Analysis For Entry Of Adidas In The Netherland Sports Market

Marketing Objective

Adidias is one of the second largest sport wear industry in the market of footwear. The company offers variety of sports equipments to their consumers that represents largely engaged with the sports industry (Holtbrugge and Schuster, 2017). The company has segmented their market into three main divisions which include Sports Heritage, Sports Style, and Sports performance. Adidias has covered their market in Europe, US as well as Asia with approximately 150 countries (Kempf and Franklin, 2016). They are catering almost all kind of products for different kinds of sports such as athletes, football, boxing, swimming, golf, body building and so on to give them comfort as well as confidence that they are wearing a reliable product. The company is known for their marketing strategies and planning that made the company more competitive in the sports market (Laluyan, Pangemanan and Worang, 2017). The company is planning to cover new market that will help them to increase their sale as well as brand awareness. The country they are planning to target is Netherland due to high level of interest towards the sports.

In the following report, detailed analysis will be done for enter in a new market by the company that help them to target audience at maximum level.

There is certain objective of the company to spread their business in other countries. These are explained in below points:

• The main objective of the company is to increase sales as well as market share.
• The company has an objective to spread their awareness about their brand that help in enhancing the goodwill of the company in other countries as well
• Market development is also one of the objective of the company
• Adidas has an objective to lead in the competitive market
• Establish a unrefined competitive advantage over competitors
• The company has an objective to increase the consumer satisfaction (Choi et al., 2015)

The risk of new entrant to the return prospective of shoe manufacturers, sports accessories as well as athletics is minimized in the market through barriers of high entry. Due to huge scale of production, heavy amount of investment in research as well as growth and tremendously investment of huge capital on innovation would help the company to cope up from the threat of new entrants in the market (Kim, Pitts and Zhang, 2017).

Due to the number of firm in the sports business; there are lots of consumers in the huge market with their high level of bargaining power. Due to the competition in the market, the companies the companies continuously market their product to satisfy maximum consumers that increase the bargaining power of the consumers due to the reason the consumers attracted towards the economical price product that forces the company to target the consumers accordingly (Lee and Chiu, 2016).

The bargaining powers of suppliers in the sports industry is low due to the huge number of raw material suppliers, who are are presented in the market. There is slightly demarcation between the suppliers that make the power of bargaining of the suppliers are low. There are certain types of raw items which include leather, cotton, rubber, as well as plastic that are offered in a larger quantity in the market. The company can take advantage of such opportunity in the market that would help them to control their costing in the new market (Toro-Jarrín et al., 2016).

Market Analysis

The substitute of these kinds of product is low due to the reason of little alternative to exchange contained by the products of sportswear and athletics footwear. Therefore, the propensity of buyers is low in the sports market (Sung, 2015).

There is countless number of competitions in the arena of global for Adidas. However, most of the companies have no power to compete such big brand the market but some of the leading companies can create competition in the market of Netherland such as Nike, Puma, Legea, and Joma and so on. Due to such competition in the market, the company need to enter with strong marketing plans that would help the company to compete in such competitive market.

Need recognition

It is the process in which the consumer will recognize their need through internal or external factors. The intensity of want will indicate the speed with which the individual will move to fulfil their wants (Hyun and Kwon, 2015).

The company will search the information about required product through various sources. The e-commerce is the best source for the consumer to search the information about their products. Most of the consumers prefer to purchase their product through online which increase the trend of ecommerce in the market. The population are shifted to digitalization that increases the trend of shopping in the market (Riivits-Arkonsuo, Kaljund and Leppiman, 2015).

It is the stage in which the consumers are decided which brand they will go for that depends on the innovation and creativity of the product. The consumers have a high bargaining power which influences the company to come with the creative as well as innovative product in the industry that attracts maximum consumers in the market (Salter, Zhou and Datta, 2015). The market of sporting goods has grown in the recent years. The sports of youth have alone grown to be $15.3 billion in a market as the segment of the industry has grew to 55% since 2010. It forces the company to enter with some creativity idea as well as innovation in their products. Such as regardless to the innovation in product, the companies design their outlet with innovative ideas (Rosenbaum, Otalora and Ramírez, 2017).  

It is the process in which the consumer has decided which product and brand they will go for. It is the process in which the consumer finally purchases the product with their final selection. The decision is depend on the trend in the market. The key trends currently affected the industry in both macro and micro environment. Firstly, alongside the Government health campaign in the Netherland, the customers are exercising more dichotomously, the World health Organization has predicted that there will be approximately 5 million overweight adults in the world. Therefore, the emerging trend towards the fitness becomes more increases among the consumers as well as those who are being pushed to exercise more. Therefore, the increase in health-club memberships has also driven sales of sportswear.

Industry Analysis

This is the last stage of consumer journey, in which the behaviour of consumers is pre important as for marketer is concerned. A satisfied buyer is a silent advertisement. This phenomenon is called cognitive dissonance.

The country Netherland in hub of sportswear, the people of Netherlands are attracted towards sports brand that maximise the chance of entering in the market of sports industry. There are certain other large sports brands such as Nike, Puma are differentiating and offering a wide range of clothing   from functional performance wear for a wide range of sports that are moving in the direction of the fashion labels (Stevenson and Cole,, 2018). Nike is one of the top designer, marketer, as well as distributor of athletic apparel, footwear, as well as accessories for various sports and fitness activities. The company has already spread their existence in Netherland and other countries that create barriers for their existing rivals as well as reduces entry for new rivals. Nike has a wide range of product portfolio that provide shoes for various type of athletic activities such as running, training, basketball, football. Soccer, bicycling. The company also manufacture as well as sells the sports inspired urban shoes and children shoes (Holtbrugge and Schuster, 2017).

There are certain other competitors also in the market such as other offline retailers that would increase competition for the company such as active wear is being majorly promotes as fashionable, comfortable as well as suitable for the use both during the sports and daily activities. Most of the consumers are attracted towards such brands which would give high competition to Adidas which may affect the sale of the company at initial level. The population of Netherlands are also active in social media that give major competition to the company. Due to high discounted rates then population prefer to purchase the sportswear from online sites which increase the competition for such brands that have outlets in such country (Mahdi et al., 2015).

The company has able to identify that more than thirty per cent of the population are engaged in athletics between the age of 18 to 30 as well as most of the population in Netherland are conscious towards their health with interest in sports and other activities. another group of the population between the age of 34-40 years are interested in amateur footing in the morning and remaining population between the age of 41-60 are also prefer to run for keeping fit and healthy.

Porter Five

Therefore the company will target all range of consumers for their product. It will increase their demand in the market -which will be fruitful for them. But mainly the target market for the company is between the ages of 18-35 years old with a motive of obtaining sports instruction personalities into using their apparel (Lee and Kwak, 2016).

While entering in new market, the presentation of the product is essential for the company which represent the brand image of the company at greater level. The company will cater variety of designs as well as fashions in the footwear product of the company which will make them feel sporty. The company will also introduce apparel as well as accessories such as sweatshirt, jackets, t-shirts, as well as shorts that are great demand in the market of Netherland. These varieties of product will create a choice for the consumers to purchase from the outlet. It would help the company to maximise their sale in the competitive market (Ang and Rusli, 2018).

The company will use penetration pricing pattern for their product in which the company will set nominal price for their product that will be affordable for all kind of buyers in the market. The price of the product will be determined after review the price of competitors so that the affordable will not be an issue for the product. The company will also provide their product in discounted price that would attract the consumers of other brands which create easiness for the company to enter in the new as well as competitive market (Strauss and Frost, 2016).

Adidas will launch their product in the market of Netherland that has a hub of population with conscious for their health. Therefore, the initial location of distribution for product will be Netherland. The outlets will be available in different locations of Netherland for that the company will consult to their organised dealer as well as retailers for the selling of their products (Shank and Lyberger, 2014).

Promotion is an effective tool through which the company would able to reach out maximum consumers in the new market. Promotion of the product plays an essential role in the marketing strategy of product (Steenkamp, 2017). The promotion can be done through various methods which are explained in below points:

Online Marketing: Most of the population are available in social sites. This is an effective tool through which the company can spread their awareness for the product. The company will target their consumers through Facebook, YouTube, and LinkedIn which would help the company to target maximum consumers (Adefulu, 2015).

New Entrants Threat

Newspaper & Magazines: The Company will approach to the consumers through providing advertisement in the newspaper and in Sports Magazines that will help in spreading awareness for the products at higher level (Solomon et al., 2014).

Sponsoring the Event:  the company will advertise their product through sponsoring event in Netherland that would help in targeting maximum level of consumers

Sales Promotion: Adidas is one of the leading brands which are mostly known by most of the consumers in the market. Therefore, the sales promotion is an effective tool to target their consumers. The consumers will get ready to listen about the information of the company which crease an interest for them in effective manner (Wensley, 2016).

There is certain strength of the company that made them unique in the market as well as weakness of the companies that would affect the profitability of the company. The companies can also faces some threat in the new future with awaiting opportunities in the market.  These are deeply analysis in the below points which are as follows:

Strength

• Positive Market Image: the company has positive marketing image in the market that would help the company to lead in such competitive market. The company has already gain strong position in the market of Germany, Europe, France, Japan, as well as gain 20 % share in the market of US athletic footwear.
• Success from 2010 FIFA World Cup: the FIFA World Cup in 2010 was a biggest achievement for Adidas. The company had a great presence at the event with twelve teams including the host nation in the finals that are combines with their status as official sponsor, licensee as well as suppliers
• Strong infrastructure of marketing: the company market their product through extensive marketing theory that made the company more popular in the competitive market of sports. The company offers their product through their own retail stores as well as through franchised stores (Kumar and Bansal, 2015)

Weakness

• Dependence on third party manufacturing: it has been analysed that the company has outsourced 95% of their production to the third-party suppliers to minimize their cost of production which are primary located in Asia. Moreover, 32% of all their suppliers were located in China. Therefore, the company procures their merchandise from other manufacturers led the company to compromise over the quality of the product (Shital et al., 2018).

Opportunities

• Agreements of Sponsorships: the company has already sponsors some of the major sports events across the world such as they have sponsorship agreements with Japan Football Association and with Australia Olympic Committee. Therefore, the company would have other opportunities in the near future that would help the company to lead in the competitive market.
• Growing Importance of Sports to fight Obesity: Government as well as other organizations are highly promoting active lifestyle to fight obesity as well as various diseases. The awareness of healthy lifestyle would directly affect the demand of sports products that would lead the company to target maximum consumers.
• Growing Global Footwear market: the global market for footwear is expected to grow by 4% which will reach to $300 billion in the next five years. Therefore, it would be major opportunity for the company to explore themselves globally that will result in increased sales and revenues (Krishnaswamy, 2017).

Threat

• Risk of Macroeconomic: The growth in the industry of sports is highly dependent on the spending behaviour of the consumers as well as their confidence towards the brand. The downturn in the economic, socio-political factors such as nationalization, civil unrest cause risk to sales development for short-term period.
• Demand Risk of Consumers: in the recent scenario, the behaviour of the consumers unexpectedly changes therefore it would be tough for the company to predict their demand. Failure to anticipate as well as respond to changes in the demand of consumers for sporting goods products is the major serious threat for the company.
• Bargaining power of Consumers: nowadays, the market is more dominated by the buyers. The bargaining power of the consumers is increasing rapidly due to the reason of intense competition between the suppliers. This issue could harm the company to certain extent (McIntyre, Michael and Albrecht, 2015).

Conclusion

From the above it can be concluded that, marketing plan play a prominent role to compete in the competitive market. One of the leading company Adidias has planning to expand their retail chain in the market of Netherland. The company already expand their roots in many countries such as Europe, Japan, Germany, and USA. Nowadays, they are planning to target their consumers in new market that is Netherland. The market of Netherland has a positive as well as negative prospect that made the company more strong while entering in new market. The consumers of Netherland are conscious towards their health as well as more dedicated towards the sports activities that make them fit. Therefore, it would be opportunity for the company to target those consumers. However, due to such growth in the market, the other competitors have already existed in the market, that would cause competition for the company. The company need to more concentrate on the marketing strategies to cope up from the challenges of competition in the market. The company will use penetration pricing strategies to compete their competitors as well as to attract maximum consumers in the market. Adidas will introduce variety of product in the market that will provide an option to the consumers to purchase variety of product from the store of the company. The company will target their consumers through various tools such as newspaper, online marketing, sales promotion and so on this would lead the company in targeting maximum consumers in the market of Netherland.

Consumers bargaining power

From the above analysis of Adidas in the report it could be recommended that,

• Adidas already lead in the market due to their goodwill while they are planning to expand their chain in Netherland therefore, the company can use their brand images to target those consumers.
• There is huge competition in the market of Netherland due to the high demand of consumers for this kind of product, therefore the company need to prepare with strong marketing strategy to compete in the competitive market.
• It is also highly recommended that Adidas should try to concentrate on their cost of the product to cope up with the challenge of high price products.

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