TOWS and SWOT analysis on Adidas

During the last group meeting we analysed Adidas using a TOWS matrix and SWOT analysis. We did this in order to help us construct our info graphic on our chosen brand. When constructing the TOWS matrix we considered a variety of strengths, weaknesses, threats and opportunities of Adidas.

In the strengths section of the TOWS matrix Jack discovered one of the strengths of Adidas was the brand loyalty. Adidas has a large number of customers who will make repeat purchases on a particular product. Adidas has an extensive product portfolio and because of this Adidas has moved into several different sporting markets which allows it to supply a wide range of products.

In the opportunities section of the TOWS matrix James pointed out that Adidas has the possibility of expanding into new markets. For example they could start providing sports equipment for a market they are not currently in. This would be a strategic decision knows as new product development as well as new market development. Yes this could be expensive in the short run but over time the potential for sales and profit to increase are of greater opportunity. James also suggested market growth could be another opportunity because Adidas could potentially increase its market share in sports where they are not at the forefront. As a group we discussed what impact lifestyle and social factors have on Adidas. We came to the conclusion that by increasing an individual’s participation in sport this could enhance Adidas’ as a brand as people need to invest in sport equipment.

In the threats section Tiza pointed out to the group that competition is one of the biggest threats. This is because new entrants can enter the market which would therefore increase the amount of business Adidas would be competing with. The state of the economy is a challenge for every business. As a result of the recession we are currently in, consumers spending power has seen a dramatic drop. Some consumers will look for alternative brands at cheaper prices. As Adidas are quite high end in terms of pricing this could impact on them heavily.

Rob identified weaknesses of the brand. Rob suggested that Adidas have issues with their advertisement agencies as they are considered not to be as a higher standard as some competitors. One of the most prolific female athletes who Adidas sponsor is Jessica Ennis- Hill. She has appeared in television commercials in recent times and will potentially help Adidas become more known by more consumers. 

‘Adidas in the news’

This week there has been a lot of media attention regarding Adidas. Adidas have made a strategic decision regarding new product development, this in turn should help them compete with their major competitor Nike who have similar product out already. Adidas have decided to bring out a smart watch. Not only will the athlete have a GPS connection, the watch will have Bluetooth connectivity as well as heart rate sensor. In addition to this, this will track an athlete’s performance and provide feedback and heart rate training guidance either through the watch’s screen or over Bluetooth headphones. These features have created a unique selling point for Adidas and this potentially could increase sales in the short term and increase their profit margin the long term.

The above picture is Adidas' new smart watch which include heart rate technology.

‘Is it just PEST’S that effect Adidas?’

Since being put into our groups and with contracts signed our first task as a group was to identify what industry and brand we wanted to look into. After establishing we all share a common interest in sport we thought it would be a sensible idea to look into sports equipment so we went with Adidas and in particular their footwear. We felt that not only are we interested in sport equipment but we are also consumers of this industry. In addition to this we know as consumers what we are looking for in a product and how much we are prepared to pay. When researching Adidas we came across a surprising figure. According to athletics.com they state for global market shares of athletic footwear Nike lead the market with 31% compared to Adidas with 16%. We weren’t expecting such a big gap between the two companies. After discussing this with group we wanted to know why this was. Could it be Nike’s marketing strategies are better or that they have more money invested into their marketing? What we found interesting within our group was each member was loyal to a certain brand. This is known as brand loyalty.

During our next group discussion we discussed what affected Adidas both internally or externally. This is known as macro and micro factors. Macro environment mean factors Adidas don’t have control over. In contrast micro environment mean factor’s in a company’s immediate environment that affect its capabilities to operate effectively. When we talk about the macro environment the term ‘PEST’ is used. In simple terms political, economic, social and technological factors will influence company’s decisions. Each member of our team looked at a particular factor and thought about how it would impact on the brand. Firstly, Rob looked at the economic factors. He looked at whether the current state of the economy affected sales and would customers be prepared to pay Adidas’ prices or go for cheaper brand.  At this point Jack said this could overlap with a micro factor by introducing one of Porter’s five forces. The power of buyers is essential to any business and if the demand was to fall how would Adidas react is crucial to their success. Would they drop their prices or simply ‘sit tight’. Though James argued that he would buy shoes that he knows are a good product and value for money. We don’t think people can go without shoes, can they? One of the biggest macro factors is technology. With modern technology increasing and companies bringing out new products Adidas have to keep up in order to compete. The demand for specialization for us as the customer is higher than it ever has been. Tiza did some research into ‘micoach’. Mi coach brings an individual’s training to a new level.  You can choose training plans or create your own and from here you will track your progress and receive feedback and then you are able to identify where you need to work harder. This will create a direct feel with Adidas and make you feel part of their brand.

Socially, Adidas must seek where their highest potential customers are, for example, in the UK as there is a high demand for sports equipment given sport in this country is popular. In addition to this Adidas must consider when and where it is best for them to advertise in order for potential customers to increase so therefore sales will increase. For example, during the football season when there are numerous followers for such an in-demand sport there is a higher chance to attract more customers.  By looking at these factors it crucial for Adidas to respond efficiently and effectively.