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E-marketing Case Study #2 (Adidas) -- Outline

Before answering the questions of this case, let's take a look at the outline of some important events:

E-Marketing Case Study #2 (Adidas) -- Question 1

1. What is Adidas’ position in the athletic shoe market? How does the brand seem to be doing in this market?

Ans:

While Nike is the global leader in athletic shoe market, Adidas is nothing more than the second place in that market because it started its business in the field of soccer shoe market. So, Adidas could not handle the whole athletic shoe market. Later on, Adidas wanted to expand its capability on the shoe market. In order to satisfy the market’s need in depth, Adidas also went for the basketball market.

However, Adidas found that marketing is much more important because shoe is in the “shopping goods” category. It means that products from different brands have high homogeneity. Adidas must have a good marketing strategy if they don’t want to be in a price war. So, Adidas outsources its production and focus on marketing in the 1990s.

In the marketing process, Adidas launched several campaigns and we are going to show you briefly in the following table:

Timeframe	Adidas’ major turning points
1995	Campaign for soccer footwear leader
1998	Focus on U.S. market
2002	“Colours” campaign in Sweden
2003	“Living Billboard” in Japan
2003	“Vertical Soccer Field” campaign
2004	T-MAC4: The first laceless basketball shoes
2004	“Impossible is Nothing” campaign “R2L”campaign
2005	15~25% of total marketing budget on new media
Others	Partnered with MTV
--	“Match Centre” campaign
--	“Respect M.E.” campaign

On the other hand, we want to give Adidas some suggestions in the future.

First of all, Nike is the strongest competitor to Adidas as we know. Second, Nike’s capital capability is also huge. So, it’s certainly foolish for Adidas to compete with Nike in a price war. We concluded a few differences of the characteristics between Adidas and Nike in the following table.

	Adidas	Nike
Involved Area	Focus	Broader
Style	Fashion & Casual Exercise Type	Comfortable Sport Type

According to the above analysis, Adidas can try to differentiate itself from Nike with different aspects:

· Cooperate with reference groups: Adidas can sponsor some sport stars and launch some limited edition products related to those sport stars.

· Cooperate with famous designers: Adidas can cooperate with famous designers to establish new product-line which can magnify its fashion and casual style.

· Change the traditional image of sport: Traditional image of sport is sweatiness and smell. Adidas need to establish a positive or even beautiful image for exercise, to attract youth and female in particular.

E-Marketing Case Study #2 (Adidas) -- Question 2

2. What evidence does Adidas have that suggests the importance and potential success of digital interactive and mobile marketing?

Ans:

In this question, we try to answer this problem from two points of view.

The first point of view mainly provides evidences in the case. Adidas’s media campaign were designed to follow 3 steps: impact, involvement and activation, it tried hard to keep the track on the advantages of the fad of Internet, cell phone, 3G cellular telephony, Hip-pop etc, so that it can provide brand image beyond text messages, like ring-tones, wallpaper, video games, new products, sports news, living sport match scores…..

 

Event No.	Evidences from the case
1	In 2002, Adidas’s first attempt to interactive mobile marketing was in Sweden, with a campaign called “Colours”, using very simple banners and wallpapers for downloading phone wallpaper with Adidas logo.    This campaign leaded to huge access.
2	Another pilot involved a ring tone program in UK, with a small fee, which resulted in 6,000,000 downloads.
3	Adidas envisioned its own broadband channel that could be accessed through an Adidas icon.  Users could then enter a virtual “Adidas World”.
4	Adidas hired a software development firm to create an arcade-style soccer game applet that could be downloaded for a fee of ￡1.99.
5	In early 2004, Adidas took over the Yahoo portal to promote “Impossible is Nothing” campaign with famous boxing star, Laila Ali, daughter of Muhammad Ali.
6	Adidas adopted an “Opt-in” policy, users had to request, for all Internet and mobile advertising.
7	Adidas envisioned a platform that would allow users to manage a variety of fitness and sports programs through PMG.
8	Adidas divided the mobile contents into 3 tiers, based on production cost and user value, which were free content, cost-plus content charged small fee and fee-based content.
9	Adidas announced its mobile marketing initiative to regional subsidiaries, America Adidas.
10	Because technology varied from region to region and regional tastes were different, Adidas partnered with MTV.
11	Adidas sought methods that gave customers a “hook”, and then relied on viral marketing to convince others to use the service or product.
12	Adidas sponsored European Cup in 2004 with “Road to Lisbon” (R2L) campaign, featuring 13 of European greatest soccer stars by a short film.  The company also invested heavily in TV ads, complemented by an Internet site from the mobile component.  Adidas sent out “scooter squads” to other areas of Lisbon to remind people of the campaign. As a result: i.               Sold the relevant products 2.5million units. ii.              In the first month, 10,000 ring-tones were downloaded. iii.            Adidas created its Euro 2004 Java ticker applet, which could be downloaded to cellular phones and offered real-time score for the championship matches.  The applet could be downloaded to 2.5G phones at of ￡5.0 for 2 month.  The company had more than 63,000 subscribers. iv.            With R2L, Adidas was testing the waters to see what could be achieved on mobile devices.
13	A second-generation program called “Match Centre” provided up-to-date regional league scores for 5 countries leagues.  It appeared to be very popular among soccer fans.
14	Adidas worked with cellular phone manufacturers to include features important to its target market, and had to develop appealing add on content, such as sport tickers, games and ring-tones.
15	Adidas incorporated with Missy Elliot to created “Respect M.E.” and successfully attracted consumers to advertise it on various blogging sites.

 

 

The second point of view is mainly about some implications about the importance and potential of the digital interactive and mobile marketing.

 

No.	Implications
1	Very low cost.
2	Inefficiency in magazine ads and TV ads because of video recorder.
3	Adidas can make use of “Viral Marketing” which is very efficient.
4	Mobile became a common and private stuff, so people keep online on its marketing channel 24 hours/day and 7days/week.
5	Its target audience in the range of 12~24-year-old have great potential in involving in the mobile market 2.5G or 3G generation. It can reach most of those people comparing with the traditional one in the future.
6	Many manipulations can be done to achieve interactive marketing. So, Adidas can get the consumers more involved in the marketing process.    e.g. Adidas QR tagging (Reference)
7	Adidas can take advantage of “time” and “place” because shopping is a certain extent of impulsive buying behavior.   e.g. According to the classic ads method such as TV ads, people are normally at home when they saw an ad. By mobile, people maybe right at the street. So they may be triggered to do the consumption.

 

** Reference:

Adidas QR Tagging. QR codes, which turn your phone into a bar code scanner, are everywhere in Japan and Korea. Adidas used these codes on retail merchandise tags and clothing imprints. Potential customers could take a photo of the color code on a sleeve, and the handset would then load up the manufacturer's WAP site. Over the course of the test run, 60,000 people participated in the Korean Adidas program, and Adidas had over 2,000,000 page views. (Note: It's up to carriers as to when this technology becomes available in the US.)

 

E-Marketing Case Study #2 (Adidas) -- Question 3

3. Why did Adidas choose to centre the campaign based on Elliott?

Ans:

After R2L and Match Center, Adidas had found a way to impart information and to demonstrate products, with brand concept. However, Adidas hasn’t been able to engage youth in a meaningful way, particularly the 12~24-year-olds.  It planned to incorporate “cooler” elements, such as photos and video. The target audiences of Adidas are the group of people who are most possible to be influenced by the “reference group” and they also concern their images between the “peer group”. So, Adidas was only interested in the 12~24-year-olds, which is an age Adidas can make a favorable impression. Adidas was less interested in older customers because they already have brand loyalty and thus they are not easy to be influenced.

 

By 2003, the hip-pop cultural phenomenon had reached 45 million Americans, who spent more than $10 billion on hip-pop music and related merchandise. Based on estimation, 80% were Caucasian between ages of 13-34.

 

ME campaign’s objective is mainly to attract the young Americans and provide a long-term connection between the Adidas brand and ME fans. As there are many sub-culture exist in US, ME is one of the most popular representative female artist in Hip-Hop field and this matches the age-layer (12~24) of Adidas’ target audience.

 

As the limited market support, Adidas decided to promote the line in 3 ways: mobile, online and a face-to-face event at the music awards in Miami, Florida.

The objectives of the mobile campaign were to:

1)    Show the product line,

2)    Create consumer demand,

3)    Drive traffic to retail outlets,

4)    Help consumers locate the products,

5)    Grow the existing database of Missy fans and capture SMS data,

6)    Alter fans to product line activity,

7)    Enable users to download exclusive Respect M.E. mobile content onto their handsets for viral promotion.

 

Finally, Missy Elliot created an exclusive track for Adidas, which was advertised on various blogging sites.

E-Marketing Case Study #2 (Adidas) -- Question 4

4. How important a role should MMC play in Adidas’ overall brand communications strategy? Is MMC just a novel approach to marketing communications and a marketing fad (is it merely communicating the same message in a new format?), and to what extent should it play a part of overall marketing communications strategy at Adidas or at other firms competing in different industries in the future?

Ans:

a) Based on the analysis in the previous question, we know that MMC(mobile marketing communication) does have great potential in the future. However, the status quo of the 3G wireless technology is not equipped enough to let Adidas giving up the entire traditional channel and transform to multimedia channel. In order to take advantage of MMC early to surpass its competitors, Adidas need to invest in MMC for a certain amount of advertising budget. 

 

MMC’s role in Adidas’ overall brand communications strategy  included:

No.	Contributions of MMC
1	Since mobile is private to individuals, MMC appeals to individual-based audiences rather than mass-based public.
2	Users can control what they want to know in MMC comparing to the traditional marketing channel. That is, users can manipulate the information through MMC rather than looking at the deadly message sent by Adidas.
3	MMC provides recreation, attractiveness, funny and interesting activities.
4	This is the most important point: MMC can create a new shopping channel.   e.g. Users can access a certain company to buy a product through their mobiles. At the same time, they can make use of GPS to position their home location or the nearest convenience shop for shipping.

 

b) MMC is certainly not a marketing fad. The information sent by MMC is much more meaningful comparing with that from the traditional channel. We can explain it by the “Brand in the hand” concept.

 

Brand in the Hand concept means that company is trying to do marketing through mobile channel rather than the traditional one such as Magazines and TV which become inefficient gradually.

 

Because individuals can now be connected anytime and anywhere through their mobiles, mobile marketing can be used to collect data through GPS & wireless technology to determine the exact location of an individual at a given time. We can also analyze the data to guess why he/she might be there. With that information, more meaningful and relevant advertising messages or promotions can be delivered to that individual through the mobile device. For example, we can show an individual where he/she can find the nearest store of Adidas  by his /her location right now. And we can also send him/her some promotion information to attract him/her to visit the store.  This is so called “Brand in the hand” concept.

 

By the “Brand in the hand” concept, it means to Adidas that it would have a chance to surpass its competitors if they start taking advantage of it earlier. And if Adidas succeed in the transformation, its branding efforts can cost Adidas much less budget but with higher effectiveness.

 

c) In order to clarify our answer , we construct the following table:

 

Adidas	So as for Firms in other industries
Promote the MMC to the current customers’ base to establish preference for MMC in their mind.
Construct mobile catalog to show the customers their products at anytime, anywhere.
Provide 3D view of a certain product or environment in a particular shop, or converging the fitness and wearables with the personal shape or photos.
Make use of GPS to show customers the route information about their stores.
Shopping through mobile service and integrated with GPS to provide high quality shipping service at the same time.   e.g. Directly ship to customer’s home or the nearest convenience store (7-11)
Mobile coupons
Spokesman’s music or video
Live sport event
Show real model catwalk with Adidas’ products
Use 3D model to show products in catalog and let customers can virtually try the products according to the information they provided.   e.g. Users can key in their height, weight and physical build in order to have a look at the 3D model to determine whether the products suit them. If it does, they can then purchase that product through their mobile.