Adidas Sources of Competitive advantage
Adidas is a leading brand of sports shoes and apparel. The company has seen its financial performance and global presence growing in the recent years. Its main rival is Nike. Despite the market dominating presence of Nike, Adidas has been able to strengthen its position in the global markets. The brand has built several sources of competitive advantage which include technology, marketing, supply chain as well as product design and quality. Apart from them, it is investing in sustainability and the creation of sustainable products to increase the popularity of its products and brand. Apart from Nike, there are many more competitors of Adidas competing for market share including Under Armour and Puma. The level and intensity of competition in the sports shoe industry has grown very high driven by digitization and changing consumer trends. Have a look at the sources of competitive advantage that have helped Adidas retain its leading position in the global markets.
Adidas is a global brand of sports shoes and apparel that has managed its global presence well. The company has managed its retail presence throughout the globe through its 2,500 branded retail stores as well as 13,000 mono branded franchises stores. Apart from these, there are 150,000 wholesale doors also through which the company sells its products to customers globally. In this way, Adidas has managed its global presence through an unrivalled network of stores globally. Global presence of Adidas is a major strength of the company that has helped it reach a large customer base and grow its revenue.
Product Range & Variety:
Adidas also offers a large product range for various customer segments. It makes products that are designed to cater to a large range of sports including golf, basketball, American football, baseball, rugby, tennis, baseball, handball, swimming and boxing. Apart from these, it has products in running and training categories. The training category is both the largest performance category as well as the apparel engine of the brand. Running category of Adidas offers the largest growth opportunity across genders and price points. Adidas is now focussing upon growing its product range in football category as well as those for women. Another category where Adidas’ sales are growing is the lifestyle category. In this way from sports shoes to apparel and other products, Adidas offers a large range of products and variety to its consumers.
Product quality is also an important focus area for Adidas. It is also one of the leading reasons behind its popularity. The company has always offered its customers best quality products. Now, it is focussing upon the style quotient of its products and sustainability. The company is growing its range of products made form sustainable raw materials. The level of competition in the sports shoe industry is growing faster and companies are focusing more and more on product quality to remain their customers’ favorite and to retain customers longer. This is also why brands like Adidas are investing more than ever in research and innovation. Better product quality translates into a larger customer base and higher revenue.
Marketing is a major driver of demand in the sports shoe industry. All the leading brands including Adidas, Reebok and Nike focus heavily on marketing to attract new customers and retain the existing ones. Adidas also spends heavily on advertising and promotions for growing its sales and revenue. In 2017, it spent overall 2.7 Billion Euros on marketing and promotions. In the recent years, the company has also made major changes to its marketing strategy. The company has shifted its focus towards the metropolitan markets where the largest part of its customer segment is found. As a part of its acceleration plan, the company is also focusing upon the use of digital technology for strengthening its customer connection and getting closer to the customers. On the one hand, while the use of digital technology is driving the marketing ROI higher, on the other it is also helping engage the consumers better. Marketing is also important for differentiating your brand from the others in this era of intense competition.
Supply chain management must be an important focus area for any global brand trying to achieve a leading position in its industry. Adidas has also managed its supply chain well and sources from a large number of suppliers located in various corners of the world. In order to control its production costs, the brand has outsourced nearly 100% of its production to independent suppliers. The largest number of Adidas suppliers are located in Asia. The leading supplier country for Adidas is Vietnam followed by Indonesia and China. Vietnam accounted for nearly 44% of the entire footwear production in 2017. China is the leading apparel producer country for Adidas. The company works with key strategic partners to manage production. Majority of its products were manufactured in 109 facilities in 2017. Efficient management of its supply chain has helped it control its operational costs and increase profits.
Adidas being a global company has a large and global customer base. Its customer base is growing faster due to a renewed focus on marketing and business strategy. The brand has focused on the areas in which most of its customers reside. The largest customer segment of Adidas is found in the metropolitan cities. While the company is intensifying its marketing efforts in these areas, it is also working to deepen its consumer connection. For this purpose, the brand has focused on the use of digital technology to drive is customer engagement higher. Growing customer engagement leads to larger customer base as well as higher sales and revenue.
Adidas has built strong brand equity over time. It is why despite the dominating presence of Nike, it is among the leading brands with a large customer base and market share. Strong brand equity is a result of consistent focus on customer experience, product quality as well as sustainability and other aspects of business. Adidas excels in most areas and is focusing on growing its level of customer engagement higher through the use of digital technology. So that it can offer its customers better quality products and higher variety, it spends on research and innovation. The brand has expanded its range of products made from sustainable raw materials. Apart from the other things, it is a customer centric company and its focus on customers has helped it strengthen its brand equity.
- Adidas Annual Reports.