Product Life Cycle: Adidas's Marketing Strategy

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Adidas is widely known brand and in order to maintain their brand equity, they have to

manage its product quality, designs, and most importantly the price. Customers often

psychologically equate high prices with high quality – as the saying goes, “You get what you

pay for.” Adidas uses skimming pricing for new products and competitive pricing,

acknowledging their competitors such as Nike and Reebok. Adidas also uses psychological

pricing where price are set at $9, $89, $99, $189, $299, to perceive as being at a lower price.

If the organization undercuts its competitors pricing excessively, it will not be appealing to

stockholders. If the organization’s product or services are overpriced, it might risk and lose

potential customers.
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Product Life Cycle: Adidas is classified as under the ‘Growth Stage’. They are constantly

introducing new products into the market that are different from its competitors and thus

result in rapid increase in sales with aggressive pricing. There are also many competitors in

the market such as Nike, Puma, and Asics etc., this results in Adidas having to fight for retail

space for a broader distribution. If customers were to be more satisfied with other brands,

they would selectively demand for those brands instead of Adidas and thus, Adidas has to

constantly think of new ways to innovate and create so as to keep ahead of competitors.

Cost: Cost of production is also crucial especially when it comes to price decisions. The

higher the cost of production is, the higher the price of product in the store. The lower the

cost of production, the lower cheaper the item is. Hence, Adidas uses high quality materials

to produce their goods to ensure that their customers are paying not only for the brand but

for also durability and that they are paying for what its worth.

External Factors: (Uncontrollable)

Competition: this means the availability of substitutes, which would result in the price
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Adidas is known as the “brand with the three

stripes”, making it a distinctive and widely recognized brand. Hence, Adidas is able to set its

price at their own benchmark. This is the most instinctive type of competition market, and

Adidas is classified under this as their products require an enormous amount of framework

and discussion. Such examples would be the ‘Adidas Spring Blade’ and ‘Adidas Originals’.

Due to its unique features, other competitors in the market have yet to come up with

similar products. Monopolistic Competition is another competitive market that would cause

an impact on the pricing decision of the organization. Monopolistic competition has many

competitors competing on both price and non-price factors such as product features and

advertising. One of Adidas biggest competitor is Nike. They have been competing and

producing similar products in the market. Hence with unique products that belong only to

Adidas, Nike would have to come up with more innovations to ensure competition is still

fresh and this allows Adidas to have an advantage. Through their advertising campaigns

with celebrities, this allows Adidas to be even more widely established as a brand

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