Analysis of Adidas Firm’s Strengths and Weaknesses

Executive Summary

The brand audit requires two distinct steps to understand a company‚Äôs strengths and weaknesses. These stages are the overview of how the organization‚Äôs products or services are marketed and understanding the customers‚Äô perception of a brand. The brand that will be evaluated in this report is Adidas, one of the leaders in the sports apparel industry. It provides comfortable sportswear and equipment for professional athletes and amateurs. For example, football teams prefer to purchase Adidas shoes due to their durability and pleasant feeling when training. For more than seventy years of its existence, Adidas has proven that the firm has been manufacturing high-quality products. David Beckham and Lionel Messi, who participated in the ‚ÄėImpossible Is Nothing‚Äô campaign, were the brand‚Äôs ambassadors. However, the analysis revealed some issues that need to be overcome to enhance the brand‚Äôs prosperity. The main problems are reliance on external manufacturers, inadequate support of female athletes, insufficient representation in basketball and golf, higher prices than in Nike, and slow design. These issues can be addressed if Adidas recruits women into its marketing campaign, develops cheaper but high-quality fabrics, and shortens the deadline for planning and production.

Brand Audit

When a particular brand is created and gains interest, it may undergo a comprehensive assessment. It is known as a brand audit, which can be defined as an extensive examination of a trademark to determine a company’s financial health by evaluating its accounting records (Keller and Swaminathan, 2020). Unlike a marketing audit, a three-step process of agreement on objectives, data collection, and report preparation for a firm’s internal use, a brand audit is more complex because it involves the consumer. In fact, the latter consists of two stages that are brand inventory and exploratory (Keller and Swaminathan, 2020). The first step is necessary for creating an overview of how the organization’s products or services are sold and marketed (Keller and Swaminathan, 2020). The second phase allows understanding the customers’ perception of a brand (Keller and Swaminathan, 2020). The company that will be assessed in this report is Adidas, an established brand of sportswear clothing (Wright, 2019). The brand’s success was attributed to its increased popularity among renowned athletes, and to maintain the recognition from the clients, Adidas should know what people think about its products.

The Company’s Background

Adidas is a well-known sportswear company that aims to be the leading brand for professional athletes and ordinary people interested in the sport. It was established in 1949 in Germany by Adolf ‚ÄúAdi‚ÄĚ Dassler, who initially planned to produce shoes for training (Wright, 2019). Before founding this firm, he started Gebr√ľder Dassler Schuhfabric in his mother‚Äôs kitchen in 1924, intending to provide the best equipment for athletes (Adidas, n.d.a). His new store, which was opened later, had only 47 employees in 1949, but the brand was already known for its famous three stripes and wins of the sports teams wearing Adidas boots (Adidas, n.d.a). One of the ingredients to this brand‚Äôs success was that it carefully listens to the athletes‚Äô demands and considers their wishes.

This corporation had an incredible history of success, failure, and triumphal comeback. After the founder’s death, the company continued to be led and managed by his wife and son. However, after their passing, Dassler’s daughter sold the family’s share, and the firm went bankrupt (Adidas, n.d.a). Fortunately, the new leaders, Robert Lous-Dreyfus and Christian Tourres, changed the company’s direction and enabled its return to the market (Adidas, n.d.a). Adidas had different partners, the recent one being Reebok, but it always strived to maintain its original values and principles (Adidas, n.d.a). Therefore, it became one of the most preferred brands among professional athletes, sports amateurs, and fashionistas who seek comfortable and stylish clothing.

Brand Portfolio

The types of Adidas products are vast and include clothing, shoes, and sports equipment. Furthermore, many of its inventions, such as Micropacer, an athletic boot with a built-in computer to monitor performance, were ahead of time (Adidas, n.d.a). Other innovations include Torsion, the Predator football boot, the Equipment concept, and the Streetball campaign made between 1989 and 1994 (Adidas, n.d.a). In fact, Adidas continues to implement new technologies to create new products to satisfy customers.

Brand Inventory

Adidas’s success can be attributed to three significant factors that the company controls. Firstly, it makes products of exceptional quality and continues to improve them. Secondly, Adidas always communicates with the customers to know their needs (Adidas, n.d.a). Thirdly, the firm’s marketing campaigns are carefully planned, and thus they are memorable and impactful not only because Adidas often recruits sports stars but also due to the message of the advertisement.

Brand Elements

A firm is recognized for the features and characteristics not present in its rivals. The three stripes trademark is probably the most distinguishable brand element of Adidas. It was introduced during the company’s early time, but it quickly became recognized in Germany and worldwide (Adidas, n.d.a). Although this logo was modified throughout the brand’s history, consumers always seemed to associate it with sports and exceptional quality.

Product

Over more than seventy years of the brand’s existence, Adidas proved multiple times that the company had produced high-quality products. For example, football and basketball teams prefer to purchase Adidas shoes due to their durability and comfortable feeling when training and playing (Wright, 2019). Many of this brand’s products became classics and are manufactured regularly with slight changes (Wright, 2019). Furthermore, Adidas experiments with materials and technologies, like 3D and 4D printing, used for production (Wright, 2019). Therefore, customers continue to choose sports and lifestyle items from this brand.

Pricing

Adidas was able to achieve the balance between quality and cost because it offers a wide variety of products for low, medium, and high prices. For instance, the numerical value of Adidas women‚Äôs pants ranges from $20-$40 to almost $200-$300 (‚ÄúWomen‚Äôs pants,‚ÄĚ 2022). A similar price can be observed for sneakers, running shoes, hoodies, T-shirts, and sweatshirts, with a slight difference on the upper end. It appears that the company tries to adjust prices by introducing discounts and sales to allow people with different incomes to be able to purchase Adidas products.

Distribution

Adidas distributes its products through wholesale and retail partners worldwide. For example, the firm’s stores are present in New York, Los Angeles, London, Shanghai, Paris, Tokyo, Mexico City, Berlin, Dubai, Seoul, and Beijing (Adidas, n.d.b). The company wants to raise its presence in China, Europe, and North America (Adidas, n.d.b). Moreover, Adidas outsourced its manufacturing to 700 other organizations, making the distribution process easier (Wright, 2019). Overall, this approach allowed the company to reach many customers globally.

Communications

The brand image can be created through various communication routes with the consumers. Adidas uses marketing campaigns and recruits famous athletes, celebrities, and designers to represent the brand (Adidas, n.d.a). Furthermore, the company is involved in the global sustainability challenge in which it strives to make the manufacturing process more sustainable (Adidas, n.d.b). All these strategies helped to increase the clients’ trust in this brand.

Advertising

Many of Adidas‚Äôs marketing campaigns are memorable because they involve renowned athletes and inspiring ideas. For instance, the 2004 campaign‚Äôs central message was that any obstacle could be overcome with the right amount of effort (Adidas, n.d.a). It also demonstrated David Beckham and Haile Gebrselassie ‚Äúfacing their fears, defeats, and challenges head-on only to prove that indeed, ‚ÄėImpossible Is Nothing‚Äô‚ÄĚ (Adidas, n.d.a, para. 19). Indeed, tying the advertisement to such a motivating message encourages people to primarily choose this brand.

Ambassadors

Adidas was able to gain the trust of many sports teams and recruit some of the players to become its ambassadors. For example, Lionel Messi, Derrick Rose, and David Beckham signed contracts with the company to represent the brand (Adidas, n.d.a). Furthermore, the agreement was developed between the company and basketball player James Harden (Wright, 2019). The company also has a ten-year $1.1 billion contract with Manchester United (Weiss, 2018). Moreover, Adidas recently partnered with Kanye West, releasing Yeezy sneakers (Wright, 2019). Another non-athletic collaboration was between Adidas and the hip hop group Run-D.M.C. in 1986, which allowed the incorporation of street fashion into the company’s service (Adidas, n.d.a). These ambassadors helped promote the brand in professional sports and among ordinary people.

Sports and Culture

Adidas continues to make substantial investments in football and other sports by sponsoring athletic events and competitions. Specifically, Adidas has been an official sponsor of the World Cup from 1970 to 2030 (Holmes, 2018). This event has about four billion fans, and thus it is a powerful platform for the company to promote its brand (Holmes, 2018). Moreover, Adidas organized a marathon last year, where 90 elite runners were invited to participate (Adidas, 2022). In fact, Peres Jepchirchir, a leading female runner from Kenya and Adidas ambassador, won that marathon and the Olympics in 2021 (Adidas, 2022). Organizing such events and sponsoring big sporting competitions enables the brand advertisement.

Philanthropy

Since Adidas is a company of inclusion, diversity, equality, and sustainability, it strives to support these areas financially. For example, the firm increased its donations to African American communities to $120 million after the Black Lives Matter protests in 2020, stating that the brand has always been against any discrimination (Jones, 2020). Furthermore, Adidas staff engage in volunteering to help non-profit organizations. Over the past year, the company’s employees delivered almost 1100 hours of volunteer work to 14 international non-for-profit corporations (Adidas, 2022). Indeed, Adidas makes a significant contribution to helping people and groups in need.

Brand Exploratory

Consumer Knowledge

The quality that Adidas provides to customers and the context that it gives to people through inspiring campaigns made this brand well-known worldwide and financially profitable. People recognize its three-lined logo, aware of its ‚ÄėImpossible Is Nothing‚Äô slogan, and know that one of the strongest football teams is this brand‚Äôs ambassador. Although Adidas is mostly the brand for athletes and individuals with higher income, people worldwide are familiar with its products and marketing tactics.

Brand resonance pyramid for Adidas
Figure 1. Brand resonance pyramid for Adidas.

Brand Resonance Pyramid

Any successful brand is built in a sequence of steps known as the brand resonance model. This model consists of four stages: identifying the brand with customers, establishing brand meaning, eliciting proper consumer response, and creating brand resonance (Keller and Swaminathan, 2020). Figure 1 shows the details of the brand resonance pyramid for Adidas. As the diagram shows, there is a balance between the brand functionality and the emotions it evokes in consumers.

Competitor Analysis

Adidas has many rivals in this market, and some companies surpassed it in terms of sales and popularity. For instance, Nike is a leading distributor of sports clothing in the United States and among people with low income (Tighe, 2022). Furthermore, Adidas continues to compete with Nike globally when sponsoring large athletic competitions (Holmes, 2018). Other rivals are Puma, New Balance, Under Armour, and Reebok, but the latter is now a part of Adidas (Wright, 2019). Still, as the perceptual position map demonstrates, there are more similarities between Adidas and its major adversaries (Figure 2). The main differences between Adidas and its main competitor, Nike, appear in the types of sports they target in marketing.

Nike Is the Main Competitor

History

Nike, Inc is a renowned American athletic clothing company that provides affordable apparel. This company is based in Beaverton, Oregon, and includes three brands: Converse, Nike, and Jordan (Nike, n.d.). Its story started in 1964 when Blue Ribbon Sports firm was opened in a small town in Oregon by Phil Knight and Bill Bowerman (Meyer, 2019). Knight saw the future of clothing manufacturing in Japan, where the labor was markedly cheaper than in Europe and North America (Meyer, 2019). Bowerman later proposed the ‚Äúwaffle‚ÄĚ design of sports shoes that became Nike‚Äôs first success (Meyer, 2019). In fact, the first triumph was maintained throughout the years due to solid marketing tactics.

Advertisement and Ambassadors

One of Nike‚Äôs greatest assets is its marketing strategies and representatives. The brand‚Äôs 1988 ‚ÄėJust Do It‚Äô campaign was carefully planned, enabling retention in people‚Äôs memories (Meyer, 2019). Nike‚Äôs partners and ambassadors can also be considered its asset because the firm worked with Kobe Bryant, Lebron James, and Tiger Woods at the early stages of their careers (Meyer, 2019). Furthermore, Michael Jordan has always been Nike‚Äôs most prominent sponsor and contractor (Meyer, 2019). This partnership made $100 million for the company in 1984, continues to make more than $2.8 billion today, and allows the brand to dominate among basketball players (Meyer, 2019). In 2018, Nike acquired another renowned basketball player, Colin Kaepernick, into the team of its representatives (Meyer, 2019). Moreover, the company partnered with 13 female athletes of various ages and ethnicities this year (Sanchez, 2022). Overall, this brand provided customers with good products and maintained their interest with clever marketing policies.

Perceptual Position Map Against Competitors

Points of Parity

Since both Adidas and Nike are sports apparel companies, they have many similar features. Both started with an intention to produce athletic shoes and grew into large brands popular among elite athletes (Figure 2). Furthermore, their marketing campaigns have inspiring context and are well recognized worldwide (Figure 2). Lastly, Adidas and Nike care about reducing their carbon footprint; thus, these firms use sustainable manufacturing technologies.

Points of Difference

Adidas and Nike have three main distinctions that underlie their competition. Firstly, Adidas is based in Germany, while Nike is an American brand (Adidas, n.d.; Nike, n.d.). Secondly, Adidas seems to be a favorite brand for football players, while Nike dominates basketball (Wright, 2019). Thirdly, Adidas is a leader in team endorsements because it sponsors and collaborates with many athletic crews (Wright, 2019). Overall, the perceptual position map showed that Adidas is a strong player in this market.

Possible Adidas brand positioning
Figure 2. Possible Adidas brand positioning.

Analysis of Brand Issues

Despite the success Adidas has had throughout the years, some brand issues need to be discussed. If these weaknesses are overcome by implementing specific recommended changes, the brand will further improve its position in this industry and can raise its profit. The main issues of this company seem to be related to the dependence on external manufacturers, insufficient marketing and representation in some sports, scant support for gender equality, slow design turnaround, and higher pricing.

Reliance on External Manufacturers

Like many other firms in the developed nations, Adidas outsourced most of its production process to developing countries. Although it allows faster global distribution, the company cannot completely control the quality of clothes manufactured in a place far from the headquarters (Wright, 2019). If the apparel happens to have defects, it may negatively impact the brand’s image and perception by consumers, resulting in clientele loss and revenue drop. Still, this problem is not a priority because it provides the benefit of wide distribution.

Inadequate Support of Female Athletes

Apart from Peres Jepchirchir, mentioned above, Adidas appears to choose male athletes only for its marketing campaign. It certainly recruits singers like Beyonce and actors like Hoyeon Jung to become the brand ambassadors for the ‚ÄėImpossible is Nothing‚Äô campaign (Maguire, 2022). Furthermore, this year, the company invited Tifanny Abreu, a Brazilian volleyball player, and Asma Elbadawi, a basketball player, to represent Adidas (Maguire, 2022). Still, it is behind Nike in terms of the number of women recruited for advertisement.

Insufficient Marketing and Representation in Some Sports

Despite Adidas’s dominance in football, other sports such as basketball and golf seem to be mainly influenced by Nike. Although Adidas established contracts with the World Cup, Manchester United, David Beckham, Lionel Messi, and Derrick Rose, this brand’s representation in basketball can hardly be noticed (Weiss, 2018). The problem is not that football is not a good sport to invest in; indeed, it creates most of the firm’s revenue. Adidas is not a leader in the global sports clothing market because many people seem to desire to wear the brand promoted by Michael Jordan and the late Kobe Bryant.

Pricing

Another possible reason why many people prefer Nike to Adidas is that the latter‚Äôs clothes are more costly. Ordinary people are unlikely to believe that ‚ÄėImpossible Is Nothing‚Äô if they have to pay $200 for running shoes, especially when they make $30,000 per year, have educational debts, medical bills, and monthly mortgage payments. It is certainly not wise to lower prices for products made of high-quality and expensive materials to gain more clients since the company may eventually go bankrupt.

Slow Design Turnaround

Companies working in industries with extremely high competition should be able to adapt and change their designs quickly. According to Wright (2019), the average time during which a product is planned and completed is fifteen months, which is a relatively long period for the apparel industry. It may lead to Adidas missing the trends demanded by consumers and lagging behind its rivals (Wright, 2019). Therefore, it is vital to take measures to shorten the design and manufacturing process to present new items to customers in the most appealing way faster than the competing firms.

Recommendations and Brand Campaign to Address the Issues

As the analysis showed, Adidas is a famous brand known for the quality and inspiring message that it sends through its marketing campaigns. However, specific issues were recognized that prevented this brand from overpassing Nike, its primary competitor. Thus, recommendations were developed to overcome these problems and further improve the performance of Adidas in the athletic clothing market. These suggestions are to collaborate with women athletes, speed up the design process, and search for cheaper alternative fabrics of the same high quality.

Brand Campaign: Collaborating More with Female Athletes

Adidas is not, at its core, a company that discriminates against women; thus, it will be easy to implement this recommendation. In fact, 37% of the share is held by women in this firm (Adidas, 2022). Hence, following Nike‚Äôs example, Adidas should recruit at least ten female athletes of different races, ethnicities, and religions for the ‚ÄėImpossible Is Nothing‚Äô campaign. It can expand the client network since many women may associate themselves with one of these ambassadors. In fact, the company has started to recruit athletes and celebrities of various backgrounds to ensure that any person can associate oneself with these stars and truly believe that anything is possible (Thompson, 2021). Since the ‚ÄėImpossible Is Nothing‚Äô campaign not only features big names but also shows how they become extraordinary through hard work and dedication, it can motivate ordinary women to start the path to greatness.

Faster Design Process

Since Adidas appears to have a relatively long design process, it is recommended to shorten deadlines for teams working on various new product development projects. Less time for task completion will be compensated with higher wages and remaking old brands. Indeed, changing old classics and adding modern features can widen the age range of customers interested in Adidas clothing (Wright, 2019). Moreover, the company should continue implementing and purchasing more 3D printers to automatize a portion of manufacturing.

Alternative Fabrics

Adidas is known to utilize lasting, comfortable, and sustainable materials, but the resulting product price is relatively high; hence, alternative fabrics should be considered. The more recent invention that changed the idea of running was the Energy Boost, introduced in 2013 (Adidas, n.d.a). It was made of a soft material that possessed the property that enabled responsive cushioning, which substantially improved the running experience (Adidas, n.d.a). The firm also experiments with colors, shapes, fabrics, and production methods (Wright, 2019). However, it still ends with $100-$200 shoes, which low-income families cannot afford. Therefore, more effort and resources should be redirected to opening laboratories that will be developing cheaper materials with qualities similar to the current ones. Moreover, the COVID-19 pandemic negatively affected the company’s pricing policy, resulting in a significant rise in costs, but in 2021, it was able to correct these negative alterations (Adidas, 2022). Adidas could return on track from the 2020 economic crisis by closing or restructuring some of its retail stores (Adidas, 2022). These strategies allowed to regain consumers’ loyalty and inspire them for positive change during the coronavirus crisis.

Reference List

Adidas (2022) Annual report 2021.

Adidas (n.d.a) History.

Adidas (n.d.b) Strategy.

Holmes, E. (2018) Nike vs. Adidas: the brand battle of the 2018 World Cup. 

Jones, R. (2020) Adidas increases donation to black communities to $120 million.

Keller, K.L. and Swaminathan, V. (2020) Strategic brand management: building, measuring, and managing brand equity. 5th edn. Harlow: Pearson.

Maguire, L. (2022) How Adidas is investing in women in sport as never before.

Meyer, J. (2019) History of Nike: timeline and facts.

Nike (n.d.) About Nike.

Sanchez, R. (2022) Nike partners with 13 women athletes to bring equality to sports.

Thompson, S. (2021) ‚ÄėWhy Adidas‚Äô new ‚Äėimpossible is nothing‚Äô campaign is a blueprint for authentic representation‚Äô, Forbes.

Tighe, D. (2022). Adidas statistics & facts.

Weiss, R. (2018) Nike gains a step on Adidas in competition for top soccer stars.

Women’s pants: up to 40% off for members week (2022)

Wright, M. (2019) Strategic audit of Adidas. Undergraduate Honors Thesis. University of Nebraska-Lincoln.

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