Brief coverage of the business situation in the case: Make sure that you do not

Question

Brief coverage of the business situation in the case: Make sure that you do not cut-and-paste things from the case. Present some background and highlight major issues of the situation in the case. Keep this section concise to free up space for your question discussion. Please write over:

Adidas is one of the world’s best-known companies and it has been this way for a long time. On top of this, Adidas has not only established itself as a global athletic footwear and apparel giant but also as one of the top 3 Global 100 Most Sustainable Corporations. 1998 was the first time that the company issued its first official environmental statement and they haven’t looked back since. Nowadays Adidas has focused so much on the health and well-being of the planet that it has embedded sustainability into its core business. Below I will discuss how Adidas differs from its competitors, what marketing principle do they follow, under which category do their products fall into, and whether or not they could be more successful if they focused less on social responsibility.

Explanation / Answer

Adidas is a multinational organization, founded and headquartered in Germany, which designs and manufactures shoes, clothing and accessories mainly related to the field of sports. It is the largest sportswear manufacturer in Europe and the second largest in the world. The company was started by Adolf Dassler in his mother's house, and was joined by his elder brother Rudolf in 1924. Dassler assisted in the development of spiked running shoes for multiple athletic events. To enhance the quality of spiked athletic footwear, he transitioned from a previous model of heavy metal spikes to utilizing canvas and rubber. In 1949, following a rift in the relationship between the brothers, Adolf created Adidas and Rudolf started Puma.

It is deeply rooted in the company’s core belief that sport has the power to change lives, the strategy leads to the organization’s sustainable efforts into plausible goals and objectives. All actions taken based on the sustainability Strategy have a direct positive impact on the world of sport, in order to ensure that sport remains an infinite source of happiness and sustainability for the whole world. Sport needs an appropriate space is the result of thorough research the company had done to validate its understanding of how important sport is for well-being of the human beings as well as for the overall society. It should be noted that at the same time, any kind of sport needs a space to play on, an ocean or a mountain. These spaces are increasingly endangered because of human made threats like depletion of natural resources, climate change, Global warming, deforestation or overpopulation. That is why, Herbert Hainer, adidas Group CEO said that they want to take positive action and be the protector of these spaces with sustainable work methods that addresses these critical issues.

The main strategic priorities the adidas Group undertook to tackle the challenges that endanger the field of sports involves the following:

Water -- The most endangered resource is the most essential one. The company’s approach addresses water efficiency, quality and accessibility, so as to ensure that there is no wastage of water and the sources of water can be utilized in the optimum manner to maintain the natural balance.

Raw materials -- The Group is committed to be involved in the use of more sustainable raw materials such as recycled polyester and ocean plastic. All these are hampering the eco-system and the company wants to make sure all these materials are recycled and reused to avoid wastage as well as clean up the environment.

Energy sources – Adidas has vouched that they will continue to reduce the company’s energy consumption also make transition to clean energy sources and look into opportunities to harvest energy. As we all know that the energy sources are limited and we should stop wasting them unnecessarily, the company is trying their best to use as much as possible to use sustainable sources of energy and those which does not pollute the environment of the earth.

Empowerment of human beings -- At the heart of the Group’s strategy is the empowerment of the people. It includes but not limited to, factory workers to employees and customers as well, their focus is on ensuring that the people understand and exercise their own rights wherever necessary, make well informed decisions and utilize their potential to lead a happy and sustainable life.

Health is wealth -- It is believed that any kind of sport has a direct link to good health. They strive to enable people across the whole world to participate in various sports activities and at the same time impart knowledge on physical as well as mental health, hence allowing them to lead a healthier and more fulfilled lifestyle and a better living.

Motivation -- Focusing about supporting the company employees in becoming delegates of change in the society they live and work in and also engaging with influencers to drive innovations, the company wants to harness the power of sport to motivate the people around the world to take the necessary and right actions for the overall betterment of the society.

These priorities that involves fixing of the eco-system and achieve total sustainability is what differentiates Adidas from its competitors.

Adidas is primarily segmented based on psycho-graphic, demographic and behavioral factors. The Adidas group has four brands under it, which are Adidas, Reebok, Rockport & Taylor meant for different customer segments. Adidas uses differentiated targeting strategy to target adults, young adults as well as children who have penchant for healthy lifestyle, fitness and sports related activities. Use as well as benefit based positioning are the strategies that Adidas uses to create unique image in the mind of the prospective clients. Their tagline, Impossible is nothing showcases the importance of fitness and that of striving till you achieve anything that you desire, is one of the biggest asset the company has, and summarizes the marketing strategy of the company. Product quality as well as brand equity is one of the few competitive advantage the company has, as it is known over the years to give the best products in terms of utilization, comfortability and long lastingness. Sports activities mainly revolving around community connect programs has helped Adidas to be one of the biggest players in the sportswear. Each sub-brand under the group is responsible for bringing its own unique identity and positioning to social life, through the creation of distinct products, services and lively experiences that provide consumers a sense of attachment to the brand. Driving positive change in the industry by harnessing the power of Sports, saving the environment and increase the sustainability are the core ideas the brand revolves around. Plastic free offices globally is another initiative taken up by the company in recent years.

Whether or not they could be more successful if they focused less on social responsibility is a critical question, but the answer can be seen clearly without any doubt in mind. Adidas and social responsibility goes hand in hand, through its innovative marketing and the will to protect the world we live in, the company has evolved much and has come a long way. Without these CSR efforts it is quite possible Adidas brand value would depreciate at an alarming rate. So, it can be seen the company is revolving around the right strategies and continue to do so, for the overall benefit of the society and the company. We should remember that without a society there would be no customers to buy the brand’s products, hence restoring the environment and achieve total sustainability is the right step taken by the brand. All these beliefs makes Adidas group stand out from other companies in the industry, and helps to lift the brand value of the company.

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