Fashion Marketing and Merchandising

Major Project
Adidas Originals

Eileen Ng

Edwin Lim

Irina

Lee Hung Bin

CONTENTS

1. Executive Summary

2. PEST Analysis of Macro Environment

3. SWOT Analysis

4. The 4 Ps of the Marketing Mix

5. The 4 Cs of the Marketing Mix

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6. Conclusion

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APPENDIX

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REFERENCE

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1. Executive Summary
Introduction
During the mid to late 1990s, Adidas Group has separated themselves into 3 main groups
with different focuses.
Adidas Performance, which prides itself in innovation in sports technology.
Adidas Style, which caters to the higher end consumers with exclusive designer
sportswear, e.g. Yohiji Yamamoto, Y3.
Adidas Originals is an extension of the brand that focuses on sports fashion and
lifestlye collections with strong references to music, arts and street culture.

(Adidas Performance)

(Adidas Style)

(Adidas

Originals)
In the following report, we would be analyzing the marketing mix for the division,
Adidas Originals.
History
1920 Adi Dassler created his first pair of shoes with an emphasis on durability,
protection and performance.
1928 Adi Dasslers shoes were featured at the Olympic games for the first time in
Amsterdam.
1936 Jesse Owens wore Adi Dasslers running shoes and went on to win 4 Olympic
Gold Medals, becoming the most successful athlete in Berlin.
1948 After the First World War, Adi Dassler started production again with 47
workers.

1949 Adi Dassler registers Adolf Dassler Adidas Sportschuhfabrik in Furth. Adidas
is born.
1954 The German Team wins the World Cup in Berne for the first time with Adidass
screw in studded football boots to adapt to the ground conditions.
1962 Adidas shoes are won in all 32 games in the Football World Cup in Chile.
1971 Mohammed Ali and Joe Fraser wore Boxing Boots by Adidas in the Fight of
the Century at Madison Square Garden, New York.
The Trefoil logo was introduced with Adi Dasslers vision of expanding into a
leisure and lifestyle sector, along with Adidas Originals concept.
1978 Adi Dassler passed away at the age of 78. His son Horst Dassler carries on
Adidas.
1987 Horst Dassler passed away at age 51.
1989

Adidas transforms into a corporation but retains its family ownership.

1993 Robert Louie Dreyfus, becomes the President of Adidas Ag and introduced new
sales and marketing strategies that paved the way for success.
The Adidas Originals wave surfaces with Madonna and a team of other
trendsetters donning classic sports footwear and apparels in 1970s style.
1995

Adidas goes public.

2003 Grand opening of the Adidas Originals Concept store at Pacific Plaza, Scotts
Road Singapore.
2004 The global brand campaign Impossible is Nothing is launched, featuring
great athletes like David Beckham, Mohammed Ali and NBA star Tracy
Mcgrady.
2009 The opening of the 2nd Adidas Originals Concept Store at Illuma Shopping
Centre, Victoria Street Singapore.
The introduction of the highly anticipated Adidas x Star Wars collaboration is
launched.

Size of Company
Currently, there are two Adidas Originals concept stores in Singapore. They are
located at Pacific Plaza at Scotts Road and Iluma Shopping Center at Victoria
Street,Bugis.

Philosophy of The Parent Company (Adidas Group)

The Adidas Group aims to be the global leader in lifestyle and professional sporting
goods industry. Adidas is customer driven and continuously improve quality and design
aspects of their merchandises. Adidas is involved in Research and Development to aid
athletes of all skill levels achieve peak performance. They are also constantly extending
their merchandise mix to cater to the fashion conscious consumers. Adidas is a
environmentally and socially responsible organization that takes part in fair-trade
practices. Lastly, by being committed to offering the highest satisfaction value to their
consumers, they strive for growth and long-term profitability.
Marketing Objectives of Adidas Originals
Diversify Brand Portfolio
Adidas plans to maximize their consumer reach by offering an array of brands that caters
to different market segments. This allows each brand to keep their unique identity and
focus on their core competencies.
Leading Through Innovation
Adidas Originals strives to come up with trendy designs that take references from popular
street cultures like Adidas Originals for Skateboarding. In addition, Adidas Originals
have also approached big franchises like Lucas Film (Star Wars) and A Bathing Ape to
come up with collaboration collections. Designers and celebrities like Jeremy Scott and
David Beckham are invited to develop exclusive collections for Adidas Originals.

Developing a Team Grounded through Heritage

Although Adidas Originals is always forward-looking, they are always looking back at
heritage and culture of the company for collections inspirations and guidelines for their
work ethics.
Being social and environmental friendly
Adidas Originals ensures that all operations are under the guidelines of international
social and environmental standards. They encourage socially and environmentally
responsible work ethnics for generating long term profitability.

2. PEST Analysis of Macro Environment

Political and Legal
A government that has been in power for the past 45 years is a good proof of being stable
and reliable. Foreign businesses are encouraged to set up operations here in Singapore.
According Passau Universitys Corruption Perception Index, Singapore is ranked third
least corrupted country out of 180 countries in the year 2009 and also ranked the most
transparent company in the world.
In addition, Singapore is also 1st in the Ease of Doing Business Index created by the
World Bank in 2010.
Due to stringent measures set up by the legal system, unfair business practices are not
common. The Consumer Protection (Fair Trading) Act 2003 ( THE ACT) provides the
legislative framework to allow consumers aggrieved by unfair practices to have recourse
to civil remedies before the courts. It also provides for a cooling off period for direct sales
and time-share contracts, and allows specified bodies to enter voluntary compliance
agreements with, or apply for injunction orders against errant traders Ministry of Trade
and Industry, Singapore. Singapore is also rated 3rd best country in terms of protection of
intellectual property by the Global Competitiveness Report of 2010/ 2011, World
Economic Forum.

Economics and Demographics

Singapore has one of the fastest growing economy in the world. The GDP growth rate of
Singapore is 17.9% for the first half of 2010 as compared to Chinas 11.1%. Singapore
has GDP Per Capita of $50,180, Singapore is ranked 4th highest in the world according to
the research undertaken by the International Monetary Fund (IMF).
With a population of approximately 5 million, Singapore has one of the lowest in the
unemployment rate in the world of 2.2% in the year 2009,.This may due to the success of
the countrys education policy in producing skilled workers. It is compulsory for all
citizens to attend 6 years of primary education. In addition, they have opportunities to
move on to tertiary institutes after their secondary education to develop skills and gain
industrial experience.
Social and Cultural
Singapore is still a relatively traditional country with values and mindset taught by the
older generation. Singapores society is moving at a fast speed with our economy being
one of the best in Asia hence it has been a culture for Singaporeans to rush at everything
they do, aiming to achieve the best and not losing out to others. This is the term and slang
used in Singapore called Kiasu, which is a hokkien dialect meaning afraid to lose.
Also, being a multi-racial country, Singaporeans have all learnt to compromise and live
with various different ethnic groups and this has in turn promoted harmony and peace in
the country. Contributing to the peaceful life in Singapore are the strict guidelines of the
governments rules and regulations reinforced by the Singapore Police Force with fines
and court sentences implemented on every broken law in the country.
Technological
One of the key factor for attracting foreign investment and businesses is the IT and infocommunication infrastructure. Singapore has an advanced and comprehensive IT
infrastructure with Internet home users reaching 80% in 2009 according to the Infocomm
Usage by Household and Individuals Survey. Singapore has three tele-communication
companies in Singapore which offer wireless broadband Internet access with just a
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smartphone or laptop. This allows people to stay connected to the Internet or access to Emails on the go. The Infocomm Development Authority (IDA) of Singapore is
developing a nation-wide wireless Internet program call Wireless@SG. The program
aims to enable Singaporeans to have broadband Internet access on the go. Internet access
is now available in shopping malls, restaurants like McDonalds, the airport and
community centers. Soon, Singapore homes will be equipped with optical fiber cables
wiring which will greatly improve the Internet download speed and allow multiple
Internet access without a big increment in the fees.

3. SWOT Analysis
Strengths
Adidas Originals has established itself as a quality mid-market apparel brand catered for
the local youth market. With stores located at the heart of the youth culture district in
Singapore, Adidas Originals is fast gaining popularity as a trendy yet affordable
purchasing option for the trendy. Capitalising on Adidass reputation for producing high
technology sporting products, consumers trust the quality of the merchandises introduced
by the Adidas Originals line. In addition, Adidas Originals has several permanent
collections with big name franchises like David Beckham, Diesel, Star Wars and Luker
by Neighbourhood from Japan. These collaborations not only keep the merchandise mix
of Adidas Originals unique and interesting, but also affect consumers perception of the
brand. Being associated with youth idols like David Beckham, Ian Brown, Dj Def Jam
and street-wear design maestros Kazuki, Clot and Luker by Neighbourhood has
successfully aid in elevating the status or brand image of Adidas Originals. Coupled with
a pricing strategy that caters to the majority of youths (40 to 60% cheaper than A Bathing
Ape) in Singapore, products, both in stores and online are well sought after and talked
about among peer groups.

Weaknesses
The general perception of the public is that Adidas is just a high sporting performance
firm. People may not step into the Adidas Originals Concept stores thinking that it is just
another Adidas retail outlet merchandising the same products. This may be due to the lack
of promotional activities conducted by Adidas originals in the region.
With the growing popularity of online retailing especially among fashion forward youths,
Adidas Originals is at a disadvantage as they do not provide an online shopping channel
to consumers in Singapore. Lastly, the high price of some products like the merchandises
from the Jeremy Scott series may be too expensive for most of the youths in Singapore.
Opportunities
Firstly, Adidas Originals should introduce a convenient online shopping channel for
consumers in the region to serve Singaporeans who lead hectic lifestyles. In addition,
through interactive display of merchandises, history and interesting facts about Adidas
Originals, consumers would be captivated by the brand.
Adidas Originals could come up with more promotional campaigns to let consumers
know more about them i.e the difference between Adidas Performance and Adidas
Originals. Introducing unique, lifestyle and fashion centered advertisement campaigns
should be considered to boost brand recognition. Having just constructed a world-class
skate park at East Coast Park, Adidas originals could hold or sponsor a skateboarding
event at the venue. Also, a Star Wars movie marathon party could be held to celebrate the
popular collaboration between these two big franchises.
Threats
Adidas Originals direct competitor, Nike NSW series is gaining strength to strength with
big name collaborations like Fragment Designs from Japan and Undefeated from New
York. However, products are exclusive and are can only be found in a handful of
specialty retailers. Regardless, Nike is still Adidas Originals biggest threat as products
from their staple collections like the Air Force 1 series, Nike Sb series and the Air Max
series are highly sought after by consumers of varied ages and lifestyles.

As Singaporeans become more fashion forward, an influx of brands are setting up outlets
here in Singapore. Hence, Brands like A Bathing Ape and Comme Des Garcons Play
series may cause Adidas Originals to lose a certain amount of market share.
The general increase in prices of raw materials would have dire effects on Adidas
Originals. With the increase in cost prices, profit margins for sales would fall.
Competitors perceptual mapping
(Refer to Appendix 2.1)
Ethical issues
In November 2000, Adidas was accused by the UK Observer that children as young as
15 years old were expected to work a minimum of 70 hours a week in Indonesia. The
article also stated that in Thailand, a woman had to work 12-hour shifts, 7 days a week
just to get paid the equivalent of US$1.50 per day. In addition, globalmarch.org disclosed
an article displaying children in Pakistan stitching footballs for the upcoming World Cup
2012(Scott, February 11 2008, blog.pier32.co.uk). These revelations caused a huge
global outcry and Adidass brand image was severely affected.
Therefore, knowing that they are under intense scrutiny, Adidas has cleaned up their act
and has added a section labeled sustainability in their corporate website which consists
of information about their initiatives regarding the environment and human rights. The
section states that Adidas has now set a minimum social, environmental, health and safety
standards for all of its subsidiaries including the offshore manufacturers. Based on the
International Labour Convention, Adidas has set clear rules for minimum age for
employment and hours of work. On the environmental aspect, Adidas has helped set up
energy efficient workshops for their suppliers to contribute their part in saving the
environment.
To conclude, Adidas seems serious about rebuilding their image as a socially and
environmental corporation. A Google search on Adidas Ethical Issues discloses no
recent controversial articles regarding ethics.
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4. The 4 Ps of the Marketing Mix

Product
Adidas Original offers a wide range of products that appeal to the fashionable savvy
crowd presenting and coming up with constant collaborations with talented upcoming
designers of different brand personality and character.
A few examples of collaboration in recent years are namely Adidas Originals with Star
Wars. This collection is very popular amongst Star Wars movie fans worldwide. Designs
included airspace-inspired sneakers available in black and silver colour. Another
monumental collaboration is with avant garde designer Jeremy Scott, this range of
collaboration in footwear and apparel appeals to the out-of-the-box quirky crowd with the
classic Adidas footwear infused with Jeremy Scotts iconic wing design infused at the
sides in metallic shades of colour.
Coming up with various different character and style adopted from each collaboration has
been the norm for Adidas Originals and is also one of their selling point which constantly
attracts new potential consumer and current consumers loyalty for their savvy style and
ever-changing new trendy designs.
Price
Adidas Originals price level is approximately equal to competitor, Stage and
Nike. However it is 40 to 60% lower than exclusive brand, Bape.
For example you can buy a pair of sneakers for $89-149 and apparel starts from $59, but
exclusive collection starts from $139.
Place

Adidas Originals is a well-accepted brand in Singapore. Singapore has only 2 Adidas

Originals concept stores. They are located in Pacific Plaza and Iluma Shopping Center.
This two stores are located in central districts of Singapore, in shopping malls with
branded stores and with high volume of potential customers. The latest store (Illuma) is
known frequented by the youth population.
Both shops are accessible by public transportation, such as MRT and buses. Therefore
easy to search and they are located in the areas of interests of the target market.
Promotion
From time to time, Adidas Originals do have promotions in-store such as storewide
discounts as well as preview launch party of a new collaboration for VIPs and the media.
Other than occasional in-store marketing, Adidas Originals is also involved in
sponsorship of events with magazines such as Juice Magazine for their recent 12th
Anniversary Party held at Zouk by giving limited edition items for winners of games and
competitions.
Adidas Originals has been gaining popularity and publicity with buzz marketing. There
are fashion information websites feature Adidas Originals products, reviews and sneak
peak of the upcoming collection launch. The articles are available at no cost and anytime
anywhere, with the access to the Internet. The articles feature stories behind each product
creation, the launch date and where they can be found.
Others traditional forms of promotion done by Adidas Originals are magazine advertising
and public relations. Occasionally, Adidas Originals products are featured in fashion
lifestyle magazines editorial or recommendations, namely in Juice and Catalog magazine.

5. 4 Cs of the Marketing Mix

Customer Solution
Customer solution is about studying consumer wants and needs, and to manufacture
products in response to those needs. Adidas Originals is always offering consumers with
trendy and innovative products as mentioned in the 4 Ps. That is done after studying the
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target consumers and trends to aid its product development responding to their
differences in the needs and wants.
The increasing demand for fashionable and stylish sporty apparel and shoes is what
motivates Adidas to branch out with Adidas Originals to focus on combining fashion with
Adidas heritage aesthetics. With the growing trend of individualism, consumers are
demanding for products that are unique and not commonly seen. Adidas Originals then
started mi Originals (refer to Appendix 5.1) to allow consumers to customize shoes
according to their ideal colors, materials, finish and even add personalized embroidery.
Consumers can choose a pair of shoes of their choice and design it to fit their style or
personality.
For the consumer who wants to be different and stand out from the rest, Adidas Originals
collaborated with well-known American fashion designer Jeremy Scott. The collaboration
worked on a collection which includes Jeremy Scotts illustrious approach to Adidas
Originals sportswear and shoes (refer to Appendix 5.2). Each design is exclusive and eyecatching that can fulfill the demand of consumers who like to be fashionable and unique.
The signature pieces were seen on celebrities resulting in a craze for them and products
were taken off their shelves quickly.
Adidas Originals cater to comfort and quality seeking consumers by integrating shoes
technologies into its footwear with a modern twist. A new range of cross-trainers
combining the element of basketball heritage of Adidas and technology adapted from
Adidas performance basketball shoes (refer to Appendix 5.3). The shoes technology
which is known as Mega Torsion XTH was introduced to provide better forefoot support
and overall cushioning while allowing greater lateral movement and stability.
Customer Cost
Consumer approach to the cost is the cost involved in consumers purchasing products to
satisfy their needs and wants. Consumers are getting more fashion-conscious and they
have ever-changing demand and desires. Those are the motivations that drive them to
make purchases. Cost is a big factor when purchasing of products and consumers are
always concerned with getting their money worth and every cent counts.

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Customers of Adidas Originals buy the products for the brand image, uniqueness of
designs and quality of product. The brand always tries to provide quality creation of
apparel and shoes. tries to collaborate with various designers and brands to come up with
creative and innovative designs. Consumers purchase the products because they wish to
own a part of the designers item so they could have a part of the lifestyle the brand
portrays.
Convenience
Consumer approach to the place of the brand or retailer is the convenience to purchase
products or services. With access to the Internet, consumers could look up the product
catalog available at the official Adidas Originals website. Adidas Original has an online
store but it only serve consumers living in United States and does not ship to Singapore.
However, there are online authorized Adidas Originals resellers like ASOS and
Karmaloop which are established online retailers. They provide shipping to many
countries including Singapore. Singapore consumers could purchase Adidas Original
products online and get them shipped to Singapore. World-wide communication medium
like the Internet, E-mail and Facebook enables online stores to communication with
consumers in real time and answer any doubts or queries promptly. Globalization induced
more transportation and delivery of items worldwide which gave rise to more shipping
companies. That resulted in shipping of products from one country to the other cheaper
and in a shorter lead time.
There are two Adidas Originals brick and mortar stores in Singapore. The two stores are
strategically located, in the vicinity of the busiest shopping malls and departmental stores
in Singapore. Both are located in the ground floor and within walking distance of the
nearest MRT stations, making them accessible and highly noticeable. It is convenient for
consumers who can choose to take the public transport or drive with parking lots
available in the mall.
Communication
Communication does not emphasize only on the promotional aspect, instead it focuses
more on the interaction with the customers. With promotion used by Adidas Originals
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such as appearing on write-ups and fashion news updates in magazines such as Juice and
Catalog, they have also included the stores address and telephone number as reference
for the customers who are interested or have enquiries. Social networking media like
Facebook allow Adidas Originals to communicate with consumers in real-time and more
interactively.
Adidas Originals promote its products by organizing events such as the recent Juice
magazines 12th Anniversary Party at Zouk. The theme of the party revolved around the
lifestyle and hobbies of Adidas Originals consumers. It attracted groups of like-minded
people who share the same interest, passion and lifestyle. In this way, they are promoting
the brand to them but not plainly revolving about their products, rather, it is interacting
and promoting the lifestyle where everybody could all have fun together and Adidas
Originals could inflict a sense of belonging to the consumers as well as interaction with
the consumers as a brand.

6. Conclusion
Summary
From the research and findings, the key appeal of Adidas Originals is the innovative
creation of new products. It is evident in the collaborations with the different designers,
from avant garde designer Jeremy Scott to Japanese street style designer Kazuki and
celebrity David Backham. Adidas Originals get a lift in its brand image through the
publicity generated in major collaborations. This allows Adidas Originals to expand its
target market and attract new customers. The brand revolves around the youth street
culture, skateboarding and fashion trends. Therefore, Adidas Originals choose to price the
regular-range products affordable with the youth in mind, established itself as a midmarket brand providing quality apparel and shoes.
Recommendations
Adidas Originals could do more magazines advertisements as compared to the frequency
they are implementing currently in order to make their brand more distinct. This way,
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more consumers would know the difference between the family brands, Adidas being the
traditional sportswear brand and Adidas Originals being the fashionable lifestyle brand.
They could also keep up, update their image and look at venturing into the internet
market as there has been a tremendous growth of internet youth users over the years.
Also, Adidas Originals could reflect on their pricing for certain collaboration products to
make it more affordable for their youth target market. And they could participate more
actively with event marketing to have more interaction with current consumers and also
to attract potential consumers. By doing more event sponsorships, Adidas Originals could
build up the intimacy between the brand and its group of customers, hence enhancing
brand loyalty.

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Appendix
Appendix 2.1 Perceptual mapping

Appendix 5.1: mi Originals

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Appendix 5.2: Adidas Original with Jeremy Scott

Appendix 5.3: Adidas Original integrating shoes technology

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References
Adidas Group. 2009. adidas Group History. [ONLINE] Available at: http://www.adidasgroup.com/en/ourgroup/history/history.aspx. [Accessed 04 December 10].
World Economic Forum. 2010. The Global Competitiveness Report 2010-2011.
[ONLINE] Available at: http://www.weforum.org/en/initiatives/gcp/Global
%20Competitiveness%20Report/index.htm. [Accessed 06 December 10].
All White Kicks. 2010. Mega Torsion XTH Kicks. [ONLINE] Available
at: http://allwhitekicks.com/mega-torsion-xth-kicks/. [Accessed 08 December 10].

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