Global Marketing and Digital Business Practices

Assignment
Introduction
Task 1
1.1 Selection of Industry
In the present era, the global market of Sports Apparels has witnessed a significant growth due to
health awareness and increasing in health activities. The interest of human beings has increased
their interest towards sports activities. For sports industry, the market is further expanded due to
increasing participation of women in sports and fitness. It is also predicted that Asia-Pacific will be
the leading revenue generating region in the year 2020. Adidas has been selected for the purpose of
developing an understanding of the global market. Adidas is engaged in serving its consumers in
the global market and is a German multinational corporation operating in Apparel and accessories
industry. It was founded by Adolf Dassler in the year 1924 (Adidas, 2017).
1.2 Company Background:
It is operating in Apparel and accessories industry and serves consumers at the global level with
footwear, sportswear, sports material and other accessories. It is engaged in the designing and
manufacturing process of shoes, clothing and other accessories. It is one of the leading sportswear
manufacturers of the world. Headquarter of Adidas is located in Herzogenaurach, Germany (Adidas,
2017). There is a wide opportunity for Adidas to expand its business globally. In the year 2015
Adidas had made sales of amount 16.92 billion euros.
Nike and Puma are the biggest competitors of Adidas in the global market. In the year 2015 Adidas
captures only 21 % market in relation to Puma. The motive of Adidas is to achieve its goals which
are to become a global industry leader in the sports goods industry and strengthening its brand
image, improvise its operational and financial resources. To attain these goals company, frame its
strategies and tactics which are focusing on the value creation and customer satisfaction. Currently,
Adidas is focusing on its marketing strategy for enhancing the brand image at the global level and
the cities where it is focusing are New York, Shanghai, Paris, Tokyo, and London.
 Revenue of Adidas:

It faces some fluctuation between the years 2013-2016. In the third quarter of the year 2016, Adidas
was earning 6.042 billion.
Sales and profit trend chart:

1.3 Situation Analysis and Environmental Scanning for Adidas:

1.3.1 SWOT Analysis:
Strength

 Company have the wide range of product for online selling.

 Company have association with many online distributors like flip kart, Amazon etc.
 Company is also sponsor of many big sports events.
 Company uses celebrity endorsements in marketing its product globally (Ommani, 2011).

Weaknesses

 High product prices due to use of latest technology will affect online selling channel
 Less product range in comparison to competitors.
 Tough competition and availability of similar brand show customer switching towards higher brand.

It operates in a global market with on the concept of "Impossible is Nothing". Adidas is famous for its
sports shoes and apparels worldwide after Puma and Nike. SWOT analysis for analysing the
strengths, weaknesses, threats and opportunities of Adidas is as follows:

1.3.2 Porter’s Five Forces Model:

1.3.3 PESTLE Analysis:
Macro environment analysis helps in identifying the issues related to macro factors which Adidas is
facing in its global marketing and online business practices (Birnleitner and Student, 2013). PESTLE
analysis is conducted by the company which identifies the impact of various factors related to
the macro environment.
Table 1: Pestle Analysis
Macro environment factor Description
Adidas is facing many issues due to the political
factors. These issues include tremendous
changes in trade policies and civil unrest. While
framing strategies, Adidas considers the political
Political Environment factors like War, terrorism, expropriation etc. Due
to these political factors, Adidas fails to serve its
customer on time. However, they also provide
the advantage of low labour salary (Gupta,
2013).
Adidas is facing economic issues like change in
per capita income, inflation, deflation, and
Economic Factors unemployment rate which affect the marketing
strategy and online business practices of the
company. Change in money value and taxation
 policy affects the purchasing power of consumers
and increase firm capital cost (Gupta, 2013).
Social factors include a change in the taste of
people with reference to the sportswear and
Social Factors sports accessories. Social factors affect
innovation and buying nature of individuals
(Gupta, 2013).
Adidas uses its own unique technology for
manufacturing and producing goods.
Technological Factors Technological factors contribute to creating brand
loyalty which helps the company in doing less
marketing efforts (Gupta, 2013).
Adidas do not produce any restricted product
which has a harmful impact on the environment.
The company encourages production of a
Environmental Factors: sustainable product which will increase quality
and functionality of goods. The company also
mention these points in its marketing strategy
and help in increasing online business practices
(Gupta, 2013).
While framing marketing strategy for every store
and for online business practices company must
Legal Factors: aware about all legal proceedings related to trade
and description of goods, sale and supply of
goods, intellectual property right, and
advertisement standards etc. (Gupta, 2013).

Task 2 Critical analysis of global marketing practices of

Adidas.
2.1 Competitive Advantage of Adidas:
Michael Porters develop a model called diamond model for the business organisation. With the use
of such economic model, the company can understand their competitive positions in the global
market. Such model helps in gaining an advantage at the global level.
2.2 Global Presence of Adidas- Strategy and Entry Mode.
Adidas group is having a strong brand image in the local market. Adidas group launched e-
commerce sites in Russia, Europe, Canada and South America, India etc. Online selling activity
helps the company in entry into the global market. Adidas adopts e-commerce for expanding its
business at international level. Further, Adidas also operate through physical stores. The focus of
Adidas is on enhancing the presence of the business through the digital market. It has started
offering products all around the globe with the websites of the company. Adidas is planning to
enhance its presence in the digital market (Dusto, 2013). A multi-brand strategy has been adopted
by Adidas for offering a wide range of choices to the customers. For the expansion of the area of
operation, Adidas has made an investment in the markets where it has identified long-term growth
and profitability opportunities.
 2.3 Market Selection and entry mode- Adidas
 Adidas serves high-quality products to its globally available customers. There are many reasons
due to which Adidas serves in many countries:
 The flow of human resources becomes cost effective.
 Availability of new market
 Change in technology
 To become global industry leaders

For doing business at the global level company should adopt the model of internationalisation. That
increases the involvement of the company in the global market. Model of internationalisation help
companies in increasing their market share at the global level (Jones, Coviello& Tang, 2011).
 Model of internationalisation include following steps:

 No regular export activities

 Export through independent representative
 Establish foreign sales subsidiary
 Starts foreign manufacturing.

Adidas enter into global through incurring knowledge about the nearby market then explore its
activity and set their sales subsidiary to serve the market of the specified region. Online business
activity is part of the strategy for internationalisation. Serving need of customers online will help
Adidas in the expansion of its business which leads to economic growth and growth in its market
share (Jones, Coviello& Tang, 2011).

2.4 Segmentation, Targeting and Positioning in the Global market:

Segmentation: Adidas wants to create a strong brand image in the market. It creates a new market
segment to increase its sales (Goat, 2011). Adidas divide into four segments:
Targeting:Adidas uses differentiated target strategy. It targets customers include children and adults
of the 13-40 years’ age group. The strategy behind it that children and adults are more passionate
and sports lover so they are love to buy innovative and luxurious sports product at affordable prices
without going on physical shopping ( Lynn, 2011).
Positioning: Positioning: Available number of users and benefit based positioning is adopted by
Adidas. It uses digital market for promotion its product and ties ups with online distributors for
providing products to a final buyer (Lynn, 2011).

2.5 Market Mix:

Global marketing also includes the concept of the marketing mix. Marketing mix structure adopts by
the company helps in analysing the marketing business practices and online business practices
(Pour, Nazari&Emami, 2013).
Table 2: Market Mix of Adidas
Marketing Tools Description
Adidas provide a quality product to its customers.
To create brand loyalty of consumers. Company,
Product provide the latest product with innovative design
through online channel (Pour, Nazari&Emami,
2013).
To increase online business and promote
Prices digitization Adidas offers its product at
discounted prices.
Adidas uses digital marketing tools for the
promotion of its product. Adidas uses an online
Promotion
channel like media, websites etc. for marketing
its products (Pour, Nazari&Emami, 2013).
Adidas places its stores at every area where it
Place serves consumers through the online channel so
that they could not face any delay in delivery.
Adidas must offer its product in attractive
packages. Improvement in packaging style will
Packaging
create impression on customer (Pour,
Nazari&Emami, 2013).
The company should frame its strategy to
establish itself in the consumer's mind. Adidas
Positioning offers new and attractive products through online
business practices may help in increasing its
business.
Adidas not only think about the comfort level of
its customers but it also offers attractive
People commission and pays to its distributors which
help the company in selling a product online
(Pour, Nazari &Emami, 2013).

Task 3: Critical Analysis on online Business Practices of

Adidas.
3.1 Company Background on online presence:
Adidas moved towards global business after establishing itself in the sports shoe industry to
increase market area at the global level and to increase in sales. The company started to take use of
online business channels for its brand promotion. Adidas makes strategic plans and uses social
media to promote its product and also sales its product through online distributor channels (Grewal,
et. al., 2011). Adidas uses social media marketing for marketing of its products and in recent years a
rapid growth can be seen in the online business of Adidas.
3.1.1 Use of Social Media for promotion: Adidas use Facebook, twitter and other online channels
for promoting its product and attract more and more consumer.

3.2 Mode of online Business:

Web presence and e-commerce: Adidas sells its product to an ultimate consumer by using its own
website. Adidas has its own website through which it offers a wide range of product to the final
consumer. Through this company has not to incur cost related with distribution channel and it can
easily make contact with the final consumers (Grewal, et. al., 2011). Adidas uses KPI s measures for
measuring its performance of the online business.
Search engine marketing and pay per click attributes: The company can enter into an
agreement with online distributors like Flip kart, Amazon etc. and sell the product to final consumers.
These distributors also offer discount schemes for increasing the sale of company's product on
festive seasons. Adidas has also pay per click attributes through which it is able to reach directly to
its customers (Grewal, et. al., 2011).
Social media: Adidas uses social care for the promotion of its products. With the help of social
media sources, Adidas is able to generate its sales through advertisement of products through social
media sources. In this concern, Adidas contributes specific parts of its profits towards social media
sources such as Facebook, twitter, YouTube etc.
Mobile App of Adidas: Adidas also offers its product with the help of mobile applications. It makes
easy to shop for every consumer because mobile is most common instrument available to every
individual. With the help of mobile applications, customers of Adidas can access to the products of
Adidas anywhere and anytime.

3.3 Key Performance Indicator in Digital Marketing:

Table3: Key performance Indicators

Particular Description
Engagement and use of websites of the Adidas
indicate its performance in the global market.
Higher visit of people on the website shows that
Engagement on Website company is more preferred by the Consumers.
This reflects the favourable performance of
Adidas at the global level. (Velimirovic, et. al.,
2011).

Traffic Sources Traffic sources include identifying the traffic

sources which drive consumers directly to the
 website of Company. Traffic sources include:
Direct Traffic
Referral Traffic
Campaign Traffic etc.
Cost Per Mile
Cost Per Click
Cost Through Rate
Online Campaign
Cost Per Acquisition is the measurement tools
which measures the performance of Adidas for
the online campaign (Graça and Camarinha-
Matos, 2016).
Interaction with the consumers with the use of
social media brings a positive engagement of
Social Interactions
consumers and improve the overall performance
of the company.
Maximum use of mobile applications indicates
the positive performance of the company.
Mobile Traffic Increased number of downloads indicates the
positive performance of Adidas. (Graça and
Camarinha-Matos, 2016).

3.4 Compare current position with future objectives:

In order to compare and identify loopholes in the performance of the Adidas. Key performance
indicators like revenue, profit and market shares are analysed below.

Above figure shows the actual and predicted performance of Adidas. This figure explains the key
performance indicator of Adidas (Velimirovic, et. al., 2011).

 Revenue: It can be predicted that revenue of the company from its selling activity may rise because
company going to explore the online market for its product.
 Profit: The main aim of Adidas is to generate more income through using cost-effective
technologies. Use of digital technology reduces cost which arises in the form of opening new
branches and stores of Adidas (Velimirovic, et. al., 2011).
 Market share: Adidas has a good market share in the global market. It is second largest sportswear
company that serves customers at the global level (Velimirovic, et. al., 2011).

Growth in revenue and profit contributes in meeting the future goals and objectives of the company.

Task 4: Recommendations
4.1 Recommendations for Global Business Practices:
The performance of Adidas is quite good in the global market. It comes at the second position after
Puma. Adidas faces threat from the external market as there is a various competitor in the market
who are involved in the same online business as Adidas. In order to improve its performance level,
Adidas should adopt following strategies.

 Management of Adidas should use Porter’s Diamond model which is helpful in gaining a competitive
advantage at the global level.
 Adidas must produce female sports accessories in order to target new area of the market. It should
focus on female sports accessories.
 Adidas should offer its product at affordable prices.
 Adidas should take sponsorship of sports event like football cup, cricket world cup in order to
promote its products at the global level.
 Adidas should develop an understanding to identify local market needs of each country and promote
the product as per the requirements.
 Adidas should offer products as per different culture which is prevailing in different countries so that
it is able to meet the expectations of customers of various cultures.
 4.2 Recommendations for Online Business Practices:
Offline business practices are not enough for an organisation. Adidas is doing a great business
through managing its digital business model. If Adidas wants to promote its business practices at the
global level it has to make some changes in its online service distribution channel and marketing
strategies:

 Adidas can launch its own mobile app for online shopping and provide as this will reduce the cost of
distributors.
 Adidas should promote its product through internet advertisements.
 Adidas should make available a search page where consumers can get all the information that is
related to product range offered by Adidas.
 The company should have good online payment system which does not cause any difficulty to
buyers while making payment of their transactions.
 Adidas should make the best use of search engine marketing and pay per click advertising.

Conclusion:
This assignment has explained the market analysis and internal analysis of Adidas. This analytical
study has helped in identifying the opportunities and threats that are available to Adidas in the global
market. This Study analyzed that with the use of online means the company can not only explore its
market share but also can meet its long-term objectives and sustainable development. Adidas Starts
online selling of product and makes effective use of digitalisation. For long-term concern, Adidas
needs to identify external factors and internal strength and weakness which affect its performance at
the global level. This will also help in increasing the sustainability of Adidas. The company should
adopt growth strategies, product differentiation strategies for its global development.

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