Products in the marketing mix of Adidas

The Adidas group has 4 main subsidiary’s. The first is its own brand name –
Adidas, which is present in clothes as well as footwear. The second is Reebok
which has overtaken Adidas and is one of the leading subsidiary’s in the Adidas
group. The 3rd is Rockpot which specializes in outdoor footwear, apparel’s and
accessories and 4th is Taylor made which is focused on golfing clothes,
equipment etc. Out of all the above subsidiary’s, Reebok is the strongest
followed by Adidas.

Adidas has various products. The major product of Adidas is off course their
footwear. Coming in various design and style, Adidas footwear is robust and
athletic. The secondary product of Adidas is apparel’s and accessories. Apparel’s
like T-Shirts, jackets, sweatshirts, shorts etc are in great demand. Where Reebok
is stronger in footwear, Adidas is stronger in apparel’s.

The aim of Adidas is to give the best footwear to their customers which has the
combination of technology and design. These products are not need based. In
fact, the shoes are bought by customers to satisfy their wants and desires.
Similarly, the apparel’s are targeted towards comfort during heavy activity.
However, although the main target is sports, the apparel’s are frequently used as
a style statement by youngsters.

Pricing in the marketing mix of Adidas.

Adidas, because of its style, design and promotions uses skimming prices as well
as competitive pricing. For run of the mill products, Adidas uses competitive
pricing keeping in mind competitors like Nike, Reebok and Puma. But for
products which are newly introduced in the market and are uniquely designed,
Adidas uses skimming price.

Apparel’s of Adidas constantly use skimming price and are higher priced due to
brand equity of Adidas in the apparel’s market. The target customer for Adidas is
the upper middle class as well as high end customers. Adidas never uses
penetrative pricing because that will affect the brand equity of Adidas. In fact, the
higher price point helps in the price quality approach and psychologically,
customers think that a higher price will mean better quality as well. Thus, Adidas
rarely drops its prices.

Place in the marketing mix of Adidas –

The major areas in which Adidas is sold is through retail outlets. Adidas has its
own exclusive stores in which the material is provided directly from the company.
On the other hand, many multi brand showrooms will also have Adidas apparel’s
and footwear on display. These multi brand showrooms get the products from a
distributor. The third and last mode of distribution is online. The products are sold
through online medium via fashion stores lie myntra.com as well as the online
website of Adidas. Thus the distribution channel of Adidas is as follows

1) Manufacturing > Adidas outlets > End customer

2) Manufacturing > Distributor > Multi brand showrooms
3) Manufacturing > Online fashion websites / Adidas website > End customer

Due to the excellent brand equity of Adidas, the operating margins are fairly high
thereby keeping the distribution channel motivated. A happy distribution channel
means better promotion for the company.

Promotions in the marketing mix of Adidas

Adidas markets through various marketing vehicles but the majority of marketing
is concentrated on television and product placements. The creative team of
Adidas is known to pump adrenaline in their customers through ads which are
well made, very creative and filled with energy. These ads attract the customers
towards the brand by sending the right marketing message to the customer. The
tagline of Adidas “Impossible is nothing” is in itself a very powerful statement for
the brand.

After television, product placement is the second line of promotion for Adidas.
The popularity of the brand is because it ties up with the top players across the
world such as Lionel messi, Ronaldinho, Sachin tendulkar and various others. At
the same time, Adidas also sponsors teams and some of the top teams include
Real Madrid, France, Great Britain (in football), England and South Africa (in
cricket) and several others. Here is a list of all the sponsorships done by
Adidas. http://en.wikipedia.org/wiki/List_of_Adidas_sponsorships

Below the line marketing of Adidas includes some very creative outdoor
campaigns as well as events marketing. Sales promotions and trade promotions
are also regularly offered by Adidas to their channel partners to promote the
sales of the brand. This concludes the marketing mix of Adidas.

B0
Cost based pricing
This involves setting a price by adding a fixed amount or percentage to the cost of
making or buying the product. In some ways this is quite an old-fashioned and
somewhat discredited pricing strategy, although it is still widely used.

After all, customers are not too bothered what it cost to make the product – they
are interested in whatvalue the product provides them.

Cost-plus (or "mark-up") pricing is widely used in retailing, where the retailer wants to
know with some certainty what the gross profit margin of each sale will be. An
advantage of this approach is that the business will know that its costs are being
covered. The main disadvantage is that cost-plus pricing may lead to products that are
priced un-competitively.

Here is an example of cost-plus pricing, where a business wishes to ensure that it

makes an additional £50 of profit on top of the unit cost of production.

Unit cost £100

Mark-up 50%
Selling price£150

How high should the mark-up percentage be? That largely depends on the normal
competitive practice in a market and also whether the resulting price is acceptable to
customers.

In the UK a standard retail mark-up is 2.4 times the cost the retailer pays to its supplier
(normally a wholesaler). So, if the wholesale cost of a product is £10 per unit, the
retailer will look to sell it for 2.4x £10 = £24. This is equal to a total mark-up of £14 (i.e.
the selling price of £24 less the bought cost of £10).

The main advantage of cost-based pricing is that selling prices are relatively easy to
calculate. If the mark-up percentage is applied consistently across product ranges, then
the business can also predict more reliably what the overall profit margin will be.

ompetitor-based pricing

If there is strong competition in a market, customers are faced with a wide choice of
who to buy from. They may buy from the cheapest provider or perhaps from the one
which offers the best customer service. But customers will certainly be mindful of what
is a reasonable or normal price in the market.

Most firms in a competitive market do not have sufficient power to be able to set prices
above their competitors. They tend to use "going-rate" pricing – i.e. setting a price
that is in line with the prices charged by direct competitors. In effect such
businesses are "price-takers" – they must accept the going market price as
determined by the forces of demand and supply.

An advantage of using competitive pricing is that selling prices should be line with rivals,
so price should not be a competitive disadvantage.
The main problem is that the business needs some other way to attract customers. It has to use
non-price methods to compete – e.g. providing distinct customer service or better availability.