overseas market therefore; company should be personalized by putting more elements into its future product design in order to promote the product localization.
• To keep the inventory an optimal level, Adidas need to implemented in combination with its ordering scheme comparable to reproduce which will develop the strategy.
• Adidas need to learn the specialized e-commerce enterprises sanctioned to function its online sales.

At the end it is evaluated by measuring actual performance and targeted performance of the Adidas. It will be examining that whether company has achieved its strategic objectives from the implementation phase or not. If not then changes will be made to progress the presentation and results.

Therefore, to control the deviation, the company will adopt different measures to achieve the desired goal of Adidas.

Tactic 1

 To control over the brand value of the company, the company should analysis the taste and preference of the customers to match their product to the psychology of the customers through the method of survey.

Tactic 2

To target the consumer, the company need to target market according to the demand of the products. The price of the product will be settled according to the demand of the product in the market.

Tactic 3

In order to sustain the existing and loyal customers, a positive word-of-mouth will have to be generated. Building a extremely enthused and capable sales team progress the visibility and endorsement of brand.

Tactic 4

Adidas can progress administration of paid assignment and website link to societal media to make simpler and get better the functionality of Ecommerce platform to make a most excellent class shopping understanding. Optimize visibility of website build embattled communication with the clients.

Tactic 5

The company can grow one more money-making allocation channel from side to side their factory outlets by learning from their own retailing skill to improve sales strategies.

The company can expand their roots in regional market by establishing Reebok as the foremost fitness brand. Focal point on speed, steadiness and customers, the company can present Adidas and Reebok in a reliable way in term of diversity and pricing

Tactic 7

The company can expand their performance in up-and-coming marketplace such as Russia, China which will help the company to cover their roots globally and can compete in the market at global level. The company can expand the fast fashion business through Adidas Neo label.

Challenges faced by the company

Tactic 8

The company should innovate the products, services, and process in all area of group. The company should produce at least one innovation and significant development per year which provide assortment of manufactured goods to a wide range of consumer.

Tactic 9

Adidas can create a work environment that would help in encouraging innovation, teamwork, and achievement through strong leadership and employee engagement which would help the company to improve design of product and promotion.

Particulars	1st	2nd	3rd
Direct marketing	21000	20000	17000
Traditional advertisement	6000	8000	10000
Social Media marketing	5800	7000	8000
Sales	20000	15000	17000
Total	52,800	50,000	52,000

Cost-Volume-Profit Relationships – Breakeven
	Per Unit Amounts
Selling price	$              128.00
Variable costs	$                35.00
Contribution margin	$                93.00
Total fixed costs*	$       5,00,000.00
Breakeven in units	$        5376.34
Breakeven in dollars	$       6,88,172.04

Calculations of Sales growth rate
Financial year ends in December. EUR in millions except for per share data.	2014-12	2015-12	2016-12	2017-12	Average growth rate
Revenue growth rate	0.29%	16.38%	14.05%	9.99%	10.18%
Calculations of total expenses growth rate
Financial year ends in December. EUR in millions except for per share data.	2014-12	2015-12	2016-12	2017-12	Average growth rate
Total COGS	3.51%	14.95%	13.31%	6.07%	9.46%
Total operating expenses	1.31%	18.60%	12.11%	8.88%	10.22%

Activity	Time Period	Objective of Growth
Opening of New stores with new opportunities	7-8 months	Plan to open  16 stores in Asia to target maximum customers
Giving New face to the Brand	5-6 months	Cristiano Ronaldo can be the new face for the brand that will hit among the new users
Analyse Taste and Preference of customers	8-9 months	To compete in the competitive market
Hiring more new expertise	4-5 months	Hiring of experts for innovative products
New Budget Plan	7-8 months	Analyse the financial requirement for the new plans
Improve Distribution channel	9-10 months	To enhance the sale of the products
Beating the summer heat in a ‘pun’ny way	5-6 months	To enter in the existing market with innovative products for summer

References

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