ADIDAS COMPANY 4

  • Category:
    Marketing
  • Document type:
    Assignment
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    1836

Adidas Company: Innovation

Table of Contents

31.0 Introduction

3Organisation Innovation 2.0

32.1 Adidas Innovative Process and Implementation

42.2 Innovative Lessons Learnt

52.3 Effectiveness of Lessons in Advancing Strategic Requirements of Adidas

62.4 Competitive Advantage and Difficult in Adopting Adidas Strategies

72.5 Overcoming the Difficulties: Recommendations

8Summary 3.0

9Reference List 4.0

1.0 Introduction

Adidas was established in 1924, and has continuously developed to introduced and improve customer products. The company brings together designers, innovators and managers in developing products and engaging the customers. In the footwear industry, competition is fierce and one of the solution to counter competition is innovation. Innovation takes different forms ranging from manufacturing facilities to the design of the footwear and other accessories. The aim of the report is to discuss Adidas organisation innovation, specifically, the shoe/footwear sector. Some of areas discussed includes innovative processes that Adidas implements, innovative lessons learned, effectiveness of the lessons learned, competitor’s challenges in adopting to Adidas innovation, and how the competitors can counter the competitive advantage of Adidas.

  1. Organisation Innovation

Organisation innovation employs different approaches in creating products and services. The section discusses Adidas innovative process, innovative lessons learnt, effectiveness of the lessons in advancing Adidas requirements, competitive advantage of Adidas innovation, and measures to counter competitive advantage of Adidas.

2.1 Adidas Innovative Process and Implementation

Adidas Company continues develop products and services that targets the requirements of the customers. The principle of the company is “to make athletes better” and innovation is a core of all Adidas products. It includes choosing the appropriate materials and manufacturing process ensuring high quality products are developed. Adidas Company creates and tests different products to suit the requirements of the customers. For example, Adidas Company partnered with singer Kanye West in developing the Pure Boost. The sneaker is commonly called Yeezy 750 Boost and utilises a technology in which more than 3,000 tiny foam pellets are glued together. It results in a shoe with a pillowy shock absorbers on the feet of the customers (So, 2016). Adidas Company is furthering the innovation through Futurecraft 3D technology. The aim of the technology is to allow customization of the shoe depending on the requirements of the customers (Materialise, 2016).

Adidas Company creates products while focusing on the requirements of the community. For example, the innovation process aims to champion environmental footprint through avoiding oil based plastics that are associated with emissions (Adidas Group, 2016). Adidas Company approaches the innovation process from an environmental perspective and employ strategies such as dry-dyeing clothes to save water, and use of lighter materials. Thus, the focus of innovation are reduction of waste and emissions, low waste, Adidas Nodye strategy and Adidas drydye strategy.

2.2 Innovative Lessons Learnt

Fulfilling the strategic requirements of the customers is important (Mahdi et al. 2015). Factors such as customer expectations, customer satisfaction and customer interaction are important in the innovative processes (Bhatti et al., 2011). Customer interaction enables identification of the customers’ requirements allowing Adidas to create the products. The customer expectations includes identification of the needs and requirements of the customers, and turning these expectations into reality. The customer interaction also raises aspects of conflict management and customer resolutions mechanisms.

Brand image and corporate image also contributes to advancing the requirements of the customers. For example, with a strong brand, it is possible to attract high quality talent and a knowledgeable organisation (Aubrey and Judge, 2012). For instance, Kanye West partnered with Adidas Company in marketing newer products meaning the strength of brand image dictates the associates and partners. All these are premised on the quality of the brands, which depends on the innovative processes.

The use of technology is also integral in the planning, design and implementation processes (Turner, 2015). The technological world is changing meaning newer technological opportunities exist. Adidas Company utilises technology to develop new products and improve the current products. Advancement in technology provides tools such as prototyping and simulation whereby it is possible to see a sample of the product and efficiency of the product without the need of the final product (Schmid, Dauth and Kotulla, 2011). Such approaches reduces the costs of research and development, enabling Adidas Company to continue producing high quality products that reflects the requirements of the customers

The technological advancement provides platform of engagement with the customers are other stakeholders. The customers are integral to the business and engaging the customers enable identification of the requirements of the customers resulting in developing the product (Bhatti et al., 2011). Unveiling of the product and follow up is easier because social media and other similar platforms enables collection of feedback (Jawecki, Füller and Gebauer, 2011). Hence, the communication process is more effective resulting in utilising the feedback from the customers to create more high quality products and services.

2.3 Effectiveness of Lessons in Advancing Strategic Requirements of Adidas

Nike and Adidas operates in the same industry but Nike concentrates on the US market while Adidas concentrates on Europe and Asian markets. Adidas entered into the US market in 2006 whereby it entered into partnership with Major League Soccer and National Basketball Association (World Finance, 2016). Adidas also is an official sponsor of the Boston, and aspect that Nike did not consider. It indicates that the aim of Adidas is to enter new markets and utilises sporting events to attract more customers (World Finance, 2016). Such a strategy is visible during the 201 World Cup in South Africa where Adidas sponsored clothing of major players including Kaka and Messi. The exposure resulted in increase in sales and creation of awareness.

Adidas has most of its manufacturing facilities in Germany while Nike outsources most of the production and manufacturing to South Asia. The cost of production is cheaper to Nike but problems associated with ongoing perception of poor labour practices affects the image of Nike. In addition, Nike products are comparatively expensive compared to Adidas reducing the market reach. Adidas bases its research and development facilities including manufacturing processes in Germany meaning the products quality can be monitored and also negative information on labour regulations dies not arise. Hence, customers can easily acquire the Nike products compared with the Adidas products because of negative labour regulations and pricing strategy.

2.4 Competitive Advantage and Difficult in Adopting Adidas Strategies

Understanding the requirements and expectations of the customers is important and aligning strategic requirements with customer expectations is a challenge. Adidas has achieved this requirement through creating products and services that targets the customers. It comes in the form of image, market strategy, packaging and pricing (Bhatti et al., 2011). For example, the Nike products are similar to Adidas products because of the design and use analysis but the price is different (Nike, 2016). Nike attaches a higher premium on the products, which makes Nike products more expensive. Lowering the pricing and offering products of high quality is a problem and it is a problem for any competitor. Therefore, Adidas continues to have a competitive advantage because of aligning quality and price of the products and services.

Differentiation is another component that makes Adidas products competitive and creates an edge against the competitors. Adidas develops products of different prices and also targets different market segments. It ensures Adidas has a wider market segment increasing revenues (Piller, Lindgens, and Steiner, 2012). For example, Adidas creates shoes for running, playing football and basketball. In addition, shoes for children and other demographic segments are created to address identified requirements. Having these skills ensures Adidas understand the market and can continue developing products and customizing services (Beverland, Napoli, and Farrelly, 2010).

Innovation, creativity, and collaboration are some of the strategies that make Adidas competitive (De La Concepción et al., 2014). The core competency of Adidas is utilizing innovation and technology in developing products and engaging with the customers. For example, the partnership with Kanye West on the boost shoe created a wider awareness of Adidas products. Such strategies ensure the Adidas products are known, and more consumers can acquire the products because of celebrity endorsement (Fredberg and Piller, 2011).

2.5 Overcoming the Difficulties: Recommendations

The three recommendations are:

  • Carrying out market research to understand the customers’ expectations and needs (Beverland, Napoli, and Farrelly, 2010)

  • Engage with brand ambassadors to create awareness of the products

  • Utilization of technology in innovation and creativity processes

  • Increasing the human resource competency through recruiting and hiring individuals with capacities to improve product provisions

  1. Summary

Adidas operates in the footwear industry and creates different footwear depending on the needs and requirements of the customers. Adidas utilizes both technology, innovation, and creativity in developing the products and engaging with the customers. The competitive advantage of Adidas is attributed to the use of technology, aligning organisation strategic operations with customer requirements, and effective customer engagement platform. The strategic approach to counter the strengths for Adidas is to innovate, utilize competent human resource, and engage effectively with the customers.

  1. Reference List

Adidas Group. 2016. Homepage. Retrieved from http://www.adidas-group.com/en/sustainability/products/sustainability-innovation/

Aubrey, C. and Judge, D., 2012. Re-imagine retail: Why store innovation is key to a brand’s growth in the ‘new normal’, digitally-connected and transparent world. Journal of Brand Strategy, 1(1), pp. 31- 39.

Beverland, M.B., Napoli, J. and Farrelly, F., 2010. Can all brands innovate in the same way? A typology of brand position and innovation effort. Journal of Product Innovation Management, 27(1), pp. 33-48.

Bhatti, W.A., Khan, M.O.N., Ahmad, A., Hussain, N. and ur Rehman, K., 2011. Sustaining competitive advantage through effective knowledge management. African Journal of Business Management, 5(8), p. 3297.

De La Concepción, M.Á., Morillo, L.S., Gonzalez-Abril, L. and Ramírez, J.O., 2014. Discrete techniques applied to low-energy mobile human activity recognition. A new approach. Expert Systems with Applications, 41(14), pp. 6138 — 6146.

Fredberg, T. and Piller, F.T., 2011. The paradox of tie strength in customer relationships for innovation: a longitudinal case study in the sports industry. R&D Management, 41(5), pp. 470-484.

Jawecki, G., Füller, J. and Gebauer, J., 2011. A comparison of creative behaviours in online communities across cultures. Creativity and Innovation Management, 20(3), pp. 144-156.

Mahdi, H.A.A., Abbas, M., Mazar, T.I. and George, S., 2015. A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3), pp. 167-77.

Materialise. 2016. Adidas Futurecraft: The Ultimate 3D-Printed Personalize. Retrieved from http://www.materialise.com/cases/adidas-futurecraft-the-ultimate-3d-printed-personalized-shoe

Nike. 2016. Homepage. Retrieved from http://www.nike.com/us/en_us/

Piller, F.T., Lindgens, E. and Steiner, F., 2012. Mass Customization at Adidas: Three Strategic Capabilities to Implement Mass Customization. Available at SSRN 1994981.

Schmid, S., Dauth, T. and Kotulla, T., 2011. The Acquisition of Reebok by Adidas. In Fallstudien zum Internationalen Management (pp. 713-731). Gabler Verlag.

So, D. 2016. How Adidas Boost Technology is making the Brand Relevant Again. Complex. Retrieved from http://www.complex.com/sneakers/adidas-boost-technology-is-making-the-brand-relevant-again

Turner, T., 2015. German Sports Shoes, Basketball, and Hip Hop: The Consumption and Cultural Significance of the Adidas ‘Superstar’, 1966–1988. Sport in History, 35(1), pp. 127-155.

World Finance. 2016. Nike vs. Adidas: a league of their own. Retrieved from http://www.worldfinance.com/home/a-league-of-their-own-nike-vs-adidas