2Timeline of AdidasFouded 1920 by Adi Dassler – wanted to design shoes for athletes in soccer, T&F, & tennis.The Dassler brothers (Rudi & Adi) made their first major innovation in athletic shoes, integrating studs & spikes in track & field shoes.Innovators in Marketing – gave away shoes to German athletes competing in Olympic games. By 1936 most athletes would compete only in Dassler shoes.Bitter family feud, company dissolved. Rudi established Puma. With his departure Adi renamed company Adidas & registered the trademark 3rd strip to Adidas shoes.Adi expanded spikes concept in track shoes to soccer shoes. Partial credit was given to the soccer shoes for Germany’s World Cup Championship that year.1954
3Timeline of AdidasAdidas is the clear favorite among athletes – 75% of T&F athletes wear them in Olympics. ’63 started producing soccer balls, ’67 athletic apparelAdidas became leader in consumer jogging shoes in the US. T-shirts and apparel bearing the 3 stripes became popular among teens.Adi Dassler dies, Adidas remains worldwide leader in athletic footwear but they are losing market share fast to Nike in US. Market share loss continues through the 80’s and mid 90’s.Through cost cutting, new model launches, and endorsement contracts with popular athletes Adidas increased sales by 75% over prior year in US. Becoming 3rd largest athletic footware company in US – trailing only Nike and Reebok.1970’s19781994
4Timeline of AdidasAcquisition of Salomon SA – diversified beyond shoes & apperal to ski, golf, bicycle, & winter sports.Stock price takes a hit possibly due to Salomon acquisition. Adidas mgt divested all of Salomon’s winter sports & bicycle equipment.Acquistion of Reebok, included Rockport footware, Greg Norman apparel, & CCM hockey equipment.19982006
5What enabled Adidas to be the Market Leader in the past?
6Product InnovationTrack and Field1925:studs and spikesArch support1949 – molded rubber cleatsscrew in spikesSoccer1954 – screw in spikes1963- Began producing soccer balls1967 – athletic apparelResultsOver 700 patentsStrong reputation among top athletes1970 – leading brand in consumer jogging shoesAnalysis – Adidas was an early entrant into athletic shoe industry. They developed many of the features still present in shoes today.Created a strong brand based on high quality, innovative products that top athletes choose to use in training and competition.
7Marketing InnovationGave shoes to German athletes in 1928 Olympics2 stripe (and later 3 stripe) brand75% of track and field athletes wearing adidas in 1960 Olympics78% of athletes wearing adidas at 1972 OlympicsDeveloped strong following with top track and field athletes.Applied this same model years later with soccer shoes and apparel.Successful because adidas was creating innovative, high quality products.Product innovation enabled marketing innovation.Different than Nike – marketing is what set them apart from the start.
8Has Adidas positioned itself well in developing markets?
9Adidas is a global player 43% of sales from Europe, which is slowest growth marketEncouraging that #1 in developing eastern European market, Russia expected to be most profitable market in Europe by 20102006 acquisition of Reebok not enough to overcome Nike in North AmericaGrowing number of sales in Asia market, fueled by adidas success in China.Strong demand and large population
10Net Sales in Emerging Markets Analysis – strong growth trend in sales in two very attractive emerging markets. Growth may be result of Adidas brand strength in soccer, world’s most popular sport.
11Regional Footwear/Apparel Markets SizeMarket Growth RateAdidas SalesAdidas Sales GrowthAdidas PositionNorth America$42.5 billion3%$2.9 billion5%#2 behind NikeEuropeN/A2% (20% Eastern Europe)$4.3 billion8%, mainly in Russia#1Asia3.2 billion people13% (South and Central) 15% (China)$2.2 billion17%Latin America$657 million39%Analysis – Adidas is strong in several developing markets (Eastern Europe, China) but its focus and acquisitions have been geared towards overtaking Nike in the large, but slow growth North America market.
12Has the Acquisitions helped position Adidas against its competitors?
13Salomon Acquisition: Was it Successful? Product Line BeforeProduct Line AfterAthletic ShoesAthletic ApparelSki EquipmentGolf ClubsBicycle equipmentWinter Sports ApparelAnalysis:Paid 1.5bn to diversify product line. Surpassed Reebok world’s 2nd largest sporting goods company, however…
14Adidas’s Stock PriceStock price fell soon after acquisition in 1998, Salomon divested except for Taylor-Made Golf line. Adidas overpaid for acquisition.
15Adidas after Salomon was divested Product Line BeforeProduct Line AfterProduct Line After DivestitureAthletic ShoesAthletic ApparelSki EquipmentGolf Clubs*Golf ClubsBicycle equipmentWinter Sports ApparelOnly added Golf Clubs to product line