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ADIDAS BRAND MARKETING PLAN
The sports market is currently undergoing one of the most striking transformations in its history, starting long before Covid and merely accelerated by the pandemic, a transformation that could have a profound effect on the world of sportswear branding: the emergence of e-sports as a new form of community.
For Adidas, the unfolding opportunities related to e-sports are especially interesting for multiple reasons.
This report analyses the current global sports market, highlighting key groups and important developments, like the impact of the pandemic and the rising youth market. It goes on to give an overview of the global sports audience, presenting key findings such as shortened attention spans, reluctance to attend live sports events, and the rise of e-sports as a popular spectator sport.
Further, it gives an overview of the Adidas brand structure, strategy, image, identity and target audience, and summarises these findings in the CBBE model and a SWOT analysis.
On the basis of this information, a brand extension with a detailed marketing plan is proposed and assessed: a branded game on the online platform Roblox, targeted at young gamers, offering digital products for sale and reflecting physical brand events.
With Adidas, “everything the company does is rooted in sports.”
What is sports? - Answers to this question are becoming increasingly diffuse. While this shift can be daunting for sports companies with a heritage like Adidas, it is also exciting. It opens up new possibilities with great potential, either to create new competitors, or to boost existing players who get it right.
A big perceptual shift in the 1970’s, when sports like running and basketball experienced mass popularisation, showed this clearly: it helped Adidas reach new heights - while also giving birth to the biggest competitor, Nike.
A similar shift is already well on the way, spawned by the digital era and fuelled by continuous technological innovation and most recently the Covid pandemic: a shift away from traditional sports to lifestyle sports like home fitness and a significantly rising focus on e-sports.
Therefore, sports brands need to find new answers to the question what sports is and assess the commercial potential of those answers.
Adidas, having arrived at the end of a five year plan, is ideally poised to rethink its definition of sports.
Overview: Sports Market and Sports Consumer
Pre-covid, the global sports apparel market growth was forecast to grow steadily in the next years, while the global athletic footwear market was expected to see accelerated growth starting in 2020.
Compared to 2019, the global youth sports market was even expected to more than triple by 2026, reaching 77.6 billion US dollars.
However, the Covid pandemic caused global sports industry revenues to total under 74 billion U.S. dollars, almost half the amount estimated pre-COVID-19.
The youth market is equally hit, facing huge losses. "Youth sports will not be the same following this pandemic," a letter from youth sports associations to the US government stated.
The Sports Audience
The amount of hours of sports broadcasting in the United States increased by more than 400% between 2002 and 2017, presenting providers and sponsors alike with increased competition.
Live sports viewing is also getting faster paced, with reach staying the same, but attention spans shortening, demanding an increase of services like game highlights and high-stakes situation alerts.
The Covid pandemic can be expected to cause long term shifts in the sports events market, with more than 50% of Germans, British and Americans saying they will try and avoid sports events “for the time being, because of Covid-19.”
The most notable shift is the rise of e-sports which is said to be “the third- most-popular spectator sport for young men; 38 percent of US men under 25 years old are e-sports fans. They watch almost an hour a day of streaming e- sports.” (McKinsey)
Despite the cancellation of in-person e-sports gatherings, popularity of e- sports events as such "has not just endured but grown” (McKinsey). The global e-sports market reached an estimate of 1.1 billion US dollars in 2020, with “most of the revenue forecast to come from sponsorships,” indicating an equally growing interest among marketeers.
The brand - A strategic In-Depth Analysis
In the company’s own words, “the Adidas brand offers apparel and footwear for every sport, every fashion, every style, whether you are an athlete or fashionista.” With such generalistic terms, it is all the more important to remember the angle from which Adidas approaches all its products: “Everything the company does is rooted in sports.”
The Adidas brand is divided into two major sections: Adidas, under which all performance products are marketed and Adidas Originals, encompassing streetwear and sportswear.
Around the turn of the millennium, Adidas underwent a major transformation from being sales-focused to being marketing-focused. This meant outsourcing almost 100% of manufacturing and getting as close to the consumer as possible.
In 2012, the brand aimed at becoming a “media channel in its own right” with “30% of shared content created by consumers by 2017.” In line with that goal, the brand is currently divesting in promotional partnerships “with events, associations, leagues, clubs and individual athletes,” in turn investing more into its “grassroots and local activation efforts,” aiming to build brand equity from the base upwards.
Fig. 1: Creating the New
In 2015, the company presented a five-year business plan under the headline “Creating the New”. It specified three major areas of focus:
“Speed: Become the first true fast sports company – fast in satisfying consumer needs, fast in internal decision-making.
Cities: Six key cities in which to grow share of mind, share of market and share of trend are identified: New York, Los Angeles, Shanghai, Tokyo, London and Paris.
Open Source: Be the first sports company that invites athletes, consumers and partners to be part of the brands.”
This strategy helped Adidas double its brand value over the following five years. The current CEO, Kasper Rorsted, is building on the strategy with several areas of development: a focus on the digital era, “with health and fitness merging into a lifestyle concept,” sustainability, and a simpler brand architecture.
With the impact of a global pandemic, the digital focus was spurred on. In the first half of 2020, revenues decreased 18%, but the brand experienced an “exceptional e-commerce growth” in that time, helping the fallen stock price rise again towards the end of the year.
In the digital realm, Adidas had also begun to explore e-sports partnerships, launching a several sneakers and fashion items with Fortnite star Ninja. While already in 2017, CEO Kasper Rorsted mentioned digital creation and mobile communities as key steps to “inspiring love for our brand and desire for our product,” Adidas has been slow to venture into things like digital collaborations or digital sports products.
A further area of increasing focus for Adidas is sustainability, with the partnership with Parley for the Oceans seeing considerable growth, and a number of new products being launched, such as the Futurecraft.Loop shoe and a range of clothes for Adidas by Stella McCartney.
Infinite Play, a program in which customers can turn in used Adidas clothing and receive rewards in turn, was launched in 2019 and is in further development.
The brand has built a sustainable appearance that is far more credible than that of most competitors, especially due to its long-term collaboration with Stella McCartney, a brand perceived to be authentically sustainable. Adidas’ sustainability action is also well represented online and in stores.
In terms of brand structure, Adidas is striving for maximum focus, rigorously simplifying the brand architecture by reintegrating multiple subdivisions like Adidas Neo and by exiting acquisitions like Taylor-Made. The aim is to focus on Adidas and Reebok as core assets, and within them on a few iconic franchises as symbols “that can really make a difference for the brand.”
Adidas identifies six key consumer groups: “Male Athlete, Female Athlete, Young Creator [formerly Young Athlete], Streetwear Hound, Amplifier, and Value Consumer, which are not mutually exclusive.” The most important groups are the Young Creators and the Streetwear Hounds.
Young Creators are aged 12-19. As newcomers to the market, they are aspiring to the brand’s subcultural universe, responding strongly to influencers and product placement.
Some of these consumers turn into Streetwear Hounds, aged 16-28. These consumers are particularly interested in individual self-expression, always on the lookout for cultural symbols. “Brand credibility and heritage is an important prerequisite to win the discerning streetwear hound consumer. These consumers are looking for substance and craft and are inspired by stories and design.” These consumers have been a particular focus for Adidas Originals, since they were seen to inform upcoming consumers.
The overarching archetype for the Adidas brand identity is the Creator. Adidas describes this personality to be “all doers and makers, first to adopt, focused on what’s new and what’s next”, living in key cities around the world. The Creator archetype in the Jungian model can be defined as having “a desire to create something new and exceptional [...]. They need to express themselves with their individual talent and strive to bring their vision to life through that expression.”
This targeting springs from the brand’s unique foothold in creative subcultures and gives the brand a strong point of difference in regard to its largest competitor, Nike, who aggressively occupies the Hero archetype.
Adidas deliberately refrains from disconnecting its creative lifestyle segments from sports. Grounding everything the brand does in sports, helps it avoid "becoming subject the fickleness of fashion,” according to Alex Melvin, whose agency 180 is in charge of Adidas’ advertising.
Adidas’ effort to capitalise on its position in subculture, while at the same time emphasising being a sports company, has resulted in a messaging that tries to highlight the quest for achievement from a creative angle, with slogans such as “impossible is nothing” or “I’m here to create.”
Adidas is perceived as a stylish, iconic brand with values more on the conservative side. Through the brand’s deep roots in subculture, partnerships with artists are largely perceived as genuine.
However, in a worldwide survey Adidas only ranked fourth among “brands that represent streetwear the most,” behind Supreme, Nike and Off-White.
In the media, Adidas tends to be mentioned positively for its quality, popularity, appearance and attraction, according to a media statistic from the Netherlands. Innovation, utility and performance - attributes the company likes to highlight - are much less talked about.
In terms of sustainability, Adidas is seen as a credible organisation striving for real change.
In a survey among US teens in late 2018, the second largest group named Adidas as the top athletic footwear and clothing brand, with significantly higher popularity among lower income groups.
On the flip side, it also ranked third among brands no longer worn by upper income male in the same survey, indicating a low customer retention rate.
Brand Equity CBBE model
Sports brand well known for its sports shoes, particularly in football, and its sport-inspired streetwear with a connection to creative subcultures
Adidas performance wear and Adidas Originals are perceived as separate entities
Orientation towards urban sports
Strong association with high profile creative talents like artists, rappers
and contemporary fashion designers
Creation of a clearly defined lifestyle
Low involvement in societal topics
like fighting racism
Underperforming digital presence,
compared to competition
Innovative, high performance materials, durable products
Clearly defined, iconic style
Strong trend awareness
Midrange to high price
Company that cares for the planet
High quality products
Credible sports authority
Messaging sometimes old-fashioned, slow reaction to movements in society
Deep roots in subculture, authentic and not merely commercial connection to Hip-hop, strong role in cultural movements
High engagement with sustainability activations
Strong demand for vintage items and franchise icons
Top-of mind brand in many sports categories
Excitement around sneaker drops and cultural events
Low brand loyalty among digital-first consumers
Head start in sustainability efforts
Strong brand awareness
Diverse products and markets
Creator archetype appeals to wide audience
Diluted brand desirability
Fractured brand equity
Message unclear in parts
Dissatisfying digital solutions
Underperforming content creation
Credible expansion of sustainability offerings (recycled products, resale, philanthropy)
Fast response to new sports trends such as home fitness
Reinforce brand equity through technology-, innovation- and development-focused narratives
Develop creative narrative in the digital realm
Sales implosions through reinforced shift to e-commerce
Deteriorating brand equity due to loosing touch with digital movements
Failure to reach the next generation of consumers with exciting content
Rationale for Brand Extension
The proposed brand extension is a branded game on the online platform Roblox, that forms an enhancement of everything the brand does, offering digital products for sale and reflecting brand events. It is targeted at young gamers with low income and high engagement.
Roblox is an online gaming platform operating like "an online arcade in one app, hosting millions of smaller, user-created games [...] that users can toggle through” (Modern Retail).
With 150 million monthly users and games played up to 10 billion times, the game has a vast, engaged audience.
Not only can users find and enter new games with a swipe, but it is also easy for brands to create branded environments. “Whether it’s for a sports franchise, a fashion brand, a movie studio or musical artist, there are endless possibilities for building authentic and immersive experiences that bring your brand to life,” said Tami Bhaumik, Roblox’s vice president of marketing.
And there is already a lot of experimenting going on: virtual concerts are being hosted, Nike created a virtual sneaker for AirMax day 2019 and TV shows use the platform to make their stories playable.
The exciting thing about creating a branded game is users would not perceive it to be an annoying advertising interruption, but would rather “like seeing the brands they see in real life on the game.” User generated games already often feature brands.
For multiple reasons, the unfolding opportunities related to e-sports are especially interesting for Adidas, and Roblox would serve as a good gateway into the e-sports world.
Firstly, e-sports are an intersection of competitive sport and subcultural community, in both of which Adidas has a strong foothold.
The brand’s orientation towards the Creator archetype consumer would be strongly underlined by entering a platform like Roblox, placing the brand into a highly creative context.
While messaging around traditional sports is typically connected to the Hero archetype, which is aggressively occupied by Nike, aspiring e-athletes are often introverted individualists, i.e. more the Creator archetype. This gives Adidas a strong advantage against its biggest competitor in developing a consistent entry into e-sports.
Secondly, compared to traditional sports, e-sports has several marketing advantages.
Players are more willing to promote brands openly, and can reach a much higher degree of intimacy with fans through features like live chat.
E-sports are described as a new form of “communities - all-encompassing experiences with social, competitive, and personal-status elements” (McKinsey). A branded game on Roblox would future-proof Adidas’ grassroots tactic of building from the base upwards, getting very close to the consumer.
Thirdly, the demographic reachable through e-sports marketing presents a group that Adidas is underserving: the emerging, young, always-online consumer with still-low income yet high digital engagement, who has not established any strong brand loyalties yet.
Adidas’ previous strategy of targeting the streetwear hounds and relying on a trickle-down effect to transport the brand to younger consumers worked in a day when these consumer groups were closely intertwined. However, with the rise of online-only content and age-specific games and platforms like TikTok or Fortnite, they have become much more segregated, with less content - and less trends respectively - transcending age groups.
Therefore, the young Creators could be more effectively reached by a separate, narrowly targeted digital strategy.
While creating a Roblox game means reaching a comparatively narrow audience, it is one with no insignificant market potential: Using AI data analytics, McKinsey identified four clusters of e-sports players. The category Roblox falls into is made out to “have a distinctive emphasis on personal outward appearance.
Fourthly, the potential of creating branded games presents a new realm of carefully controllable brand experience with high engagement levels.
Young consumers especially, are confused about the Adidas message, and the image of the Creator archetype is not fully pushing through. A game like this would give the brand a unique opportunity to create a brand experience much more controlled than for example a Fortnite sponsorship could, and in a much more cost-effective and flexible way.
Fifthly, it would be an important chance to learn more about the gaming market in a low-cost way, developing an overall marketing strategy for e- sports. Multiple e-sports associations are developing more scalable marketing solutions,46 so Adidas could soon exploit e-sports marketing on a wider scale.
Lastly, far off as it may sound, it is important for Adidas to test the waters of selling digital products. This could be a way to reduce the entry barrier to the brand universe, reaching young consumers with limited finances and consumers outside the brands traditional radar, while utilising the overall brand equity in an infinitely scalable way.
Explore gaming market in a low-cost way, developing an overall e-sports strategy
Future-proof grassroots community building tactic for an online-only society
Generate brand equity and brand appeal among a new audience
Expand digital presence, building credibility in e-sports
Reinforce the Creator message
Sell digital products, scaling the impact of existing brand equity
Lower the entry barrier to the brand for young consumers
12-19 year-old Roblox gamers identifying with the Creator archetype, with low income and high online engagement, male and female, who have not yet established any strong brand loyalties but are style conscious.
Tyler Mitchel, 14, lives in a suburb of Los Angeles. He spends his free time gaming Roblox, and Fortnite, watching YouTube and TikTok, as well as going to a local football club twice a week. Still in school and with no summer jobs taken on, his income is limited to his pocket money of 10 dollars a week, which he mainly spends on snacks, tech and game currencies. He later wants to work at a game developing company in the city.
A Roblox game that is fun, engaging and connected to the Creator message. It should not be a sports game, but primarily promote the brands lifestyle segments, with a nod to sports. New challenges could be consistently added referencing current sports events, sneaker drops and other significant events in the Adidas world, with the game becoming a kind of digital extension of everything the brand does.
While the game itself is free, users can buy branded merchandise and utensils within the game. Other developers sell for anything from 0.01 US dollars to 34 million (more of a joke, of course). To make users actually buy the products, without psychologically devaluating the brand, the Adidas products could be sold from 3 to 40 US dollars.
In addition to the Roblox game, an in-store feature could invite consumers to play the game in flagship locations during a launch period of around three weeks.
To avoid the Adidas brand becoming too closely related to gaming, the game should primarily be promoted within the Roblox community, using the app’s ad functionality and reaching out to popular Roblox Youtubers. But the launch could be timed with a mid-profile physical event, so it could bring elements from the event into the game in a humorous way, generating mutually beneficial media attention. In this case the brands social media channels could reference the game in connection with the event.
While a dedicated landing page is appropriate, dedicated social media channels should only be created in case of exceptional response. To be as authentic as possible, these would ideally be user-generated, with Adidas supplying statistics or other engaging material via the landing page.
During the launch period, users can win exclusive benefits to unlock in the Creators Club app, for example early access, event invitations or gift vouchers.
A brand extension in the form of a Roblox game as described above is the next step Adidas should take. As the saying goes: “Skate where the puck’s going, not where it’s coming from.”
This report was written as part of my BA Fashion Marketing and Promotion at the University of Westminster, published on 4th January 2021.