Sunday, March 6, 2011

Adidas builds brand "desire"

Adidas, the sportswear giant, is looking to enhance "brand desirability" as a means of driving growth.

The German company enjoyed a 9% expansion in revenues last year, hitting €12bn ($16.6bn; £10.2bn), and net income climbed 131%, to €567m.

Herbert Hainer, Adidas' chief executive, argued these results, including an 18% lift in retail sales, were some of the best in the organisation's history.

"While this speaks to the improvement we're making in our quest to be a world-class retailer, it also underlines the strength and desirability of the Group's brands," Hainer said on a conference call.

"We did it through our unrivalled commitment to the consumer. We did it by bringing the most innovative products to the market, telling the most compelling stories and creating the most brand energy."

"We did it because we had the courage to return brand investments to pre-crisis levels when others didn't."

Among the firm's key marketing initiatives in 2010 were efforts tied to the FIFA World Cup in South Africa, and schemes aiming to reinforce its basketball credentials.

The miCoach mobile app, offering personalised training tools, has been downloaded more than 1m times to date, while the number of Facebook members that "like" adidas Originals trebled in 2010, reaching 7.1m.

Looking ahead, Hainer stated communications and innovation would play a central role.

"Even in the midst of the worst global recession in living memory, we have seen that consumers will pay a premium for exciting new products from brands renowned for quality, innovation and service," he said.

"We have those brands, and we have these products, and we have some marketing excellence to further increase brand desirability."

"We also try to put more value into the product and then we also can raise prices. This is an ongoing process and it's not just on one day."

In a bid to build on such trends, the company has developed a multimarket campaign on behalf of its eponymous range, launching this month.

"The campaign, which will be our largest global brand campaign ever, showcases Adidas' distinctive presence across and into different sports, cultures and lifestyles, fuelling the world of sport, music and fashion," Hainer said.

Although the combination of major events like the 2012 Olympics in London and caution on the part of shoppers could tempt manufacturers to roll out lower-cost goods, Adidas is resisting this strategy.

"Obviously, we want to cater with as much as many consumers in the UK and around the world, but nevertheless we will always make sure that the brand is protected," said Hainer.

"We will definitely bring products and concepts into the market which support the overall positioning of our brands … We will not go in with mass-market products just to maximise our revenues for that period of time."

Successful recent innovations include extensions into apparel, and Reebok's ZigTech and EasyTone running shoes, the latter of which have been promoted by Helena Christensen and Kelly Brook.

"Our mission to create a closer connection to the next-generation athlete and to increase our prominence in the important mall channel is clearly taking shape," Hainer suggested.

More broadly, China constitutes an essential target market, as Adidas seeks to augment the 10% growth recorded in the second half of last year, achieved by rationalising inventory levels and its store network.

"I have just returned from China … and I can confirm that momentum for the adidas brand continues to strengthen," said Hainer.