Adidas: Five Porter Analysis

By Alpin Esmiralda Pitre & Riyanto Jayadi

Traditional competitors

It is the most trusted brand looking for inspiration and invocation in the life of every person who has a body.

Nike Inc. was incorporated in 1969 that designs, manufacture, market and sells sports footwear, apparel and other related accessories and services. Nike Brand, Converse, Hurley and Jordan Brand are the portfolio brands of the company. Nike is a great success through its product innovation and superior quality. Nike is the Top competitor of Adidas.

NIKE Brand Valuation. $122.3 billion

 New market entrants

The threat of new entrants for Adidas is low to moderate. While a brand can enter with a small capital on a local scale, to grow a brand the size of Adidas requires a very large investment which can be understood from the size of its production and supply chain. There are several factors requiring large investment like technology, skilled human resources, marketing, advertising etc. So, unless someone has enough capital to spend entering the industry would be difficult.  Moreover, one cannot build as much brand equity overnight. It also takes time as well as efforts to build as much brand equity. All these factors moderate the threat arising from any new player trying to enter the industry.

Substitute products and services

The threat of substitute products before Adidas is low to moderate.  Its number of competitors is not very large and yet not so small either. There are small and large; local and international competitors which offer products under a wide range of prices. Some of them cater to the needs of the high end customer whereas the local competitors offer substitutes at lower prices.  The threat from the substitute products is moderated by the quality of products and marketing efforts of Adidas. In order to further moderate the threat, Adidas has focused on marketing in the metropolitan markets since a large part of its customer base lives there.

Customers

Adidas uses differentiated targeting strategy to target young adults, adults as well as children who have passion for fitness & sports. Although it targets customers in the age group of 13-40 years but majority of its customers are of 15-30 years of age who hail from upper middle class or the luxury class of customers.

Suppliers

According to the Adidas Group, 27 percent of all the company’s factories are located in China. China has 337 factories, followed by India with 99, Indonesia with 79 and Vietnam with 76. Japan, Korea, Taiwan, Thailand, Cambodia, Pakistan and the Philippines all have between 10 and 60 factories. How many countries does Adidas sell their products to? As per Adidas “Adidas work with around 800 independent factories from around the world that manufacture our products in more than 55 countries.”