Cleveland State University

Comprehensive Marketing plan for Adidas 1

Alice Kim, Justin Lee, Jake Pachinger, Matt Saris, Will Lahoud, Rafael CalzadaMKT420

Professor BoltonDecember 10th, 2016

MARKET ANALYSIS

Problem RecognitionThe team’s project revolves around a case study that discusses Adidas’ prior efforts to

launch a new, one-of-it's-kind, innovative shoe back in 2005. The shoe was referred to as the Adidas 1, and contained a new technology that allowed the shoe to custom form fit its cushion to its runner (1000 times per second). Although the initial buzz and press coverage was high, people quickly spotted out several crucial concerns regarding the Adidas 1. These concerns included the new model’s high price, where the market suggested retail price was set at $250 per pair, heavy weight compared to average running shoes, and competitors such as Nike coming out with other technology-embedded running shoes at a cheaper price. Although Adidas tried to accommodate some of these issues by preparing the release of two new models, the Adidas 1 Runner and Adidas Runner DLX, which were claimed to be lighter than the original and was priced at $150 per pair, customers as well as the press have not heard of an official launch of these new models until this very day. Moreover, the original Adidas 1 can no longer be found in Adidas’ product line, nor its website. Therefore, the team is recommending a cohesive marketing plan to identify and rectify Adidas’ prior failure.

Athletic Footwear Industry and AdidasFor many years, athletic footwear has been growing its market share in the overall shoe

industry within the U.S. This trend seemed to have reached it’s peak recently, as according to the NPD group, the U.S. athletic footwear industry grew by 8 percent in 2015, generating $17.2 billion and marking one of the best performances the industry has had in a number of years. One of the most prominent and largest athletic shoe brands that make up the athletic footwear industry is Adidas, a German multinational corporation that designs and manufactures sports shoes, clothing and accessories headquartered in Herzogenaurach, Bavaria. Adidas is the largest sportswear manufacturer in Europe and the second biggest in the world. According to Adidas Group, the company produces more than 778 million product units every year and generate sales of €17 billion, which is equivalent to more than $18 billion.

CustomersAdidas has a global base of customers from Europe to Asia, to the U.S. According to

Adidas Group, Adidas mainly targets customers who participates in sports at every level, as well as non-athletes. The strategic positioning statement highlighted in Adidas’ website notes that their strongest customer base are within the 20-29 age group. However, the company has also recently identified a secondary customer base which are next generation athletes in the 14-19 age group.

CompetitorsBased on both primary and secondary research the team conducted, Nike has been

identified as Adidas’ main competitor. Based on results from 66 surveys the team collected, when asking the question “Please specify all athletic shoe brands you are aware of”, Nike had the highest rate of brand awareness with 62 out of 66 respondents identifying its brand (94%). Adidas followed closely with 57 out of 66 respondents identifying its brand (86%). Other athletic shoe brands that were also frequently mentioned were Reebok (34%), Puma (34%), Under Armor (30%), and New Balance (30%). The team’s conclusion of identifying Nike as Adidas’

main competitor can also be supported by secondary research. According to Statista, a leading statistic company on the internet, Nike led athletic footwear market with a 22.9% market share, which was followed by Adidas, with a 9.7% market share. Furthermore, Hoovers, a U.S.-based commercial database, identified Nike as Adidas’ top competitor as well.

Barriers to Entry

The major barrier Adidas one faces in order to penetrate the athletic shoe industry is the bad reputation it previously earned from its initial launch. Since the technology used for the Adidas one is its first of its kind in the market, the uncertainty of the technology adds on the overall challenges that Adidas one faces. After the set back Adidas had, they had to get back the respect they lost in order to stay at the top of being one of the best athletic footwear because the competition is tough. Nike, among other shoe brands come out with new shoes pretty frequent so it was important for Adidas to have the next shoe they come out with to be great. Furthermore, with the price being extremely high for the Adidas one and a reason why consumers said was a main reason they did not buy the shoe, Adidas would have to regain control of its costs. Results prove that consumers are more likely to pay over $200.00 for Nike, but less likely for Adidas and other athletic footwear. Because there are numerous firms in the shoe market, it also means that there is a large amount of people who want to buy in the market with high bargaining power so companies need to find ways to differentiate themselves from competitors and Adidas tried to do that with coming out with the Adidas 1 and taking a risk by trying something new. Regulations

Adidas has a great team that dedicates themselves each and everyday to do everything in their power to keep their company competing at a high level. With that however come rules and regulations the Adidas group must follow. The word ‘integrity’ is used a lot with this team. All employees are to follow the Adidas group code of conduct in order to maintain good corporate governance. Any newly hired employee must complete online training prior to their first start date. The online training is to help get ready the employee for what is expected and give an overview of how the company operates. The online training is available in many different languages in order to give everyone the best chance to learn in the best way they understand. Furthermore, Adidas came up with a Fair Play Hotline option where employees can anonymously submit a complain they have to the hotline and it can be anything they have a concern about. Next, Adidas is very strict about personal information being protected. They have a data protection system that makes sure personal information is handled, stored, and processed accordingly. The data protection is learned about by employees during their online training. The Adidas group has set up work councils in Germany and other European subsidiaries. Employees are the ones that elect the members of the council. A couple of the works council representatives from Germany are part of the supervisory board. The supervisory board watches over the executive board in its management of the Adidas group and they play the role of important corporate decisions. Members of the works council meet on a regular basis to talk about corporate responsibilities and exchange ideas. They do outstanding work to keep Adidas moving forward in the right direction.

MARKET SEGMENTATION

Segmentation Criteria In order to develop an effective marketing plan, the primary target market of 18-34 year

olds has been further segmented based on both primary and secondary research findings. Results of the primary research revealed discrete demographics, media consumption habits, psychographics and social trend among potential Adidas 1 customers.

According to the National Center for Education Statistics, 41% of 18-24 year olds are enrolled in college, meaning nearly a quarter of of consumers in our target market is enrolled in some form of higher education. Results of primary research also indicated that 89% of respondents within the age range of 18-24 were either currently enrolled in college or had a higher degree. In order to hit these college students, who are a big part of their target market, Adidas has been actively sponsoring college football and basketball teams in order to maximize their exposure amongst college students. According to Nazario, an author for Business Insider, Adidas has a $7.5 million contract with UCLA’s football team, a $7.1 million contract with Texas A&M’s football team, and $6.4 million with Kansas’ University’s basketball team. Although this is a great way for Adidas to expose their brand to their target market, Adidas is not the only one sponsoring college sports teams. Competitors such as Nike and Under Armor are among other big athletic brands that actively sponsor college sports teams as well.

Additional trends revealed about the target market showed that the majority are active social media users (90.2%), internet website users (87.9%), and TV users (78.8%). This tend could be explained by the fact that Millennials are young and active social invidious who value social interactions through various media platforms to stay connected. In order to keep up with constant tweets and posts Millennials upload, Adidas uses it's own Twitter account. Adidas frequently replies to specific followers who have mentioned Adidas in their own tweets, allowing for constant engagement, which is important to Millennials. Additionally, Adidas posts information regarding any new releases in their product line to get their followers hyped up and excited, which generates many retweets and likes. Figure 1 Although Nike, Adidas’ largest competitor also actively engages in Twitter by replying to follower’s tweets as well, they do not post their own tweets introducing new launches like Adidas. With the absence of Nike’s own posts, the amount of retweets and likes that Nike receives is far less compared to Adidas, resulting in less exposure that could’ve occurred otherwise. Figure 2

The target market should also be segmented by their consumer behavior. “Millennials make up 21% of consumer discretionary purchases, which is estimated to be over a trillion dollars in direct buying power” (“Who Are Millennials,” 2011). Most Millennials are information-hungry, cautious consumers, who are eager to know everything about the product they are purchasing, from ingredients/materials to where and how it was made. According to a survey published by The Consumerist, almost 81% of Millennials respondents sought the opinion of others in order to make more informed purchases. (Kieler, 2015) To cater to these tendencies, Adidas is a stickler for detail when it comes to listing their products on their website. For example, rather than simply listing one picture the Adidas Superstar and specifying the color and size, Adidas lists detailed information about the Superstar that Millennials might find important, such as “Full grain leather”, “soft-textile lining”, “classic rubber shell toe”, “Printed Trefoil logo on heel patch”, “Herringbone-pattern rubber cupsole”, “Imported”, and “ listed specific details about their shoes listed on their website”. On the other hand, Nike does not specify the material usage or detail embedded for their shoes on their website, but they do list several benefits of each

shoe, such as “Knit upper is flexible and breathable”, “Adjustable midfoot strap for a personalized fit”, and “Lightweight foam midsole for cushioning”. Although taking a slightly different approach from Adidas, Nike still provides information to its information-hungry target market in its own way.

Innovation also plays a big role in perceptions of Millennials. 62% of Millennials consider themselves to be innovative and 71% think business innovation improves society (“Millennials Crave a Workplace That Fosters Innovation,” 2014). This appreciation of innovation drives Millennials to think outside of the box and try new things. Companies and products perceived to be innovative are more appealing to Millennials than others. In order to stay relevant as an “innovator”, Adidas has taken many steps, which also includes the launch of Adidas 1, which was the first computer-technology embedded shoe, although it ended up as a failure. A good example of successful innovation by Adidas would be the launch of Avenue A, which is a quarterly women-only subscription service that offers a curated box containing premium running and training product. According to Phelps, a contributor for Forbes Magazine, the service, although is similar to Birch Box (cosmetics) and Stitch Fix (fashion apparel), is a first within athletic footwear and apparel. Efforts like this allows Adidas to step into new opportunities that haven't been tried by other athletic footwear competitors, setting Adidas up for success through their competitive advantage. Competitors such as Nike and Under Armor on the other hand, has yet to launch similar services.

Lastly, the team has broken down geographic regions to further analyze where Millennials reside the most. Based on statistics provided by Livability, the top 8 cities with the highest concentration of Millennials in 4 states: Massachusetts, Virginia, Maine, California, as well as Washington D.C. Figure 3 The team has identified a pattern that Millennials tend to reside on coastal line states, mostly on the east coast except for California. Interesting enough, the team has found a high concentration of adidas stores in coastal line. Figure 4. By strategically placing their stores in cities and states with a high concentration of Millennials, Adidas has provided convenience and ease of access to their main consumers.

Target Market The ideal consumer for Adidas 1 are 18-34 year-old college students and young adults.

More specifically, they are innovative individuals who collect experiences and have a passion for sports. They are eager to try new things, they are constantly on social media as well as other media platforms, and they are cautious consumers when it comes to purchasing. Members of the target market are also big spenders on discretionary products, but at the same time value information and learn about a product before committing to a purchase.

PRODUCT POSITIONINGAfter extensive analysis of primary and secondary research results, the following

positioning statement for Adidas 1 is recommended: To 18-34 year old college students and young adults who are on the move, the Adidas 1 is the perfect runners shoe for its intuitive sole adjustment technology that allows athletes to adjust the comfort and cushion in real time in upwards of 1000 times per second. No longer requiring runners to search through dozens of shoes for the perfect fit for a multitude of terrains, the Adidas 1 is the ultimate runner’s shoe that is capable of adapting to the preferences of the athlete. With a sleek and trendy design, the Adidas 1 elevates the game for the next generation of runners.

IMPACT ON CONSUMERAdidas is a worldwide name with some very loyal customers.  Like any athletic shoe

brand, they are constantly thinking of new and innovative designs to achieve a higher market share in a very competitive landscape.  The Adidas 1, like all of their shoe designs, was a big impact on their consumers.  The only problem was that this was not a very good impression left upon them.  It disappeared a relatively short time after it was released to the public.  

The past struggles of the Adidas 1 left the shoe with a negative stigma.  Adidas first needs to eliminate these negative feelings the consumers may have, and focus on other aspects of the shoe the second time around.  It is safe to assume that any customer that hears “Adidas 1” will immediately associate the name to the past rolling out of that type of shoe.  We suggest that one of the most important things to include in the advertising is that this is a second coming of the new shoes.  Since it went away quietly, we feel it should have a very loud presence in the athletic shoe world.  Heavy rotations of Adidas 1 commercials on TV would be a great way to build awareness of the new shoe.  Unique commercials that mimic the uniqueness of the shoe’s technology would be most effective.  Adidas has all new technology in the Adidas 1, and customers absolutely need to be informed.

Adidas needs to tap into the memory of the consumers.  Long term memory would be the best way to go about brand recall.  Whenever a customer is looking for new running shoes, they will have the Adidas 1 come up.  Hopefully this would occur every time they go to make a purchase.  It is the desired response to get them to buy; and that’s exactly what Adidas wants from any potential buyers.  A steady rotation of effective commercials would help transfer their memories from short term to long term.Motivating athletic shoe buyers to purchase the Adidas 1 would best be achieved by focusing on the Maslow’s Hierarchy of Needs theory.  When you get down to it, shoes are a vital need to humanity.  Adidas are covering the physiological needs by providing an article of clothing to the user.  The unique style and technology would cover the consumers esteem needs, eventually leading to them to self-actualization.  The esteem needs would come from the fact that they are utilizing a technology that no other brand of shoe has.

Attitude is made up of 3 components which are cognitive, affective and behavioral. Adidas will utilize the cognitive component when marketing the Adidas 1.  The cognitive component deals with the beliefs a consumer has about a product.  Since the initial Adidas 1 was not a huge success, consumers who remember it, may have an unfavorable view.  Through the use of a more efficient marketing plan, we can change the beliefs of past, and even potential consumers, to positive ones.  Changing the beliefs of the consumers would be key in getting a large fan base to back the Adidas 1.  While cognitive is the main component to focus on, you could arguably use affective as well.  Affective would be a good focal point as well, because Adidas wants its customers to view the Adidas 1 in a good light.  In other words, if they can get a positive reaction of the Adidas 1, they will achieve a great amount of highly coveted word of mouth marketing.

A solid marketing plan for the Adidas 1 would include a heavy rotation on a high traffic medium such as TV.  Included in those commercials would be the assurance that Adidas has done its homework the second time around and that they are confident in both the new technology and the product as a whole.  They are offering a great shoe that will be valuable in the eyes of the consumer.

METHODOLOGYIn order to gather a sufficient amount of information to analyze this case effectively, the

team utilized both primary and secondary research. The three primary research methodologies the team used were surveys, focus groups, and one-on-one interviews.

The team received 66 surveys from a wide range of ages, occupations, and income levels. 33 of those surveys were identified to fit in the team’s target market, 18-24 year olds. A total of 20 questions were asked, which included questions about demographics, media habits, perception on Adidas, Adidas 1, etc. The team utilized Qualtrics to generate and distribute the survey. The team also used Qualtrics’ report and cross-tab function to further analyze any particular trend that stood out amongst the target market. See Appendix A for the survey questions. The second primary research methodology the team used was focus groups. The team gathered 6 participants between the ages of 18-24. Jake, a member of the team was the moderator who asked the questions and recorded the answers. 5 open-ended questions were asked and the entire session lasted a little over an hour. See Appendix A for a summary of the focus group. Lastly, the team conducted one-on-one interviews with 5 individuals between the ages of 18-24 to see if there were any difference in terms of answers when questions were asked in a focus group setting versus a one-on-one interview setting. The team also visited an Adidas outlet and a Nike store in order to identify any purchasing trends amongst potential consumers. However, the team wasn’t able identify any particular trends and have decided to omit the results.

CONSUMER BEHAVIOR THEORIES AND DECISION PROCESSAccording to Delbert Hawkins and David Mothersbaugh’s “Consumer Behavior:

Building Marketing Strategy”, understanding the External/Internal influences and Decision Process model that are displayed at the beginning of every chapter is crucial to understanding consumer behavior theories and the consumer decision process. Breaking down the Decision Process model step by step is an effective way to understand the target market for any company. The model is designed to understand how consumers are going to think and act. The first step of the process is to locate and understand the problem. What kind of “problem” is being presented and which brand/product can aid in solving it? These issues can range from medical situations such as knee problems, to personal satisfaction like the prestigious aspect of the product. The next step is searching for information. What kind of products are out there that can help solve the consumer’s issue? This may require the consumer to perform both internal and external searches. Understanding this step as a company will help not only in identifying the target market, but also in having those consumers lean more towards their company or companies similar to their brand when considering their purchase. Locking down this part may also avoid the step where the consumer may look for alternatives and reasons not to purchase the product. This process is then followed by Outlet selection and purchase. Which company should the consumer go with? How can the company utilize their resources to influence the consumer to consider their product and to ultimately purchase it? The final step is the Post Purchase process. This is where consumers start to develop doubts about their purchase and start considering other products with similar attributes. Incorporating the Decision Process model to the team’s proposal will allow for an effective strategy and thus prevent future failures like the Adidas 1 case.

Problem recognition is the first situation in the consumer decision process model. Understanding this as a company will not only help them design their products better, but to also have a better grip on how the consumer will think/feel. In Adidas’ case, their first course of

action should be identifying the Task Definition. Why are they looking for new shoes? Is it for personal gain or for a gift? Are they buying because they have extra money? Or is it completely due to being ill or tired? The consumer’s purchase involvement for the product is another factor to consider. Utilizing this to the company’s needs can be very effective when it comes to the purchase of the product. For example, when creating an advertisement for an improved version of the Adidas 1, implementing the most attractive features of the product may trigger a particular purchase response in a consumer which may then provoke them into thinking they need the product regardless of essentiality. When it comes to the Adidas 1, Nominal decision making would probably be close to impossible considering the amount of backlash and lack of support that they have received. So, in their case, focusing more on an Extended Decision approach will most likely be their best approach. Eventually that may lead into consumers purchasing under the Limited Decision situation.

After a problem is identified, information search starts. Adidas can utilize this section by creating their ads that will not only draw a consumer’s attention, but to also recreating the Adidas 1’s brand image. Adidas has been on the rise in the shoe industry especially releasing products such as the Yeezy’s. Therefore, Adidas can take advantage of this positivity of their brand and redirect that towards the new Adidas 1. Consumer’s that have a bad image of the Adidas 1 will be very difficult to reach. However, those who have never heard of the Adidas 1 and those who have a good image of Adidas will be considerably easier to reach. The company’s main source to reach the potential consumer is going to be Marketing such as: ads and sales reps and Independent such as: magazines and consumer groups. Consumers who shop online will most likely have economic considerations. So, at a $250 price point for a pair of running shoes, it will be difficult for Adidas to appeal to the online crowd. A clear majority of online shoppers will be making an Attribute-based choice as opposed to Attitude-based. Consumers who are Attribute-based tend to do a lot of comparisons between products. This is where the Improved Adidas 1 has a good chance to have the upper edge. When consumers see all of the things that Adidas’ shoe offers such as their computer based sole technology, they will likely be enthralled by the product.

Soon after the Information search situation, Outlet selection and purchase immediately follows. Which shoe company is the consumer going to go with? If they choose Adidas, will buy online or at an Adidas store? What kind of shopper are they? In Adidas’ case, since our target market is between the age groups of 18 and 24, we should focus on Omni-channel shoppers considering that they are filled with Younger Generation Y’s and X’s. At the physical store, utilizing the retail attraction model to increase store attraction to the customer is crucial. Eventually, this is where the consumer is going to make their decision on where and when to purchase.

Following the purchase of the product, begins the post purchase process. This is arguably one of most important steps to the entire model. This is where consumers tend to develop the feeling of post-purchase dissonance. Was the purchase really necessary? Is there a better product out there? Can I get this product somewhere else for a better price? Companies tend to devote large amounts of resources to the post-purchase step so that the consumer could assess if they are satisfied or unsatisfied with their purchase. They might develop advertisements, send follow-up emails, incentives to buy more products, etc. to ensure their customers have made the right decision.  Regardless of how they attempt to dissolve the post-purchase dissonance mindset, assuring the consumer that their purchase was necessary is the ultimate goal for the company

PRODUCT STRATEGYThrough primary and secondary research, the team has identified aspects of the product

in need of change. Three changes are recommended in the following sections in order to enhance the overall look and function of Adidas 1.

Style recommendationA change in style for the Adidas 1 is recommended in order to reflect a more trendy style

that will appeal to the target market of 18-24 year olds. According to notes taken from the focus group the team conducted, while 4 out of 6 participants showed indifferent opinions about the aesthetics of Adidas 1, two participants were very vocal about how displeasing the shoe looked. The common theme in the discussion was that although the Adidas 1 had some neat features for a shoe, it didn’t look good when the technology was incorporated with the style of the shoe to create Adidas 1 figure 5. Considering that “style” is the second leading attribute for our target market when purchasing new shoes, a change in overall shape of the shoe as well as the color will attract more potential customers. Instead of having the sole looking bulky and inconsistent by dividing it into two different colors and materials for the front half and the back half, the team recommends the heel to be replaced with an all-white basic heel using a material called continental rubber, while using thermoplastic technology to keep the material together. This material has been used on one of Adidas’ most recent successful launches which is the Adidas Ultra Boost. figure 6 Having a cohesive material from the front to the back of the shoe using a material that has been proven heavily successful will help Adidas improve the overall appeal of Adidas 1.

Color recommendation Additionally, the team recommends changing the color of Adidas 1 from the current off-

white base with gold and grey accents to simply white and black. The majority of Adidas’ shoe lines start off with a basic black and white, and then go into a variety of colors once they have proven to be successful. Similarly, the team recommends the Adidas 1 to come in one basic color, black and white, and then introduce a variety of colors once the initial launch has proven to be successful.

Weight recommendation Lastly, the team recommends reducing the current weight of Adidas 1. Although the exact

weight of the shoe was not specified, many reviews from past consumers who purchased Adidas 1 have complained that the shoes were overly heavy, which is a big drawback for running shoes.

PRICE STRATEGYThe team recommends Adidas to adjust the price of the Adidas 1 to $120 from its original

price of $250, and it’s second model’s price of $150. After showing a picture of the Adidas 1 and explaining its specifications, the moderator of the focus group session asked each participant what price they would be willing to pay for Adidas 1. The answers of the 5 participants were as follows: “$120”, “$100”, “$115”, $100 or less”, and “$120”, averaging at $113. All participants felt that the shoe had enough characteristics to put it over the $100 price range, but that if it was over $200 it would feel like they were wasting money on a concept shoe rather than making a smart and functional investment. Furthermore, considering that 84.1% of the survey respondents

between the ages of 18-34 having an income lower than $39,000, it is recommended that Adidas keep the price of Adidas 1 high enough to cover the cost of the embedded computer technology, but low enough so it can be affordable for their target market.

PLACE STRATEGYThe team recommends Adidas to focus on in-store locations for the distribution and sale f

Adidas 1. More specifically, the team has recommended three retailers for Adidas 1 to be distributed for sale: Adidas stores, Dicks Sporting Goods, and Finish Line. Although 91.2% of survey respondents indicated that they shop online, when it came to purchasing shoes, 72.3% of respondents indicated that they are more likely to purchase athletic shoes in-stores. Further analysis of primary research indicated that the most common retailers that the target market tends to purchase athletic shoes were at Dicks Sporting Goods (25%), Branded stores such as Nike store or Adidas store (25%), and Finish Line (22.7%). Due to the fact that the majority of people do not shop online for shoes, the team recommends Adidas’ online website to be the only form of online distribution for Adidas 1. Other online distribution/retailing channels such as Amazon and eBay will not be incorporated in the team’s distribution strategy. The recommended price of $120 will give Adidas 1 a competitive advantage over Nike Air Max 360, which was Nike’s version of sole technology shoes that was launched to compete with Adidas 1, as Nike Air Max 360 is currently being sold on the market for $160.

PROMOTION STRATEGY

Social Media (Twitter, Facebook)Social media being one of the most widely used media platforms used among

Millennials, it is recommended that Adidas Increase their social media presence of Adidas 1in order to better reach its target audience. Primary research found that 90.2% of respondents indicated that they are on some form of social media.

Twitter: Currently, Adidas 1 does not have a strong presence on Twitter. Therefore, to better reach the target audience using this social media platform, the team's recommends supporting the product by promoting the Adidas 1 on Adidas’ official Twitter account as well as paying for promoted tweets for Adidas 1. Both forms of promotion should target users between the ages of 18-34 who are interested in similar products, such as other sole technology-based shoes, competitor’s athletic shoes, or other Adidas shoes. Once Adidas 1gains a more prominent exposure on Twitter, the promoted tweets should be used for the promotion of contests for Adidas 1-related events, which will encourage users to interact with the brand and the product itself.

Facebook: Currently, Adidas has a strong Facebook presence with over 25 million likes. Therefore, it is the team’s recommendation to continue utilizing Facebook advertising to promote Adidas 1. Facebook allows Adidas to reach consumers based on demographics, behaviors, interests, and connections. Since other advertisers want to reach the same consumers as Adidas, Adidas will participate in an ad auction.

Collegiate Brand AmbassadorsTo reach a large portion of the target market, ambassadors between the ages of 18-24

enrolled in high-populated campuses will use word-of-mouth tactics and high-volume social

media platforms to interact with peers. Brand ambassadors give Adidas 1the chance to put their own customers in charge of executing trial techniques around campus, while getting students excited about the product at the same time. The students will work at the 24 largest campuses in the U.S., which represent the largest potential market with a focus on major regions in the nation, Table 1. Their responsibilities are as follows:

- Weekly posts on personal Facebook, Twitter, Instagram, and Snapchat accounts- Pass out flyers to students on a weekly basis. - Presence at campus events such as career fairs, campus celebrations, and student

activities.- Report back at the end of each semester with detailed information on their

accomplishments.

These student ambassadors will be a model of the ideal Adidas 1 customer, and will be chosen accordingly based on social media use and on-campus involvement.

Event Sponsorship In order to increase product awareness, the team recommends sponsoring 2 marathons:

the Boston marathon and the Chicago marathon. According to Runningusa.org, a website that records statistics for major marathons within the U.S., men and women between the ages of 20-39 year olds make up half of all marathon runners in the U.S. Furthermore, a runner that participates in marathons own 3.1 pairs of running shoes on average. Considering the high concentration of Adidas 1’s target audience, it is recommended that Adidas sponsor the previously listed 2 major marathons to increase product awareness. Furthermore, Adidas could set up a booth on site where people could try on the Adidas 1 and learn about its benefits and price. Lastly, Adidas can offer a 10% off coupon on Adidas 1 for individuals who attended the marathon by passing out a promotional code at the booth.

SERVICE STRATEGYAdidas’ service element comes into play during the consumers purchase decisions

(surrounding Adidas 1 or alternative choices) and their post purchase process.  The main service element the company incorporated into their new sophisticated athletic shoe was an instruction manual for its use.  This was intended to aid buyers of the product in case they came into contact with any problems or confusion about the shoe’s use.  Instruction manuals are a common tool used by company’s dealing with more complicated items, but they often lead to more frustration and are often looked over.  Considering the fact that the shoe was discontinued shortly after its release (and re-release in November 2005), this was the only service element consumers could expect from purchasing the Adidas 1.  This dilemma leads into the post-purchase thoughts the consumer has about the Adidas 1 and about the Adidas Group in general.  Due to the highly voiced opinions of those who disliked the shoe aesthetically and functionally, post-purchase dissonance would be a more than likely result.  The Adidas company does offer a return and exchange policy as part of their customer service extension, so displeased buyers of the Adidas 1 would be able to receive a full refund for the shoe after purchase.  

MARKET PLAN ASSESSMENT

Competitor Response

Once the previously listed recommendations are implemented, it is predicted that Nike will invest more time and money into advertising their Air Max product lines in order to compete with Adidas 1, as Nike’s Air Max line was first introduced in order to compete with Adidas 1, according to the case study. However, although Nike Air Max uses a unique technology of their own, it is no where similar to the technology incorporated in Adidas 1, as it does not use computer-based technology, and does not reshape the sole of the shoe. Adidas 1 is currently the only shoe in the market that uses computer-embedded technology that adjusts the shape of the foot sole, so Adidas will have a competitive advantage over Air Max in that regards, or against any other athletic footwear being marketed. That being said, although Nike might start to advertise more heavily on their Air Max lines in regards to the new launch of Adidas 1, due to the difference in technology used, Nike Air Max is not a suitable comparison to Adidas 1 and thus the heavy advertisement of Nike Air Max is not predicted to alter the sales of Adidas 1. Similarly, other competitors in the athletic footwear industry might attempt to compete with their own shoes that incorporate “high-tech” materials of some sort, again, due to the differences in technology, such attempts is predicted not to effect the sales or perceptions of Adidas 1 by themselves.

Anticipated Results and Contingencies

By employing the multiple strategies previously listed for Adidas 1, the team ensures that Adidas 1 will achieve the following:

Increase awareness of Adidas 1 by 50% in the first year Increase knowledge of the technology used for Adidas 1 by 40% in the first year Increase the likelihood to purchase Adidas 1 after trial to 50% Increase the level of interest for Adidas 1 through social media platforms by 30%

in one year. Increase sales of Adidas 1 by 40% in it’s first year

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Kieler, Ashlee. “Nearly 70% of Consumers Rely On Online Reviews Before Making A Purchase.” Consumerist. 3 June 2016. Web.

“Millennials Crave a Workplace That Fosters Innovation.” The Huffington Post. 3 Mar. 2014. Web.

Nazario, Marina. "11 College Teams That Rake in Tons of Cash from Nike, Under Armour, and Adidas." Business Insider. Business Insider, 22 Sept. 2015. Web. 30 Nov. 2016.

Phelps, Stan. "Adidas Reinforces A New Culture Of Innovation With The Introduction Of Avenue A." Forbes. Forbes Magazine, 10 Feb. 2016. Web. 30 Nov. 2016.

President, BCG Senior Vice. "Global Athletic Footwear Market Share (Nike, Adidas, Etc.) 2015 | Statistic." Statista. N.p., n.d. Web. 29 Nov. 2016.

"Profile." Adidas Group. Adidas, n.d. Web. 28 Nov. 2016.

“Who Are Millennials.” Millennial Marketing. 2011. Web.

"2013 State of the Sport - Part I:." 2013 State of the Sport - Part I: "Core Runner" Profiles. RunningUSA, 21 Apr. 2013. Web. 10 Dec. 2016.

APPENDIX A

figure 1: Adidas’s Twitter account snapshot

Figure 2. Nike’s Twitter account snapshot

Figure 3: Cities with highest concentration of Millennials

Figure 4: Concentration of Adidas stores in the U.S.

Figure 5: Adidas 1

Figure 6: Adidas Ultraboosts

APPENDIX B

Table 1: Brand Ambassadors LocationsUniversity Location EnrollmentThe Ohio State University Columbus, OH 40,020Texas A&M University College Station, TX 39,641Penn State University State College, PA 38,826University of Texas- Austin Austin, TX 36,899University of Central Florida

Orlando, FL 36,229

Arizona State University Tempe, AZ 34,989Michigan State University East Lansing, MI 34,838Rutgers University New Brunswick, NJ 31,759University of Illinois at Urbana - Champaign

Champaign, IL 31,516

Indiana University - Bloomington

Bloomington, IN 30,050

University of Florida Gainesville, FL 30,314University of Minnesota, Twin Cities

Minneapolis, MN 28,940

Florida State University Tallahassee, FL 29,910Purdue University West Lafayette, IN 28,659University of Wisconsin Madison, WI 28,568University of Arizona Tucson, AZ 28,401California State University - Northridge

Los Angeles, CA 28,200

University of California Los Angeles

Los Angeles, CA 28,084

University of Michigan – Ann Arbor

Ann Arbor, MI 27,316

California State University - Fullerton

Fullerton, CA 26,682

University of Alabama Tuscaloosa, AL 26,548Iowa State University Ames, IA 26,177Florida International University

Miami, FL 25,954

Liberty University Lynchburg, VA 25,911

Figure 7: Survey Questions

Figure 8: Summary of Focus Group Results

IntroductionWe are a group of students at Cleveland State University in process of completing a semester-

long proposal for a consumer behavior class. We are searching for feedback on consumer habits and behaviors for our case pertaining to Adidas.  This focus group is intended to delve into the

thoughts and beliefs that a select group of male and female participants have on the Adidas brand.  Unlike surveys, this methods purpose is to gain deeper insight into the opinions of potential customers, and draw a better understanding of their attitudes and attributes.  The

participants have been selected to conform to an appropriate age group (18-35).  Six participants have been chosen to answer and further discuss five open-ended questions about the Adidas

brand within the allotted time (1-2 hours).Participant Names: Logan Urban, Ahmad Douglas, Kelly Urban, Eric Pozun, Valentino Panic

Date: 11/24/2016Group Mediator: Jake Pachinger

 Q1.  When buying a pair of athletic shoes, what specific qualities do you look for?When discussing this topic with my group of participants, it was clear that the two major qualities everyone looked for in an athletic shoe were comfort and style.  It seemed most favored a balance between the two, and the rest favored comfort over style.  The fit of the shoe was an important aspect to one, which everyone else soon followed with agreements (fitting in with comfort).  

Weight was another issue, especially for an athletic shoe.  Heavier shoes were more displeasing for those who played soccer, basketball, and football.  Durability was also brought up; a shoe must be able to last long, more so if it’s in the higher price ranges.  A shoe that is meant to be used a lot in different environments and under constant stress should be able to last longer and not be more of a disposable purchase.  

 Q2.  What athletic shoe brands are you most familiar with, and what is it about these brands

that you like/dislike?The brands that were brought up off the top of everyone’s heads were Nike, Jordan,

Adidas, Underarmor, Puma, Asics, and Reebok.  When asked which of these two seemed to be the frontrunners, the answers came out as Nike and Adidas.  These two brands obviously have made huge impressions on this group of consumers, as even some pointed out that they had on Nike and Adidas apparel on them at the time.  

Nike was favored for its brand quality, and the perception of it being a frontrunner made the participants in the group feel more inclined to purchase it over other brands (the same phenomenon happened with Adidas when questioned about its importance to them).  The only factor that everyone seemed to agree to dislike was the price, saying that it seems that the prices have been gradually rising and now there at the point where a simple t-shirt costs the same as say a pair of nice jeans or a new jacket.  

Adidas was very appealing to those in the group that played soccer, and had a strong sense of brand loyalty with those same individuals.  They were happy with the quality and willing to pay extra for their favorite brand over other articles of clothing of different brands.  When asked if they were off-put by new ideas from Adidas and whether it would affect their purchasing

decisions (for example Adidas Originals or the new styles of basketball shoes) they said that while some were not pleasing, they were oblivious to the “bad ideas” because of their loyalty to the brand, and kept coming back for those specific items that they loved.

 Q3.  Imagine a running shoe that uses computer sensor in the heel of the shoe to adjust the

amount of cushion in real time 1,000 times per second. Based on this description, what are your initial thoughts about this concept for a running shoe?

Along with this question, I provided images of both the Adidas 1 from its original advertisement and an in-depth diagram of the shoe that labeled all the components, including the battery, cushion, etc.  When first asked about the aesthetics of the shoe, a few agreed that it looked nice, while two participants were very vocal about how displeasing the shoe looked.  The common theme in the discussion was that it had some neat features for a shoe, but it didn’t look good the way it was implemented into the specific Adidas 1 shoe.  Most initial thoughts revolved around it being overthought, too much for a running shoe, and that it was a good idea in concept but in reality (and in the picture) it lacked elements such as aesthetics, functionality, and simply seemed like it was “too much”.

 Q4.  How do you spend your free time? How do your occupation/hobbies affect your

purchasing decisions?Valentino explained that he works in the construction business, and that he is restricted to

boots for his line of work so he wouldn’t need them in his occupation.  He preferred the Jordan brand when it came to casual shoes, and explained that he would be willing to pay more for collector’s type shoes but wouldn’t pay more for a shoe that had added technological benefits (preferred personal value over functionality).  

Ahmad explained that as an athlete, he needed extremely light shoes.  To him, the battery and added components were an anchor and would potentially affect his performance.  For work, he preferred to buy cheaper shoes with more durability (restaurant business), and wouldn’t consider buying a shoe like that for his work because of its expense and “though the comfort would be nice, it’s not worth beating up a pair of expensive shoes that I’m going to eventually have to replace”.  

Logan and Kelly both work in office jobs, and are restricted to a dress code that does not include the type of shoe that Adidas 1 classifies as.  For their free time, they both agreed that when working out they would prefer something less bulky and had a hard time trying to find value in the Adidas 1 over a lighter shoe with orthotics or a nice fit.  To them, it was more about affordability as well.  Eric also was restricted to a dress code for his line of work, and said quote “I am not going to spend money for a heavy shoe that I cannot beat up for work out or free time purposes”.

 Q5.  Pertaining to Q3, what do you think would be an appropriate price for these shoes?

(Remember to ask follow up questions based on price, whether under 100$ or over 200$)When asked about what price they thought the shoe cost the answers are as followed-1. $1802. $1003. $1804. $1805. $200+

The group discussed how shoes usually don’t push past the $200 point at retail stores, and that only specialty shoes would surpass this range.  Shoes like Jordan’s are priced extremely high (for collector’s editions) because the company knows its loyal fans are willing to pay extraordinary amounts for their “special” shoes.  With a shoe like Adidas 1 however, this is not the case.  When it becomes a matter of functionality for high price, the group felt like it was more of a risk and preferred to find lower price alternatives.  

When asked what they would be willing to pay for the shoes, the answers are as followed-1. $1202. $1003. $1154. $100 or less5. $120

All participants felt that the shoe had enough characteristics to put it over the $100 price range, but that if it was over $200 it would feel like they were wasting money on a concept shoe rather than making a smart and functional investment.  Logan (1) said that he would pay $120 for the shoe because he is willing to go the extra mile for added benefits.  Ahmad (4) disagreed, and said that this type of shoe is catering to a very very small portion of the market, and while it is interesting, it would need to be cheap in order to sell volume.

 Q6. What changes (if any) would you make to the Adidas 1 shoe to make it more appealing to

you?It was unanimous that the concept for the Adidas 1 was a bad idea to the participants of the

focus group.  Some suggested taking out the smart technology altogether and just try selling the shoe with its current design.  Another suggestion was to scrap the idea entirely and go for something more practical.  The discussion turned to not focusing on technology in shoes whatsoever; that smart tech in shoes is a wasted opportunity.  Some suggested to change the design of the shoe as well, and at the end of the session when I explained the case of Adidas 1 to them, they did not seem surprised to learn about its discontinuation.  Their final thoughts on the product were that it was too “gimmicky” and was an over-complicated concept for a product that’s supposed to be reasonably priced, light, and functional.

  

Figure 9: Summary of one-on-one interview results

Q1. When buying a pair of athletic shoes, what specific qualities do you look for? What stand out to you about the Adidas 1? A1: Material, comfort, quality of the sole, and the appearance. What stands out about the Adidas 1 is the design/appearance and the thickness/quality of the shoe. Q2. What athletic shoe brands are you most familiar with, and what is it about these brands that you like/dislike? A2: Nike and Adidas. The quality and reputation of the brands are the things I like. The over pricing is what I dislike the most because if it says Nike or Adidas on it, it automatically raises the price even though it might have the same qualities and features as other shoes. Q3: Imagine a running shoe that uses computer sensor in the heel of the shoe to adjust the amount of cushion in real time 1,000 times per second. Based on this description, what are you initial thoughts about the concepts for a running shoe? A3: The structure, shape, and the flexibility of the shoe because if you are running the shoe needs to be flexible in order for it to be comfortable. Q4: How do you spend your free time? How does occupation/hobbies affect your purchasing decisions? A4: I spend my free time working out, reading, and hanging out with friends. The people I work with have the same hobbies and the same interests as me so we do a lot of shopping together. They influence my purchasing decisions and help me make the right ones just like I do for them. Q5: Pertaining to Q3, what do you think would be an appropriate price for these shoes? A5: I would say $80.00 because that is a reasonable price for a shoe you will only have for a few years since they are running shoes and will eventually wear out in about two years. Q6: Out of Nike, Adidas, and Reebok, which shoe brand do you buy most of? If an A6: I am a Nike buyer all the way simply because I do not buy athletic shoes so often so when I do, I want to buy a pair I know will last me the longest and I feel for Nike that I am getting my moneys worth. Q1. When buying a pair of athletic shoes, what specific qualities do you look for? What stand out to you about the Adidas 1?

A1: The comfort of the shoes, the amount of room inside the shoe, the amount of cushion inside the shoe, and the design. The color and design is what stands out the most to me about the Adidas 1. Q2: What athletic shoe brands are you most familiar with, and what is it about these brands that you like/dislike? A2: I am most familiar with Nike, Puma, and Adidas. I think Nike has the best quality and style. Puma is the most comfortable to me and Adidas is the best for running as I have tried all 3 for running. Q3: Imagine a running shoe that uses computer sensor in the heel of the shoe to adjust the amount of cushion in real time 1,000 times per second. Based on this description, what are you initial thoughts about the concepts for a running shoe? A3: A running shoe needs to be comfortable enough where you can run for a long period of time and not have your feet get irritated or bruises from the shoe. A running shoe should be light and have enough toe room so they don’t feel like they are num. Q4: How do you spend your free time? How does occupation/hobbies affect your purchasing decisions? A4: I spend my free time watching movies, hanging out with family and friends. My occupation does not affect my purchasing decisions but my hobbies do because if I am interested in doing something, I will want to get the best product for what ever it may be I want to do. Q5: Pertaining to Q3, what do you think would be an appropriate price for these shoes? A5: I think an appropriate price would be $85-$90 because the only type of shoes I can see purchasing more then a $100 would be Nike simply because I have noticed they last longer and the quality is better. I like the Adidas 1 which is why I say that price because for Adidas, that is expensive. Q6: Out of Nike, Adidas, and Reebok, which shoe brand do you buy most of? If any? A6: I buy both Nike and Adidas but I would say more Adidas because when I buy a pair of Nike they last me a really long time but I go through a pair of Adidas about every 6-8 months. Q1. When buying a pair of athletic shoes, what specific qualities do you look for? What stand out to you about the Adidas 1? A1:I Mainly look for the style of the shoe. I don’t like the shoe to be boring, I like different colors on a shoe and a nice style. I also look for comfort and material. The color and design stands out the most when I look at the Adidas 1.

Q2. What athletic shoe brands are you most familiar with, and what is it about these brands that you like/dislike? A2: I am most familiar with Nike, Adidas, and Reebok. With Nike, they are the most comfortable and have the best style. There are many different choices to choose from. I do not like the price of them so much. I feel like most Adidas shoes look the same but they are more comfortable. The prices are decent and I can buy a few pairs at the same time. I do not really know much about reebok because I do not buy them, I only know of them. Q3: Imagine a running shoe that uses computer sensor in the heel of the shoe to adjust the amount of cushion in real time 1,000 times per second. Based on this description, what are you initial thoughts about the concepts for a running shoe? A3: That is a great idea for a running shoe because running shoes need to comfortable and as long as the shoe is not heavy, it would make a great running shoe. The lighter the better and also plenty of cushion so your feet do not get tired or soar. Q4: How do you spend your free time? How does occupation/hobbies affect your purchasing decisions? A4: I spend my free time browsing the web, hanging out with friends, or watching movies and the news. I work at a retail clothing store so my job affects my purchasing big time because I get discounts and that allows my to try different styles and like them. Since I do a lot of browsing the web I tend to do online shopping for shoes and clothes so me having an interest in the Internet allows me to make purchases that I originally did not plan on. Q5: Pertaining to Q3, what do you think would be an appropriate price for these shoes? A5: I think $120.00 would be an appropriate price for these shoes because these are the only Adidas shoes that I can see being over $100.00 and Adidas needs something to be able to compete with Nike regarding prices and I believe that is the only type of shoe that can. Q6: Out of Nike, Adidas, and Reebok, which shoe brand do you buy most of? If any? A6: Nike because I jog a lot in the summer time and they are the most comfortable for me. Q1. When buying a pair of athletic shoes, what specific qualities do you look for? What stand out to you about the Adidas 1? A1: Design and comfort are the qualities I look for. The Adidas 1’s design is a lot different than other shoes.

Q2: What athletic shoe brands are you most familiar with, and what is it about these brands that you like/dislike? A2: Adidas and Nike. I like the style of Adidas but their comfort could use work. I like that Nike has a lot of different variety but can be pricy. Q3: Imagine a running shoe that uses computer sensor in the heel of the shoe to adjust the amount of cushion in real time 1,000 times per second. Based on this description, what are you initial thoughts about the concepts for a running shoe? A3: The computer sensor is a good idea and would be helpful, but I don’t think it would be executed as well as they hope. Running shoes also should be light and not be too tight on each foot. Q4: How do you spend your free time? How does occupation/hobbies affect your purchasing decisions? A4: I spend my free time relaxing and watching football. For my job I am on my feet most of the time so I need to purchase shoes that will comfortable to walk in all day. Q5: Pertaining to Q3, what do you think would be an appropriate price for these shoes? A5: $150.00 seems reasonable with the technology incorporated in it. Q6: Out of Nike, Adidas, and Reebok, which shoe brand do you buy most of? If any? A6: Nike because I am used to their brand and I like that I have a lot of options and they make there shoes comfortable. Q1. When buying a pair of athletic shoes, what specific qualities do you look for? What stand out to you about the Adidas 1? A1: The style of the shoe, the price, ankle fit, style, and the weight of the shoe. I like they design of the Adidas 1 the fact that it stands out and grabs your attention by looking at it. Q2: What athletic shoe brands are you most familiar with, and what is it about these brands that you like/dislike?

A2: Nike and Adidas. With Nike, I like the different styles they have and the multiple colors that could be on just one shoe. You can have Nike shoes match with a bunch of clothes. I do not like how pricy some of them can be. I like the Adidas for everyday shoes and their pricing is reasonable, I do not like the fact that most of them look a like and there is not much of a variety in colors. Q3: Imagine a running shoe that uses computer sensor in the heel of the shoe to adjust the amount of cushion in real time 1,000 times per second. Based on this description, what are you initial thoughts about the concepts for a running shoe? A3: I think the computer sensor idea for Adidas was good a good but risky idea. I think it was good because it could keep them in competition with Nike, but also risky because it could reduce their sales if it completely failed. For a running shoe, as long as it is light, comfortable, flexible, I think it should be good without adding anything fancy to it. Q4: How do you spend your free time? How does occupation/hobbies affect your purchasing decisions? A4:I spend my free time reading, watching TV and shopping. For my job I walk a lot and do a lot of selling so that affects my purchasing choices because I need to buy nice outfits and dress shoes. When I go shopping I like to wear comfortable shoes so I usually buy Adidas for that because they are less expensive and more casual. Q5: Pertaining to Q3, what do you think would be an appropriate price for these shoes? A5: I think $100.00 would be an appropriate price for these shoes because I do not think people will buy Adidas for more than that. If people were to buy shoes over $100.00 I think they would choose a different brand. But I would buy these for a $100.00 and I believe Adidas would make a good profit going by that price. Q6: Out of Nike, Adidas, and Reebok, which shoe brand do you buy most of? If any? A6: Adidas because as I mentioned early I do a lot of shopping and Adidas is cheaper and more casual so I tend to buy more of those, where Nike I tend to buy maybe once a year sometimes two years.