BRAND IN THE HAND MOBILE MARKETING AT ADIDASBSAD 331DR. B. Alex Dorward, Liam McGean, MatthewMUKERJI Tomlinson, Yixi Yao
Target Market Through its “brand in the hand” campaign, Adidas is looking expand its reach to target 12-24 year olds Hopefully reaching customers outside the sporting sphere Adidas also targets soccer segment in Europe, basketball and Hip Hop (or “Urban Cool”) segment in North America
Porter’s 5 Forces - Competition High Adidas faces stiff competition from numerous smaller competitors (NewBalance, Asics, Columbia), as well as from very large players (Nike, Reebok)
Threat of New Entrants How severe is the threat of new entrants?
Threat of New Entrants Medium Although is it relatively easy to produce sportswear and accessories, it is difficult to effectively compete in such a market Promotional costs are very high for this market
Power of Suppliers How much power do suppliers have?
Power of Suppliers Low There are very many suppliers and therefore lots of choice and little supplier power
Power of Buyers How much power do buyers have?
Power of Buyers High Since there is such competition, all of which are competing for brand recognition, buyers have a lot of choice and power
Threat of Substitutes How severe is the threat of substitutes?
Threat of Substitutes Very Low There are no substitutes for clothing and shoes There are different types of shoes/clothing, however, if somebody requires soccer cleats, they cannot substitute these with another type of shoe
PEST Analysis - Political What are some political factors that may affect the industry?
PEST Analysis - Political Regional laws regarding unsolicited mobile marketing PEST Analysis - Economic Dot Com stock market decline in 2000 may make people doubt the importance of mobile marketing Price of newer technology phone features are more expensive therefore affordability issues arise Increased online advertising popularity resulted
PEST Analysis - Socio-Cultural Increased use of internet Frequent use of cellular phones More than half of the media consumption will be digital by 2007 (estimate) Consumers became hostile towards perceived intrusion on their lives by advertising
PEST Analysis - Technological 2.5G and 3G mobile phones Transferspeeds similar to wireless broadband 2.5G usage is estimated to go from 8% - 68% from 2003-2006 (Europe) 3G usage is estimated to go from 0% - 28% from 2003-2006 (Europe) Personal Mobile Gateways
SWOT Analysis - Strengths Strongly recognized brand image Growing customer base within the USA Global Revenues more than $6 billion Largest supplier of sportswear in Europe Advertisements available in a variety of languages Adidas spends more of its marketing budget on new media than its competitors, 25%
SWOT Analysis - Weaknesses Adidas does not have the majority of market share in US Nike held 40% market share Adidas was not the leader in the European soccer market in 2003 Nike edged out Adidas for the first time Adidas spends less on advertising each year compared to its greatest competitor (Nike)
SWOT Analysis - Opportunities What are some potential opportunities?
SWOT Analysis - Opportunities In 2003 70% of Europeans had mobile phones In 2003, 23% of Europeans had mobile phones with newer technology, allowing for more innovative advertising strategies A lag in the US mobile phone market gives companies an opportunity to test their strategies first on the European market Youth spending on mobile media is rapidly increasing
SWOT Analysis - Threats What are some potential threats?
SWOT Analysis - Threats Limited bandwidth within the US Regulatory delays and diverging delayed the introduction of 3G into the US Increased competition in domestic market Consumers recognize minimal amounts of traditional advertising Ie.8 minutes a year of Adidas advertising per person
Competitive Analysis Nike is the global leader in athletic footwear In the US Market: Adidas 16% of athletic footwear market share (16% Reebok, 40% Nike) Companies compete by signing pro- athletes such as Michael Jordan (Nike), Kobe Bryant (Adidas), Allen Iverson (Reebok) In 2003, Nike had 60% of basketball segment, Adidas had 20%, and Reebok
Competitive Analysis (cont’d) Nike spent $1.4 billion on advertising and promotion compared to Adidas’s $900 million (2004) Adidas sponsored 2004 EuroCup Nike sponsored Manchester United in 2002, and increased advertising during the World Cup.
Competitive Analysis (cont’d) Both Adidas and Nike began “new media” advertising Nike charged users for all content downloaded to cellular phones Adidas, as part of “Urban Cool”, partnered with MTV to bring ringtones, wallpapers, and games
Marketing Mix Price Variesdepending on product Run DMC shoes cost $70 Missy Elliott Remix Boots cost $120 Consumers are price insensitive Product Sportswear and accessories Place No applicable information found in the case
Marketing Mix Promotion Significant amounts of promotion required This includes traditional promotion techniques such as print, billboards, TV, and cinema Internet marketing Also includes innovative promotion techniques such as “live billboards” and mobile marketing Mobilemarketing seen as the future of Adidas marketing in order to break through the clutter of advertising
Pros of Mobile Marketing “Breaks through the clutter” There is an abundance of traditional advertisements More personal, richer advertising possible More meaningful and effective Is not as intrusive as traditional media since consumers have to give consent Data can be collected that can help study what consumers want Attracts consumers outside the sporting sphere Broadens their brand image
Cons of Mobile Marketing Potential for intrusive, unsolicited, unpopular marketing (spam SMS’s) Difficult (and possibly expensive) to develop compelling content that users want Does not reach everybody Content isn’t always available due to possible service interruptions Possibility of increased use of mobile marketing and consequently getting “lost in the clutter” again Fragmented and complex due to many different handsets and carriers, different types of functionality, and different preloaded apps
Conclusion Should Adidas continue with mobile marketing?