International Business Adidas\' Global Market

International Business

Adidas' Global Market Repositioning

Adidas is a massively successful footwear and sports apparel company that has enjoyed penetration of global markets. In the major European markets, Adidas has parlayed its historical reputation for affiliation with professional football and athletic competition into a vaunted status. And its acquisition of Reebok in 2006 would poise it to remain atop its perch there. However, the United States remains the world's largest and most lucrative footwear and sports apparel market. This is the core focus for Adidas, and indeed for the case study here provided.

The study details the struggles which Adidas has experienced in pinning down the interest of American consumers, indicating that though it has had some markedly encouraging success as with the Tracy McGrady sponsored basketball shoe, the larger failure to compete adequately with Nike in the American market has motivated some dramatic restructuring for Adidas. Dividing its operation into three separate footwear divisions, Adidas would work to find ways to emphasize its primacy as a sporting goods company.

In order to improve its fortunes in the American marketplace, Adidas would detach itself from the London based advertising firm which had historically handled its promotions and branding image. Pairing itself instead with a firm based in Los Angeles and partnered to another firm based in the Netherlands, Adidas would seek to reposition itself within a global context. Still, it has centered its efforts on sports of global interest even as it attempts to corner the U.S. market. This is evident in the partnership recently developed with international football star David Beckham. The case study tells that "following Beckham's highly publicized move from Real Madrid to Los Angeles Galaxy, he signed a five-year, $250 million contract. Beckham will be featured in a variety of media, including billboards and prime-time television ads . . . As Stephen Pierpont, vice president for brand marketing at Adidas, said, 'The U.S. market has a real opportunity to grow. Football has always been a core sport for Adidas. We hope David will be a catalyst for growth.'" (Case 13.1, 467)

Discussion Questions:

Adidas approach to seizing the American market seems to be somewhat misguided in its focus. All evidence suggests that it continues to lag behind Nike in this largest of markets because it has failed to properly seize on the professional sport culture which dominates the U.S. The celebrity stature of its professional athletes represents perhaps the greatest cause for its singular importance as a sports footwear market.

Therefore, the ad campaign which seeks to redress this issue by focusing on its heritage as the primary provider of footwear for Olympic athletes falls somewhat short of the mark. There are a number of drawbacks to this strategy in the context of the United States, not the least of which is the degree to which professional sports generally overshadow the importance of the Olympic games. The general cultural interest in professional sports makes the Olympics a secondary cultural moment to American buyers. The fact that it occurs only once every four years also means that its visibility and permeation of cultural awareness is far overshadowed by the daily hum of sports broadcast and sports coverage.

Adidas appears to have misjudged the American market in spite of its success with the McGrady shoe. This should be seen as a precedent to be repeated rather than an isolated success.

The new slogan which contends that 'Nothing is Impossible' may resonate with the buying public. However, it lacks many of the qualities which make 'Just Do it' so iconic a tagline. The imperative which is present in the Nike tag is simply not found in the 'Nothing is Impossible' concept. Something more of an adage or a motivational phrase than a company slogan, it lacks the Nike slogan's clear sense of action and urgency. Instead, it posits a claim that many may be apprehensive to respond to for its hyperbolic nature. The simplicity and generality of Nike's slogan is one of its core strengths. This is something that the newly suggested Adidas slogan does not offer to consumers.

The high-tech Adidas may be useful for demonstrating that the company remains innovative in the area of shoe design. With respect to PR, the prohibitively high pricetag on the high-tech shoe suggests that it is unlikely to be a high seller. However, it is also an historically effective mode of marketing for Adidas to pair such a shoe with a vaunted athlete such as David Beckham or Reggie Bush. By creating a visibility and a positive association to a successful and popular professional athlete, Adidas may not significantly increase sales of the shoe but it will have the opportunity to associate its product with a positive sports endorsement. This could have the effect of improving sales and visibility across the boards, even as the high tech shoe remains something of a luxury item and a demonstration of innovation.