How has Adidas evolved since it was founded?

Timeline of Adidas Fouded 1920 by Adi Dassler – wanted to design shoes for athletes in soccer, T&F, & tennis. The Dassler brothers (Rudi & Adi) made their first major innovation in athletic shoes, integrating studs & spikes in track & field shoes. Innovators in Marketing – gave away shoes to German athletes competing in Olympic games. By 1936 most athletes would compete only in Dassler shoes. Bitter family feud, company dissolved. Rudi established Puma. With his departure Adi renamed company Adidas & registered the trademark 3rd strip to Adidas shoes. Adi expanded spikes concept in track shoes to soccer shoes. Partial credit was given to the soccer shoes for Germany’s World Cup Championship that year. 1920-1925 1928-1936 1948-1949 1954

Timeline of Adidas Adidas is the clear favorite among athletes – 75% of T&F athletes wear them in Olympics. ’63 started producing soccer balls, ’67 athletic apparel Adidas became leader in consumer jogging shoes in the US. T-shirts and apparel bearing the 3 stripes became popular among teens. Adi Dassler dies, Adidas remains worldwide leader in athletic footwear but they are losing market share fast to Nike in US. Market share loss continues through the 80’s and mid 90’s. Through cost cutting, new model launches, and endorsement contracts with popular athletes Adidas increased sales by 75% over prior year in US. Becoming 3rd largest athletic footware company in US – trailing only Nike and Reebok. 1960-1967 1970’s 1978 1994

Timeline of Adidas Acquisition of Salomon SA – diversified beyond shoes & apperal to ski, golf, bicycle, & winter sports. Stock price takes a hit possibly due to Salomon acquisition. Adidas mgt divested all of Salomon’s winter sports & bicycle equipment. Acquistion of Reebok, included Rockport footware, Greg Norman apparel, & CCM hockey equipment. 1998 1998-2005 2006

What enabled Adidas to be the Market Leader in the past?

Product Innovation Track and Field 1925:studs and spikes Arch support 1949 – molded rubber cleats 1952 - screw in spikes Soccer 1954 – screw in spikes 1963- Began producing soccer balls 1967 – athletic apparel Results Over 700 patents Strong reputation among top athletes 1970 – leading brand in consumer jogging shoes Analysis – Adidas was an early entrant into athletic shoe industry. They developed many of the features still present in shoes today. Created a strong brand based on high quality, innovative products that top athletes choose to use in training and competition.

Marketing Innovation Gave shoes to German athletes in 1928 Olympics 2 stripe (and later 3 stripe) brand 75% of track and field athletes wearing adidas in 1960 Olympics 78% of athletes wearing adidas at 1972 Olympics Developed strong following with top track and field athletes. Applied this same model years later with soccer shoes and apparel. Successful because adidas was creating innovative, high quality products. Product innovation enabled marketing innovation. Different than Nike – marketing is what set them apart from the start.

Has Adidas positioned itself well in developing markets?

Adidas is a global player 43% of sales from Europe, which is slowest growth market Encouraging that #1 in developing eastern European market, Russia expected to be most profitable market in Europe by 2010 2006 acquisition of Reebok not enough to overcome Nike in North America Growing number of sales in Asia market, fueled by adidas success in China. Strong demand and large population

Net Sales in Emerging Markets Analysis – strong growth trend in sales in two very attractive emerging markets. Growth may be result of Adidas brand strength in soccer, world’s most popular sport.

Regional Footwear/Apparel Markets Size Market Growth Rate Adidas Sales Adidas Sales Growth Adidas Position North America $42.5 billion 3% $2.9 billion 5% #2 behind Nike Europe N/A 2% (20% Eastern Europe) $4.3 billion 8%, mainly in Russia #1 Asia 3.2 billion people 13% (South and Central) 15% (China) $2.2 billion 17% Latin America $657 million 39% Analysis – Adidas is strong in several developing markets (Eastern Europe, China) but its focus and acquisitions have been geared towards overtaking Nike in the large, but slow growth North America market.

Has the Acquisitions helped position Adidas against its competitors?

Salomon Acquisition: Was it Successful? Product Line Before Product Line After Athletic Shoes Athletic Apparel Ski Equipment Golf Clubs Bicycle equipment Winter Sports Apparel Analysis:Paid 1.5bn to diversify product line. Surpassed Reebok world’s 2nd largest sporting goods company, however…

Adidas’s Stock Price Stock price fell soon after acquisition in 1998, Salomon divested except for Taylor-Made Golf line. Adidas overpaid for acquisition.

Adidas after Salomon was divested Product Line Before Product Line After Product Line After Divestiture Athletic Shoes Athletic Apparel Ski Equipment Golf Clubs* Golf Clubs Bicycle equipment Winter Sports Apparel Only added Golf Clubs to product line