Advertising and media in the marketing environment Lab Report

Advertising and media in the marketing environment - Lab Report Example The company is headquartered at Herzogenaurach, Germany. The company was founded by Adolf Dassler in the year 1924. Market capitalization of the company is $13.30 billion as of 2011 (Yahoo Finance, 2012). Porter Five Force Purchasing Power of Buyer Buyer power in the industry has weakened due to individuality of customers. Individual consumers lack in financial strength to affect business strategy of large manufacturers such as Nike, Puma, Adidas and others. Buyer power is low due to following factors: (Source: Marketline, 2012) Power of Supplier Sportswear industry is complemented by three inter connected themes such as innovation, research & development and adoption of style trend. In many cases it has been observed that Nike and Adidas design their sportswear in counties like USA, UK and other developed countries but subcontract manufacturing process to developing countries such as China, India and South Korea. Partial control over forward and backward integration of value chain d ecreases power of retailer but increases power of supplier hence it can be said that supplier power is strongNew entrants need to form a new company and diversify their business in order enter sportswear industry. New entrants need to establish strong distribution channel and sustainable logistics framework. New entrants need to invest huge amount of money on setting up logistic division while revenue growth is not very exciting. Risky condition of business and high start up cost have created high entry barrier for new entrants. (Source: Marketline, 2012) Threat of Substitute Online retailers such as eBay, Amazon has emerged as major competitor for brick and mortar sportswear retail channels. In many cases it has been observed as e-business companies are selling branded sportswear to customers without mentioning mark-up difference and technical knowhow. This situation creates negative image about the brand such as Adidas, Nike or Puma in the mind of consumer hence it can be said tha t threat of substitute is high. (Source: Marketline, 2012) Competitive Rivalry Companies like Nike, Puma and Adidas are trying to compete with each other at every aspect of sportswear products. Presence of online and offline retailer has intensified the completion while switching cost is low for customers because branded companies do not provide incentives to them. Based on the situation it can be inferred that competitive rivalry is high in the industry. (Source: Marketline, 2012) PESTLE Political Environment Adidas need to work in coordination with Political Action Committee (PAC) in order to handle government issues of particular country (Curtis, 2010, p. 43). Economic The world is going through economic crisis such as Eurozone sovereign debt problem and recession. These two events have dampened the growth of economy (Lynn, 2010, pp. 94-104). Adidas need to