Businessmodel of Adidas Group

Customer Segments

Adidas has a mass market business model, with no significant differentiation between customers. The company targets its offerings at any consumer who is interested in sports clothing and shoes.

Value Proposition

Adidas offers three primary value propositions: innovation, customization, and brand/status.

The company places a high priority on innovation. It established five strategic pillars for its R&D organization to guide its vision: Athlete Innovation, Manufacturing Innovation, Digital and Experience Innovation, Sustainability Innovation, and Female Athlete Innovation. As part of its Athlete Innovation imperative, it has worked with sportspeople, companies, and universities to come up with groundbreaking features in the product development process. Some of these are as follows:

• Boost – A cushioning technology created to provide maximum comfort, responsiveness, and energy return for athletes; it features energy capsules in the midsole
• ClimaChill – An apparel range with active cooling technology that features a fabric using 3D aluminum and titanium cooling spheres that correspond with the warmest areas of the body

• ClimaHeat – An apparel range providing power insulation for cold weather training; it features hollow-fiber fabrics that enable higher amounts of warm air to be trapped The company enables customization by allowing customers to personalize their products. Consumers can go on its website and, select their preferred shoe, then tailor it in the following areas:

• Colors
• Size
• Font type
• Arc type
• Artwork/Graphics
• Team Name
• Player Name
• Number
• Application Options (heat transfer, screen print, tackle twill, embroidery) The company has established a powerful brand as a result of its success. It is one of the world’s oldest shoe brands. It is the largest athletic footwear/apparel producer in Europe and the second biggest in the world (after Nike). It manufactures over 778 million product units a year. Lastly, it maintains a number of globally popular lines, including Adidas, TaylorMade, and Reebok.

Channels

Adidas’ main channels are physical retail outlets, which include own-retail and mono-branded franchise stores. It also acquires customers through various eCommerce websites. The company promotes its offering through its social media pages, online/print/TV advertising, and sponsorships.

Customer Relationships

Adidas’ customer relationship is primarily of a self-service nature. Customers use its products while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Adidas’ business model entails designing and developing its products for customers.

Key Partners

Adidas outsources almost all of its manufacturing to third-party independent suppliers, who represent over 1,000 factories, most of which are in Asia. The company has formed long-term research partnerships with several athletes, companies, universities, and governments in order to obtain additional expertise as part of the product design and development process. For example, after it has created a prototype for a new shoe, it sends it to athletes for testing.

Key Resources

Adidas’ main resources are its human and physical resources. It maintains FUTURE teams, groups of professionals from different disciplines that study new materials, scientific research, production processes, and consumer insights in order to generate new ideas. They engage in frequent communication with the company’s material and souring teams. The company maintains a limited number of own production/assembly sites in Germany, the United States, and Canada.

Cost Structure

Adidas has a value-driven structure, aiming to provide a premium proposition through frequent product innovation. Its biggest cost driver is sales, a fixed cost. Other major drivers are in the areas of marketing and administration, both fixed expenses.

Revenue Streams

Adidas has two revenue streams:

Product Sales – Revenues generated from the sale of sports shoes, clothing, and accessories

License Fees – Revenues generated from the licensing of the right to use the Adidas, TaylorMade, and Reebok brands to third parties