Adidas Group
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Mission
Adidas’ mission is to be the global leader in the sporting goods industry, with brands built on a passion for sports and a sporting lifestyle.
Business segments
Adidas is a producer of sports shoes, clothing, and accessories. The company operates eight reportable business segments: Western Europe, North America, Greater China, Russia/CIS, Latin America, Japan, MEAA, and Other Businesses.
History
In early 20th century Germany, Christoph Von Wilhelm Dassler was employed in a shoe factory, and his wife Pauline managed a laundry business. After finishing school their son Rudolf “Rudi“ Dassler temporarily joined his father’s job, then left to fight in World War I. Their son Adolf "Adi" Dassler launched his own athletic shoe business out of Pauline’s facility. Rudi later joined the venture.
Their company, called Gebrüder Dassler Schuhfabrik (Dassler Brothers Shoe Factory), performed well. In 1936 they convinced U.S. sprinter Jesse Owens to use one of their shoes in the Summer Olympics, representing the first sponsorship of an African-American. Owens went on to win four gold medals, which led to a significant increase in demand for the brothers‘ offerings.
The brothers were soon selling over 200,000 pairs a year. However, at some point during World War II, a rift grew between them due to an incident with American soldiers in which Rudi felt betrayed. The two decided to end their partnership in 1947, with Rudi founding a new shoe firm called Ruda (a combination of (“Rudolf“ and“Dassler“) and Adi founding Adidas (combining“Adi“ and “Dassler“).
Rudi eventually renamed his business Puma on the advice of an advertising agency. From that point on, the brothers engaged in a fierce rivalry. It was so heated that it divided their town, with citizens showing strong loyalty to one brand or the other. This extended to sports teams; for example, the West German national football team only wore Puma boots.
Over the next few decades, Puma became a respected brand, but Adidas achieved global dominance, eventually producing 200,000 pairs a day and generating half a billion in annual sales. Much of its success was due to Adi’s innovative designs. By the time he died in 1978, his products were being worn for all purposes by athletes and non-athletes alike. Adidas went public in 1995.
Business model of Adidas Group
Customer Segments
Adidas has a mass market business model, with no significant differentiation between customers. The company targets its offerings at any consumer who is interested in sports clothing and shoes.
Value Proposition
Adidas offers three primary value propositions: innovation, customization, and brand/status.
The company places a high priority on innovation. It established five strategic pillars for its R&D organization to guide its vision: Athlete Innovation, Manufacturing Innovation, Digital and Experience Innovation, Sustainability Innovation, and Female Athlete Innovation. As part of its Athlete Innovation imperative, it has worked with sportspeople, companies, and universities to come up with groundbreaking features in the product development process. Some of these are as follows:
- Boost – A cushioning technology created to provide maximum comfort, responsiveness, and energy return for athletes; it features energy capsules in the midsole
- ClimaChill – An apparel range with active cooling technology that features a fabric using 3D aluminum and titanium cooling spheres that correspond with the warmest areas of the body
- ClimaHeat – An apparel range providing power insulation for cold weather training; it features hollow-fiber fabrics that enable higher amounts of warm air to be trapped
The company enables customization by allowing customers to personalize their products. Consumers can go on its website and, select their preferred shoe, then tailor it in the following areas:
- Colors
- Size
- Font type
- Arc type
- Artwork/Graphics
- Team Name
- Player Name
- Number
- Application Options (heat transfer, screen print, tackle twill, embroidery)
The company has established a powerful brand as a result of its success. It is one of the world’s oldest shoe brands. It is the largest athletic footwear/apparel producer in Europe and the second biggest in the world (after Nike). It manufactures over 778 million product units a year. Lastly, it maintains a number of globally popular lines, including Adidas, TaylorMade, and Reebok.
Channels
Adidas’ main channels are physical retail outlets, which include own-retail and mono-branded franchise stores. It also acquires customers through various eCommerce websites. The company promotes its offering through its social media pages, online/print/TV advertising, and sponsorships.
Customer Relationships
Adidas’ customer relationship is primarily of a self-service nature. Customers use its products while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone and e-mail support.
Key Activities
Adidas’ business model entails designing and developing its products for customers.
Key Partners
Adidas outsources almost all of its manufacturing to third-party independent suppliers, who represent over 1,000 factories, most of which are in Asia. The company has formed long-term research partnerships with several athletes, companies, universities, and governments in order to obtain additional expertise as part of the product design and development process. For example, after it has created a prototype for a new shoe, it sends it to athletes for testing.
Key Resources
Adidas’ main resources are its human and physical resources. It maintains FUTURE teams, groups of professionals from different disciplines that study new materials, scientific research, production processes, and consumer insights in order to generate new ideas. They engage in frequent communication with the company’s material and souring teams. The company maintains a limited number of own production/assembly sites in Germany, the United States, and Canada.
Cost Structure
Adidas has a value-driven structure, aiming to provide a premium proposition through frequent product innovation. Its biggest cost driver is sales, a fixed cost. Other major drivers are in the areas of marketing and administration, both fixed expenses.
Revenue Streams
Adidas has two revenue streams:
Product Sales – Revenues generated from the sale of sports shoes, clothing, and accessories
License Fees – Revenues generated from the licensing of the right to use the Adidas, TaylorMade, and Reebok brands to third parties
Our team
Herbert Hainer,
Chairman and CEO
info: Herbert earned an undergraduate degree in Economics from the University of Landshut. He previously served as Managing Director, Germany and SVP, Sales and Logistics in EMEA for Adidas, and also held several executive roles at Procter & Gamble.
Robin Stalker,
Chief Financial Officer
info: Robin earned an undergraduate degree in Business Studies before becoming a Chartered Accountant. He previously served as Labor Director, Head of Corporate Services, and VP of Group Reporting at Adidas AG, and has also worked at Warner Bros.
Roland Auschel,
Head of Global Sales
info: Roland earned a degree in Business Studies ("Diplom-Betriebswirt"), a B.A. in European Business Studies (UK) and an MBA (U.S.). He previously served as Chief Sales Officer for Multi-Channel Markets and Head of the EMEA Group at Adidas.
Eric Liedtke,
Head of Global Brands
info: Eric earned a B.S. in Journalism at the University of Wisconsin-Madison. He previously held several senior management roles in brand communications and product marketing at Adidas, including SVP of Brand Marketing and VP of Footwear.
