About Adidas Group and its Products in US and Mexico

2021-05-28 14:05:07
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University of Richmond
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Research paper
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Adidas AG was established in 1949 in Germany by Adolf Dassler with its headquarters at Herzogenaurach. For the period since its establishment, the company has remained synonymous with sporting industries. Today, the company in a multinational and is one of the largest brands in sports in the world. The household brand name the company uses is three stripes logo that is recognized everywhere in the world. The product portfolio of the business is extensive, ranging from, clothing to accessories including bags, eyewear, watches and other sports related equipment and goods. According to the company website, as of 2016, the number of employees in the company worldwide was over 55,500 employees (Rudolph, 2016). The revenues of the fiscal year 2015-2016, the company produced 778 million products with 18.76 US Dollars in sales (Rudolph, 2016). The Adidas group consists of approximately one hundred and seventy subsidiaries that include Taylor Made-Adidas Golf, Golf, Rockport and CCM-Hockey.

The companys brand centers on the passion for innovative design and the passion for sports to help athletes to work out or perform to the best of their abilities. Just like most organizations marketing is vital for the survival of the company. According to Chartered Institute of Marketing, global marketing refers to the process of satisfying, identifying and anticipating the consumer requirements globally or internationally (Czinkota & Ronkainen, 2013). The principal purposes according to this marketing definition put into practice the need to compete in a competitive market globally, to identify and anticipate the consumer markets while considering the marketing indicators (Czinkota & Ronkainen, 2013). Conclusively, the sole purpose of this step is making profit for the company. As a market-oriented company, Adidas Group continuously reviews the customers needs to ensure that these requirements are identified. In order to provide a maximum demand in the market, the company aims to exceed these customer expectations by adapting to a portfolio to meet the changing market indicators. The key role of these functions is to realize a success for the company.

Adidas de Mexico and Nike de Mexico continue to lead in sportswear as of 2016 with their retail values being 9% and 7% retail value shares respectively (Rudolph, 2016). The two brands enjoy a long presence in the Mexican markets based on the high brand awareness and aggressive means of marketing campaigns based on sponsorship and customer engagement (Euromonitor International, 2017). On the side of Adidas Group, the company has extended a sponsorship with the Mexican National Team. According to market statics, the sale of sportswear in the country was projected to increase the compound annual growth rate (CAGR) of the Mexican economy by 6% base on the athleisure trend (Rudolph, 2016). In 2014, the Adidas celebrated the sponsorship with the Mexican national team during the World Cup; the deal was however extended to 2022 on a contractual basis (Emmerentze, 2014). According to the Ernesto Bruce, the Director of Soccer in North America confirmed that they had ripped benefits after winning the sponsorship. Its extensive involvement in sportswear in Mexico has resulted in the company recording a sale of jerseys at an approximate ratio of 1:1 with the national team of the US (Emmerentze, 2014).

The volume of sales regarding Jerseys in the two countries tops their sales record regarding volume. Adidas Q1 2016 results showed that the company is heading to recovery after weakened sales (Emmerentze, 2014). However, the profile describes that the current marketing trends the company has invested in were improving the soaring sales in 2014. In 2016 (two years after the fall in sales in North America), the company intends to increase its competitiveness in the sports gear market. The company has signed deals with celebrities like Kanye West to elevate the cool factor in the market and ensure a larger market is realized. The move creates a halo effect hence improving the sales record of the company. Athlete endorsement in the year ending 2016, the support of Pittsburgh Penguins star and Green Bay Packers quarterback Aaron Rodgers of the NHL and NFL respectively ensured an increase in sales in North America (The Economist, 2016). The president of Adidas in North America confirmed their moves stating that Americans love winners, and Adidas are indeed winners in the sporting market.

Market Structure Analysis of US and Mexico

The service sector dominates the Mexican economy, and in 2015, it contributed to about 63% of the growth development product (GDP) (Steenkamp, 2017). However, the rate of growth of the GDP became affected during the global financial crisis and recession in 2009. The rate of increase declined to approximately 4.7% during this time. The economy, however, managed to recover in 2010 rising to 5.1%. The growth is driven by dynamic changes in the external and internal market demands. The supportive government policies employed in the country has boosted the number of foreign investors while increasing the potential output of the market. Therefore, this has resulted in increased industrial activities and subsequently the purchasing power parity (PPP) of citizens (Steenkamp, 2017). It is important to consider the SWOT (strength, weaknesses, opportunities, and threats) analysis strategy. Based on the proximity of Mexico to the US and the potential young market, it is important to note that it is important to confirm the advantages of this market. The Adidas sportswear would therefore extensively exploit the benefits of the market based on the great diversity of the market.

In Latin America, the highest per capita income is recorded in Mexico and is ranked the twelfth regarding the worlds economic watch on GDP and PPP (International Monetary Fund, 2017). The country enjoys high levels of business freedom, trade, fiscal and labor freedoms in the current economy. The increased purchasing power of the country has for the countrys middle-income class has been attributed to macroeconomic stability. The stability in the macroeconomic environment saw the GDP annual growth rate of increase by 2% year-on-year (YoY) in the third quarter of 2016. The average inflation rate of the economy is approximately 2.72% in 2015. This is an indication that the consumer prices increased by 3.31 percent by 2016. This value is considered the highest inflation rate since 2014. For the company to prosper based on the marketing structure of the Mexican, economy, it is important to apply. The company should take into consideration stock market vulnerability and the interest rates.

In the US, the company benefits from the market awareness with the US population adapting to a healthy lifestyle. The values of the sportswear are expected increase at a Compound Annual Growth Rate of 4% due to the trend of athleisure (Kell, 2016). The US is a market-oriented economy with private individuals and business firms making the most decisions. The state and federal government buy the needed goods from the private persons and companies. The enterprises in the US enjoy high flexibility compared to Europe and other Asian countries. However, the essential essence of the economic structure gets summarized by the interaction between the international, private and public sectors. The US economy ids the leading in the world and has reaching effects in every place in the world. Despite the emerging trends in marketing economies, the US economy remains highly invested with stock of direct foreign investments being approximately 2.824 trillion dollars as of 2012 (Kell, 2016).

The population of the US in 2012 statistics was 314.184 Million (Heitner, 2014). This shows a potential market based on the market reports of the consumer purchasing power parity and GDP growth. The labor force of the country, however, became affected by the 2008-2009 economic recession and is yet to recover (Heitner, 2014). Adidas Group should, therefore, identify this as a potential market based on the consumers purchasing power parity. The awareness of the population and the need to ensure they live in healthy lifestyle should be a major factor to consider. The marketing campaign for the company should encompass both sportswear clothing and footwear. In this way, the potential market would help in the realization of profits to the enterprise.

A Comparative Analysis of All the Key Macroeconomic Indicators in the US and Mexico

Mexico has a free market economy that ranges in the trillion dollar class while on the other hand; the US has the largest and technologically robust economy in the world with a GDP of 51638US dollars as of 2017 (Kell, 2016). Mexican economy comprises of a mixture of old and modern industries and the private economy maximally ventures agriculture. The government over time has expanded the number of data including expanding the service providing sectors of the economy such as banks and telecommunication firms. The implementation of the North American Free Trade Agreement, the exports to the US has risen from 7% to 12% with the share to Canada doubling to 5.5% (Kell, 2016). The US has a flexible market that allows for the development of the economy. Firms and economic trends purely influence the market. After the 2008-2009, the government signed a deal of 787 dollars to stabilize the markets and increase its flexibility while creating jobs in the country. The table below shows a statistical report of a comparative analysis of the great macroeconomic indicators in the two nations from the IMF website.

Statistics Mexico microeconomic indicators United States microeconomic indicators

GDP growth rate 1% 3.5%

GDP per capita 9511USD 51638USD

Inflation CPI 3.36% 2.1%

Unemployment rate ILO Measure 3.5% 4.7%

Balance of payments 200 Million USD -45240 Million USD

General government balances 43.2% 104%

Table 1: Table below shows a statistical report of a comparative analysis of the great macroeconomic indicators in the two nations (Source: the IMF website)

The main economic factor that affected Adidas during in North America was when the world was experiencing a global recession. It meant that the consumers had less disposable income and subsequently less money to spend on non-essential products like sportswear and footwear from Adidas. A low per capita income would mean that the purchasing power of the consumers would lower the market strategy or sales of the company. However, the sportswear products continue to grow. According to recent research, sports apparel and footwear sales increased in sales by 42% leading to a value of 270 billion dollars over the past seven years (Kell, 2016). Based on the market demand, and the current economic trend, the prospects of growth continue getting stronger based on the current high participation of youths in sports according to Morgan Stanly Research.

The endorsement of celebrity and personals affect the general sociocultural development for the sportswear of the country. It includes the like of David Beckham and Kanye West in America. It helps increase the distance speed for sales in the economy (Kell, 2016). With the age of digital world, the internet can now be easily accessed by people. Therefore, there is need for the company to invest in technology and allow for online purchases of Adidas products. However, the disadvantage of this move would be that competitors including Nike and Puma would employ the same marketing strategy. The development of goods including the Adidas Boost has allowed for the application of technology ensuring competition with major competitors. The competition here in would be safe since the government in both the countries have allowed for a liberal env...

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