Adidas Product Launch report

Chloe Payne 25015232 Fashion Marketing and Management Product Report - Adidas

EXCECUTIVE SUMMARY - 4 INTRODUCTION - 5 TARGET MARKET - 6 PESTEL ANALYSIS - 8 SWOT ANALYSIS - 12 MARKETING MIX - 16 PORTERS 5 FORCES - 18 COMMUNICATION PLATFORMS -22 CONCLUSION -24 APPENDIX -25 BIBLIOGRAPHY - 28

PRODUCT REPORT

CONTENTS

2

EXCECUTIVE SUMMARY This report is about the launch of the Adidas Ace 16+ Pure-control lace-less football boots. Required is an in-depth analysis of a number of marketing models and suggestions on communication platforms.

4

INTRODUCTION

This report will provide an analysis of the micro and macro environment surrounding the new Adidas ACE 16+ Pure-control Lace-less boots. This will be done through the use of marketing models in order to research in depth the product and factors which could impact its success.

As well as this it will evaluate current communication platforms and suggest new ways in which to market the product.

WHO IS THE CONSUMER The target market for the product is males. Based on a statement from the PFA (accessed online 15/2/16) the age range is 17-35 years old; this is the ages of which contracts are first signed for professional players and the average retirement age.

6

PESTEL ANALYSIS A PEST analysis evaluates the external environment and how it impacts a product/ brand. As stated by Bohdanowica and Clamp (Fashion Marketing, 1994) “Understanding the marketing environment is not an optional extra for fashion marketers; it both sets the tone of the plan and determines its success or failure�

Therefore, PESTLE is a vital component of research when launching a new product.

8

Factors such as the economic climate will have a significant impact on the success of most products. Unemployment levels will also have an impact, it is more likely that those who are employed will have a larger disposable income and therefore will be more likely to be able to purchase products such as the laceless boots. As stated by the BBC (online, published on 27th October 2015) “the number of people with jobs is at an alltime high of more than 31 million. About 74% of the population aged 16 to 24 are employed�.

Adidas manufacture in countries all over the world, they overcome any political restrictions in place due to import/export legislations between countries for moving goods around the world because they have already got a good spread of manufacturers in many countries therefore overcoming the need to transport goods over too greater distance.

Adidas need to take into consideration the different legislations in regard to the manufacture and distribution of the football boots in each country in which they are producing, them.

E C O N O M I C

PEST P O L I T I C A L

S O C I A L

T E C H N O L O G Y

This product is a representation of the high level of innovation within Adidas and it is clear that creating a football boot such as this would not be possible without a large use of the technology. The prime-knit upper design of the boot moulds to different feet – the aim of this being to increase the control on the ball. Adidas describe the product to have ‘cutting edge technology’. Supporting this the boot is described in the following way - “internal knit system anchors the foot to provide lateral stability, eliminating any movement within the boot. Sprint-frame construction provides you with perfect balance, traction and control on and off the ball.” This product is a good example of how the increasing development of technology is a large factor in product innovation.

TEL

Social and cultural influences can affect the success of products, as a brand known world-wide, Adidas must communicate their brand image positively and take into consideration the different social behaviours of each country the product is released in. Social factors such as public attitude towards activities such as football will be the most important influence on the success of the boots.

The media are a social factor that will influence public attitudes; the medias attention is likely to be on football due to two major events taking place this year – the 2016 UEFA European Championships taking place in June-July and the Rio Olympics in the summer in which football will be a sport. This therefore makes football a key focus in sport in 2016, which consequently should have a positive impact on the success of the product.

10

An example of a legal factor which needs to be taken into consideration would be workplace policies and standards.

As stated by Michel Chevalier and Gerald Mazzalovo (Luxury brand management -2008) “The sweatshop scandal, which threated producers of sporting goods like Nike and Adidas, has been well documented”. – Sweatshops are not only unethical but also go against many workplace standards – a scandal such as this happening again would have a large negative influence for a globally known company such as Adidas, however, this is unlikely as Adidas clearly state on the website a number of workplace standards that they ensure they and all their manufactures abide by.

LEGAL

ENVIRONMENTAL If a product is produced sustainably/in an environmentally friendly way it will increase the image and reputation of both the brand and the product. As stated by Bohdanowica and Clamp (fashion marketing 1994) in relation to environmental factors “Fashion marketers tend to tackle these issues on two fronts, by using promotions to position themselves as environmentally responsible, and also by investigating how they can change aspects of their marketing mix to accommodate environmental issues.”

The lace-less boots are created using a Thermoplastic Polyutherane (TPU) cage to enable to boot to fit the foot without the need of laces. TPU can be largely damaging to the environment, however, the most common use of TPU within the clothing industry tends to be biodegradable and therefore not as bad for the environment.

SWOT ANALYSIS Another key aspect of this report is the SWOT analysis; a marketing model used to evaluate the internal and external environment as well as positives and negatives. It is important for a brand to be aware of these when launching a new product. As explained by Ashok Ranchhod (Marketing Strategies – 2004, page 19) “it is a simple but effective method by which organisations can ascertain their current position and then develop strategies to take effective action.”

12

Leading on from the strengths these factors will also be a weakness for Adidas. With little competition it could be difficult for Adidas to gain a customer base as Lotto’s small success could be an indication of consumers just not being interested in the product as a whole, regardless of how Adidas market them. As well as this it may be hard for them to gain market research as few people have had lace-less boots. Adidas will have to focus more time and finances into the marketing and promotion of the product as there is not already a large desire for the product.

Secondly, the product has been designed only for men. This therefore reduces the target market. If designed for both men and women more people would be interested in the product. However, this does mean that there is an opportunity for expansion and if the product proves to be successful and demand for the product to be made for women is shown Adidas can expand to this.

A strength of Adidas releasing the lace-less boots is that there is very limited competition. There is only one other lace-less football boot in the market – Lotto Zhero Gravity. Therefore they will be the only competition for Adidas to compete with.

With Lotto having launched the product 9 years ago and with little success Adidas have a strong position in the market. Introducing a product that they haven’t before is allowing the brand to expand their product range and therefore grow as a brand, showing both innovation and development.

W E A K N E S S

SWO S T R E N G T H

A threat to the success of the product will be that the brand are taking a risk introducing a new product. Although they have many other football boots none are lace-less. And with no more than one other shoe like it on the market gaining a lot of market research may be difficult, thus posing a threat to the brand.

Another threat would be another brand such as Umbro or Nike bringing out a cheaper alternative. This has been explained further in the competitive rivalry section in this report.

OT O P P O R T U N I T Y

THREAT

An opportunity will be the big events coming up in the football industry in 2016. As stated in the pestle analysis there are two stand-out events that Adidas can target with the new boots - UEFA European Championships and the Rio Olympics in the summer. These will not only encourage a boost in sales of football boots due to the increased attention on the sport but will also provide Adidas with opportunities to promote at events through posters on the side of the pitch/in the stadiums but also through endorsement with professional footballers.

14

5

PORTERS

1

Leading on from the SWOT a more in-depth analysis of the external environment is needed. This is done through Porters 5 forces. As defined

by David Boddy (Management an Introduction, 2014 –Page88) “Five forces analysis is a technique for identifying and listing those aspects of the Five Forces most relevant to the profitability of an organisation at that time.”

FORCES

SUPPLIER POWER: the more unique a product is the fewer choices of suppliers a business will have. Suppliers therefore have a certain amount of power in regards to driving up prices when they desire. The boots were created over a period of 24 months, suggesting that the design is complex, therefore the suppliers could potentially have a strong hold in terms of driving up prices. However, Adidas is a global brand and therefore relationships with the brand would be well respected and as shown on the Adidas website the brand emphasise the importance of their workers and suppliers. There is also security for the suppliers to a brand such as Adidas as due to the size and success of the brand it is unlikely they will need fewer suppliers any time soon.

2

BUYER POWER: Currently buyer power is non-existent as there is no one else in the market but going forward it could be if a competitors introduced a cheaper alternative. However, Adidas will now be known to have introduced the first boot with the technology and therefore brand loyalty will be high.

3

Competitive Rivalry: A brand will have more power if they have few competitors as suppliers will have less option to go somewhere else if there demands for driving up prices are not met. In general Adidas have a large group of competitors such as Nike, Puma, Umbro etc. however, specific to the lace-less boots they have very little competition which would encourage suppliers to drive up prices. With only one other boot like it (designed by Lotto) which is not very successful, the chances are slim that the suppliers would justify competitive rivalry as an excuse to push prices.

Nike are a globally known company and often use well known athletes in promotional campaigns, therefore if they were to introduce a similar product to the market there is potential for the rivalry to be strong.

4

Threat of Substitution: If a competitor such as Nike were to introduce a similar product threat of substitution would also be high. If they produced a cheaper alternative (which they have the resources and funds to do so) customers would be likely to choose this.

5

Threat of New Entry: A brands level of power can be affected by new brands entering the market.

Adidas are now at risk of this, having been the first major brand to introduce the lace-less product, it is likely that if they are successful other competitive brands will follow close behind them. However, this would only be from existing competitors such as Umbro and Nike and not a new brand.

16

For the final model it is important that product, price, place and promotion are all considered and planned when launching a product.

MARKETING

MIX These 4 factors make up the marketing mix. As explained by Palmer (principles of marketing -2000 – page 20/21) the marketing mix is “a conceptual framework.” And that “the tools can be used both to develop long-term strategies and short-term tactical programmes.”

Through looking at the product, price, place and promotion all aspects of the product and the product launch can be analysed.

18

PRODUCT Every product has different levels to it, as explained by Kotler and Keller (Marketing Management -2012, 348) “In planning its market offering, the marketers need to address the five product levels, each level adds more customer level, and the five constitute a customer-value hierarchy.” The three most noticeable levels within the boot are the core, tangible and augmented. The highly developed lace-less boots are the core product with the benefits it has being the tangible product. The main aim and benefit of the prime-knit upper design is to increase control with the ball, therefore improving performance. The augmented level of the product is the added extras that Adidas have provided such as the free delivery of the product.

From a distance the design of the boot is simple, with the lace-less factor emphasising this. The signature 3 stripes have been included on the design and they are visible on the side of the boot. This makes the boots instantly recognisable to consumers as an Adidas product.

PRICE The product is priced at £230. In order to analyse Adidas’ pricing within the football boot category a statistical analysis is necessary. There are currently 128 football boots available on the Adidas website under the firm-ground category (the category in which the laceless boot sits). Through collating the prices of the boots the most common price on the website is £80, with 19 of the 128 boots being at this price. From Adidas’ online website the cheapest product within the firm ground football boot category is currently (as accessed on 23/1/16) £15 with the new ACE 16+ being the most expensive.

This therefore leaves the new lace-less boot as the most expensive boot the brand offer, potentially making it unaffordable to a percentage of Adidas customers.

Adidas have used price skimming as their pricing strategy launching this product, this is when a product is set at a high price. This is a strategy well fitted to the product because, as explained by Kotler and Armstrong (Principles of marketing – 2012, page 338), that market skimming only makes sense within certain conditions – all in which Adidas fit. First that both the quality and image are supportive of the high price and that competitors cannot easily enter the market and undercut the price.

Place: According to Armstrong Et Al (marketing an introduction – 2012, 326) producing a product or service and making it available to buyers requires building relationships not just with customer, but with key suppliers and resellers in the company’s supply chain.” Adidas have a large manufacturing chain which is shown on their website.

Without a distribution system it would not be possible to get the product to where it needs to be.

The product is currently available in-store and online.

20

PROMOTION

There are many methods of promotion that could effectively be used to advertise the product launch. Television, printed media (magazines, newspapers, trade and technical journals) are both methods which would be useful, as well as promotional techniques such as in-store promotion, public relations methods – such a press release/interviews. Adidas have chosen to focus on digital media in order to promote the boots. Recent technological advances have provided brands with this incredibly effective platform to reach customers.

Most noticeably Adidas use social media site Instagram to promote with an impressive 9.1 million followers Adidas can quickly communicate to their desired audience. Combined with celebrity endorsement showing professional footballers with the product this method is highly successful and an effective way of building excitement within the target audience, providing Adidas with total control over what message they give to potential customers.

COMMUNICATION PLATFORMS Leading on from the communication platforms already used, improvements would be to continue to focus on the increasing use of digital media marketing as a platform of communicating to customers and potential customers -through creating effective marketing campaigns and promoting them on here the brand will be able to reach their target market quickly and cheaply.

Secondly using advertising on boards at televised football matches. Although expensive this would allow all those at the match to see it therefore aiming it directly at the target marketed as well as all those watching it on the television.

Adidas use a large range of marketing platforms, including printed media such as magazines and on television. These both allow them to reach a specific target market.

22

CONCLUSION In conclusion, the models have provided an insight into both the internal and external environment for the product market as well as showing the strengths and weaknesses of the product itself. Overall, it is clear that the key strength of the product is its use of cutting edge technology and innovation which makes the product unlike anything produced by competitors, putting Adidas ahead of others and promoting the brand as highly developed.

The short-term plan for this product would be to expand the colour range, this could make it more appealing to potential customers and could even encourage existing customers to make a repeat purchase. A long-term plan would be to expand the range and make it available to females, as stated within the 2014 Mintel Market Drivers report (accessed online) women’s interest in football is on the increase. This would therefore open the product up to a large group of potential customers.

24

APPENDIX TARGET MARKET As the products price is high in contrast to Adidas’ other boots in order to judge the target market for the product looking at the professional age is a good indicator of who would be purchasing the product.

POLITICAL The top five countries per region by number of supplier sites as stated on the Adidas website: The Americas: United States, Brazil, Canada, Argentina and Mexico Asia: China, Korea, Vietnam, Indonesia and Japan EMEA: United Kingdom, Germany, Turkey, Italy and Spain.

LEGAL Adidas will have to follow a number of laws when producing and promoting and selling their products. If they break any laws and legislations which could apply to them, they could meet serious consequences such as fines which would have a negative impact on finances and consequently as a business they could go into liquidation.

If workplace policies are not followed serious consequences such as legal fines could be given. These would negatively impact finances for the brand as well as tarnish the brand image. An example of what Adidas show on the website in relation to their standards- “The Workplace Standards are rules we apply at our own sites and our suppliers’ factories to cover health and safety, labour rights and environmental protection. The Standards draw from international law and the International Labour Organization conventions, and follow the model code of conduct of the World Federation of Sporting Goods Industry. We revised the Workplace Standards in 2001 and 2006 in consultation with labour rights groups.”

ENVIRONMENTAL As explained here TPU is not good for the environment, “TPU, which stands for Thermoplastic Polyurethane, is a form of plastic and is not known for being eco friendly. As well as being harmful to the environment to produce, TPU products can take many hundreds of years to decompose.” However, it is likely that Adidas have instead used biodegradable TPU, as suggested here –“TPU is used to produce hundreds of different products, including fabric laminates. Therefore, biodegradable TPU can be used instead of traditional TPU in the clothing industry. Biodegradable TPU is a solvent-free TPU that can biodegrade in as little as 4 years.”

As explained in Adidas’ Financial Results presentation – (November 5, 2015) they are launching Sport Infinity. They state that this programme will “influence the future of our industry in the most sustainable manner” continuing on to mention that “every pair of boots will not only be recycled, but used to produce fully customised sustainable and recyclable products in the future.” It is unclear as to whether the new Ace GTI 2016 Boots will be included in this, however, it does still bring a positive image on to Adidas in terms of the environmental factors that can hinder a brand if not considered.

SWOT – WEAKNESS here are many reasons why the only other lace-less boot on the market was unsuccessful. Lotto are established within Italy but international presence is small – compared to Adidas they wouldn’t be seen as threatening competition. This therefore shrinks the size of their consumer base. This also suggests that they wouldn’t have had the same resources or funds that a brand the size of Adidas have. Secondly, The ‘Lotto Zhero Ultra Gravity’ boot wasn’t developed with the technology Adidas used and therefore problems when purchased were raised such as what size to get. Without laces to tighten the boot and without them moulding to different feet like the ACE16+, sizing is an issue and it is likely the boots aren’t easy to wear.

4PS – PROMOTION There are large positives to the use of digital media as a form of advertising – it being that there are little cost and little limitation on the amount of which you can use.

THREAT OF NEW ENTRY The product took 24 months to develop, suggesting that the market would not be quick or cheap to enter. boot moulding to different feet like the ACE16+, sizing is an issue and it is likely the boots aren’t easy to wear.

4PS – PROMOTION There are large positives to the use of digital media as a form of advertising – it being that there are little cost and little limitation on the amount of which you can use.

THREAT OF NEW ENTRY The product took 24 months to develop, suggesting that the market would not be quick or cheap to enter.

26

BIBLIOGRAPHY Adrian Palmer (Principles of Marketing) 2000 – Oxford university press Inc,. New york Armstrong Et Al (Gary Armstrong, Philip Kotler, Michael Harker, Ross Brennan) (Marketing an Introduction) First published 2009, second published 2012 Pearson education limited Ashok Ranchhod (Marketing Strategies: A Twenty-first Century Approach) 2004 – Pearsons Education Limited David Boddy (Marketing an introduction) Sixth edition 2014 – Pearsons Education Limited J.Bohdanowicz and L.Clamp (Fashion Marketing) 1994, Published

by Routledge Kotler and Armstrong (Principles of marketing) – fourteenth edition 2012 – Pearsons education limited Kotler and Keller (Marketing Management) 2012, Published by Pearsons Education Limited Michel Chevalier and Gerald Mazzaiovo (Luxary Brand Management: A world of privilege) 2008, Published by John Wiley Mintel Report (online - http://academic.mintel.com/display/722307/?highlight#hit1) November 2014 Online http://www.adidas-group.com/media/filer_public/f2/83/f283bd255595-4537-a6a7-1c5a48b9b0a0/speech_q3_2015_internet.pdf http://www.bbc.co.uk/news/business-34621440 28