Calveta Dining Services, Inc.: A Recipe for Growth HBS Case study Solution

Case- On a June day in 2009, Frank Calveta, president and chief executive officer of Calveta Dining Services, Inc., struggled as he prepared to present growth strategies to his father, founder and former CEO Antonio Calveta. Calveta was a $2 billion, privately held firm that managed food service operations for nearly 1,000 senior living facilities (SLFs) in the United States. When Antonio retired in 2007 after 35 years of leadership, he named his eldest son, Frank, CEO and told him to double the company’s revenues within five years. Two years in, Frank confided, “I can’t let my father down. I can’t abandon the special company culture we have or risk our reputation for quality food service. But after two years in this job I still don’t have a credible strategy for meeting those two promises and also growing the business as aggressively as my father wants.”

Calveta Dining Services, Inc.: A Recipe for Growth HBS Case study Solution- 

• Core issues related to the case
• Analysis of data for the root cause/s of the problem
• Probable solutions based on the root cause to solve the problem

CALVETA

Core issues related to the case:

·        To maintain the reputation it had earned over a period of time and a Fear of losing Calveta’s solid reputation as a leader in the health-care sector due to expansion of business into different segments.

·        Conflicting objectives of preserving the company culture and achieving aggressive growth simultaneously.

·        To have well versed employees in the organisation who can strongly follow the Antonio way of doing things in the organisation.

·        Conflicts and a sense of confusions in decisions related to expansion and diversification of business into other segments and acquisition of GSD. Financial Problems in Expansion of business beyond the SLF segment to hospital segment in order to double the revenue of the organisation.

·        Financial Problems in Expansion of business beyond the SLF segment to hospital segment in order to double the revenue of the organisation.

·        Losing of contracts and rising of Customers’ dissatisfaction due to frequent changes in management and account managers at different facility centers.

Analysis of data for the root cause/s of the problem

Preserving the company culture and achieving aggressive growth were conflicting objectives Frank knew that organization already showed signs of strain, “and his sister and more than one of her colleagues on Calveta’s executive team agreed that would  rather save the culture than spread themselves too rapidly into new businesses.

Despite the growth of an aging population, and despite Calveta’s impressive business growth, it seemed highly unlikely to Frank and the executive team that the company could double its revenues in five years unless it branched out beyond the SLF segment.

And despite growth in the hospital sector, Hospitals were, in the aftermath of the 2008–2009 recession, facing cutbacks in equipment and service due to decreases in charitable donations, reduced government assistance, and declining patient-stay lengths. Calveta expected such cutbacks to result in hospital closings, possibly reducing the potential market size.

Frank feared that Calveta’s solid reputation as a leader in the health-care sector might become threatened as its relative size shrank versus the competition.

Considering the financial challenges of getting into the hospital segment, the upbeat angles seemed a bit pie-in-the-sky as Calveta shouldered little debt. Because the company had been able to fuel its growth through prudent cash flow management, it did not need to rely on debt to finance kitchen equipment and renovations. If Calveta chose to pursue growth through acquisition, however, its no-debt philosophy would almost certainly need to be set aside. Calveta’s unique culture also served as an impediment to growth through acquisition.

Lost contracts typically resulted from changes in management at an SLF; only rarely did an SLF drop Calveta citing poor performance. For several years, Frank Calveta had heard about such defections, and he believed that the vice president of account management had been dealing with them effectively. But when he’d begun reading the company’s annual client satisfaction survey results from the perspective of the CEO’s chair, Frank recognized that client frustrations with employee progression policies had worsened.

Frank felt that the organizational structure of the firm was partly to blame for the customer dissatisfaction. While he’d been CFO, Frank had expressed concern that the design of the organization might have gotten knocked out of alignment as the company grew, but little had been done as Jennifer, speaking as COO, had disagreed with Frank. But Upon reading the latest surveys, Frank decided to have another look at the company’s organizational chart.

Frank also worried about a rising diversity in the skills of area and account managers. It was becoming harder to find operations managers who fully embraced Antonio’s Way which can pose a problem in maintaining core values of the organisation. Recent development in the organisation has posed a rising diversity in the skills of area and account managers and new joinees lacked the industry experience.

As per Jenifer, GSD from Great Southwest don’t have the best reputation. They’ve had labor problems and substantial turnover in their management ranks.  However, Frank was confident that maybe Calveta’s best managers could slowly move GSD’s culture toward Antonio’s Way.

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Probable solutions based on the root cause to solve the problems:-

Looking into scenario and objectives of the organisation, Calveta must opt for expansion of its business in different business segments particularly hospital segment as they are leaders in health segments. As the statistical data also proved that there is a sharp increase in aging population and 75 % market remained untapped. So Calveta must exploit this opportunity and target to achieve the goal of doubling its revenue in five years. Though Company have had no debt in its financial structure but in order to ensure its growth and expansion plan they must lever its financial structure and take advantage of reputation of company in getting debts from the market. Instead of hiring fresh graduates, company should focus on hiring those candidates who are ready to work in ANTONIO’s way, a work culture set by the founder of the company and the company should train them accordingly in order to maintain in reputation in the market. The company should go for acquisition of GSD as this company can help in expansion of the business in great southwest, the place where Calveta is not operational. The problems of labor problems can be sorted out by hiring competent employees and training them to cater the needs of company.

Case: Countering the Dreaded Supply Chain Bullwhip Effect in a COVID-19 World case study solution 1. “Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?” Explain the bullwhip effect using this example. Give a description of events that you suspect will happen through the supply chain of toilet papers when such an event happens.2. Identify two other commodities which have witnessed an event of panic buying during the ongoing COVID-19 pandemic. Do you think a bullwhip effect can be expected in their cases? Justify your answer. 3. “Building bridges with other supply chain partners is critical to preventing the bullwhip effect.” Read from the case study and explain how the given statement prevent bullwhip effect scenarios.

Case: Countering the Dreaded Supply Chain Bullwhip Effect in a COVID-19 World

Case Study Questions

1. “Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?” Explain the bullwhip effect using this example. Give a description of events that you suspect will happen through the supply chain of toilet papers when such an event happens. 

2. Identify two other commodities which have witnessed an event of panic buying during the ongoing COVID-19 pandemic. Do you think a bullwhip effect can be expected in their cases? Justify your answer. 

3. “Building bridges with other supply chain partners is critical to preventing the bullwhip effect.” Read from the case study and explain how the given statement prevent bullwhip effect scenarios.

Case Study - Countering the Dreaded Supply Chain Bullwhip Effect in a COVID-19 World

By shifting from a forecast-driven ordering system to one that enables high levels of visibility and information-sharing, companies can effectively avoid the dreaded “bullwhip effect” in their supply chains.

The “Bullwhip Effect”

A distribution channel phenomenon in which inaccurate forecasts quickly turn into supply chain inefficiencies, the “bullwhip effect” refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.

With COVID-19 taking its toll on supply chains around the world, more companies will experience this detrimental impact, which was originally identified back in the 1960s and then weaved into supply chain vernacular in the 1990s.

That’s when Hau Lee of Stanford University told a story about Volvo to illustrate the bullwhip effect’s impact on the supply chain.

Suffering a glut in “green” cars at the time, Volvo’s sales and marketing developed a program to move its excess inventory.

The program helped raise interest in the cars, but Volvo’s manufacturing department was unaware of the campaign and wound up reading the increase in sales as an indication of a growing demand for green cars. In response, it ramped up production, thus adding to the glut and creating a bigger issue for the car manufacturer.

“A supply chain is a complex group of companies that move goods from raw materials suppliers to finished goods retailers,” Osmond Vitez writes in The Bullwhip Effect in Supply Chain.

“These companies work together when meeting consumer demand for a product; supply chains allow companies to focus on their specific processes to maintain maximum probability. Unfortunately, supply chains may stumble when market conditions change and consumer demand shifts.”

What Causes the Bullwhip to Snap?

According to Vitez, the bullwhip effect surfaces when changes in customer demand push organizations to order more goods to meet the new demand.

From there, the bullwhip effect flows up the supply chain - from the retailer to the distributor to the manufacturer and right through to the raw materials supplier. In many cases, the problem can be traced back to forecasting errors.

For example, when companies introduce new products, they estimate the demand for goods based on current market conditions.

“Most companies in the supply chain order more than they can sell, attempting to prevent shortages and lost sales of goods,” Vitez writes, noting that this excess inventory begins to increase or decrease during the normal market fluctuations of supply and demand.

“In the bullwhip effect, demand for items amplifies up a supply chain like the crack of a whip. Imagine a bullwhip - a tiny, swift flick at the whip’s handle results in an uncontrolled, widely snapping motion at its tip,” Amy White describes in The Causes and Impact of the Bullwhip Effect on Supply Chains.

“Similarly, a simple action such as a manager ordering products at a store can result in unpredictable effects at the top of the supply chain like a manufacturer or wholesaler.”

This variable and unpredictable demand leads to significant supply chain inefficiencies that include (but aren’t limited to), buying and storing excessive inventory, lost revenues, ineffective transportation, missed production schedules, out-of-stock products, poor customer service, and higher costs for consumers.

Addressing the COVID-19 Bullwhip

In the wake of the COVID-19 health crisis, images of empty store shelves have triggered a few things: even more panic buying, a social media frenzy of hoarder shaming, and even gang activity linked to toilet paper theft in Hong Kong.

“For many supply chain leaders, this presents the enormous and potentially costly challenge of dealing with the bullwhip effect” Jenny Reese Senior Manager, Solutions Marketing at Kinaxis

“For many supply chain leaders, this presents the enormous and potentially costly challenge of dealing with the bullwhip effect,” Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?

“When major swings in inventory occur from panic buying and hoarding, the impact of this sudden demand is magnified as it moves upstream in the supply chain (similar to the way a bullwhip’s thong amplifies in a wave as it moves away from the handle),” Reese writes, noting that little or no visibility into demand patterns and limited understanding of demand drivers are the primary culprits in this scenario (of course, COVID-19 came with little early warning, hence the paper goods shortage).

“How long can this boom in freight volumes last?” FreightWaves’ Daniel Pickett asks. “I have to imagine we are seeing a one-time pull of inventory as pantries, garages, and freezers are filled. Inevitably, the shelves at home will be full, and we will see a ‘demand hangover’ in grocery retail and trucking.”

Building Bridges with Partners

For companies that want to avoid or counter the bullwhip effect within their own supply chains, the answer lies in accurate, real-time demand information across the supply chain.

To achieve that, companies must shift from a forecast-driven ordering system to measures that enable information-sharing with the supply chain partners and provide complete visibility of the actual customer demand.

Using real-time inventory and shipment information, companies can effectively minimize the risk of disruption while moving more inventory at a predictable, reliable cadence.

In How to reduce the bullwhip effect, George Lawton tells companies to educate themselves on the causes of the bullwhip effect, build better trust across supply chain partnerships, consolidate supply chain data (i.e., aggregate efforts across suppliers), and gain an understanding about partner processes. “Building bridges with other supply chain partners is critical to preventing the bullwhip effect.”

Case Study Solutions

1. “Jenny Reese points out in Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper?” Explain the bullwhip effect using this example. Give a description of events that you suspect will happen through the supply chain oftoilet papers when such an event happens.

A small change in downstream demand at consumer level causes significant change in upstream demand closer to manufacturer. This phenomenon in supply chain refers to bullwhip effect where a small change in consumer demand causes a big change in inventory of each participant and this change tends to become bigger and bigger as one moves upstream from inventory of finished goods to inventory of raw materials in supply chain system leading to supply chain inefficiencies¹. Bullwhip effect spurs due to inadequate demand forecasting, unexpected change in demand of customers and buying patterns as experienced during COVID 19 crisis as in case of toilet paper and other commodities.

Assuming one toilet roll paper required by one person per week and counting four members in a family leading to 4 toilet roll paper per week per family is general demand of toilet roll paper universally and in case one buys 100 rolls of toilet paper due to Covid 19 pandemic which S/ he generally does not buy in normal situation will impact supply chain of toilet roll paper adversely and hinder the process of forecasting actual demand in the market thus increasing overall cost, reducing profitability, stock out and even excessive inventory and huge volatility in supply and demand of toilet roll papers. Initially it will trigger retailer to place more number of units to be ordered to its wholesaler than usual order units and in turn wholesaler will demand more number of units from distributor and this will force distributor to demand an increase in production of units from producers. ² It will causes massive miscommunication among participants of supply chain as the demand for products increase and decrease exponentially in a short amount of time. ³ It will result in a volatile and unbalanced manufacturing environment where participants of supply chain will struggle to intelligently predict demand as a result of panic buying behavior. ⁴ As suppliers are fulfilling the demand of yesterday, the demand of today could be completely different from that of tomorrow. Retailers have to limit on number of units of toilet paper given to one customer at one time. The customer will face issue of stock outs in retail outlets. The retailer will lose sales and customer service will be deteriorated.⁵ Wholesalers and Distributors will be messed up in determining who should get how much in this shortage, and manufacturers will be unable to increase production instantly and overwhelmed with sudden and unanticipated spikes in demand.

In case people buys 100 toilet roll paper due to panic buying and situation prevails for few days  demand will increase abruptly and retailers will order more quantity. Sales will go high for few days while industry will supply what it could. When retailers will give new orders to all suppliers of toilet roll papers they will recreate new demand forecasting based on past days sales. Since all retailers will be ordering at the same time, they will order more units to wholesalers and wholesalers will follow the same pattern and order more units from their distributors and distributors will be demanding more units from producers. Thus, toilet roll paper producers will also increase their orders from their raw material suppliers and increase their production. However, since toilet paper usage at home did not significantly increase during this period, sales will decrease tremendously. By this moment retailers will realize the new sales level of toilet roll papers and thus cancel or reduce their most of open orders thus inventory matching at new sell out level. Same will be done by wholesalers and distributors at their end. Manufacturers of toilet roll papers will struggle finding new buyers for their finished products once orders will be cancelled form distributors’ end. They will also have to revise their entire production schedule, MRP, headcount, etc. Producers will also cancel their surplus orders from their raw material suppliers who were also preparing for an increased demand thus creating a chaos in whole supply chain system. Thus bullwhip effect will generate huge losses to all participants of supply chain in terms of stock out , increase in holding cost, excessive inventory investment, ineffective capacity planning & production scheduling , transportation cost, poor customer services and loss in revenues. ⁶

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2.Identify two other commodities which have witnessed an event of panic buying during the ongoing COVID-19 pandemic. Do you think a bullwhip effect can be expected in their cases? Justify your answer.

During Covid 19 outbreak, panic buying has been seen for grocery items, pharmacy and hygiene products such as sanitizers, face / surgical masks and disinfectants. In U.S., Sales of rice have been increased by 50 % and canned meat by 40 %. Sales for peanut butter, pasta, beans and bottled water have increased significantly as a result of panic buying during ongoing Covid crisis. Online purchase of cold, flu and cough products have increased by 198 % and online purchase of non perishable products such as canned goods have been increased by 69 % in US.⁷ This event of panic buying is unsustainable and causes scarcity in the market creating inaccessibility of necessary commodities for those who are in need.

This type of surge in demand and change in buying pattern impacted supply chain adversely and gave rise to phenomenon called bullwhip effect in supply chain system of necessity products, grocery items and pharmacies products and other commodities where stockpiling has been done by customers due to fear of stock out. The demand shocks and volatility created by COVID-19 have caused extreme bull whip effects on products taken into consideration, that resulted in an unpredictable and unstable manufacturing environment where suppliers struggle to intelligently predict demand as a result of panicked buyer behavior. Panic buying forces supply chain participants to increase demand of such products from suppliers and suppliers to increase production capacity to meet such demand which was not there before. Small changes in demand creates wider demand changes at upstream level in supply chain resulting in inability to provide products to go downstream to retailers and meet demands of customers. Bullwhip has rippled up and down supply chain of grocery, pharmacy and hygiene products whose demand has been intensified due to panic buying. Many times demand due to panic buying does not reflect actual consumption.⁸ For example; increase in demand of surgical mask is mix of increase in consumption and fear of stock out however demand for rice is an example of panic buying only. No one is consuming more rice so increase in demand does not reflect increase in consumption of rice. Consumption of many products remained constant but due to temporary increased demand, supply has been increased leading to surplus of such products in market and searching customers for excessive surplus products in the market by suppliers.  During March and April in Singapore, eggs were missing in supermarkets and online stores but in month of June distributors had thrown away more than 250000 eggs due to oversupply. This movement from deficit to surplus is a classical example of bullwhip effect where inadequate forecast and little or no visibility of demand in a volatile market by supply chain participants led to face situation of surplus or excessive stocks and suffer such loss.⁹ Bullwhip effect caused supply chain disruptions of commodities taken into consideration due to panic buying and inefficiency of supply chain participants in predicting adequate demand to combat impact of bullwhip.

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3.“Building bridges with other supply chain partners is critical to preventing the bullwhip effect.” Read from the case study and explain how the given statement prevent bullwhip effect scenarios.

Demand forecasting and sales estimation are usually done separately by participants of supply chain. When retailers notice a slight increase in demand of a certain product, they order extra units in case the small upturn in sales indicates a trend.  When wholesalers receive the order from retailers and distributors from wholesalers and see an uptrend in demand, they make their own forecasts which create chaos because they are not based on real time sales figure. When producers get the orders and analyse it, perceived increase in demand becomes more exaggerated leading to bullwhip effect. In order to avoid this situation, retailers must share information on demand pattern of products to its upstream partners so that participants of upstream chain get necessary data for predicting accurate demand of products future and adjust inventory on the basis of real time demand information and thus avoid losses and counter bullwhip. Participants of supply chain must have full visibility in projected demand on real time basis so that they can secure inventory for building safety stocks. Clear picture on demand and supply of products will help supply chain system to manage demand signals more accurately and promptly, ensures faster response to customers and smoothen effects of demand variation and thus overcoming impact of bullwhip in supply chain system.¹⁰
Instead of batching orders at certain times of month or year which is less time consuming and cheaper, manufacturers should focus on receiving steady stream of orders which will reflect actual day by day demand of products. Higher administrative cost involved in this system can be reduced by shifting from manual ordering system to software based ordering system and transportation costs may be  reduced by collaborating with other suppliers to consolidate loads to achieve economies of scale in shipment and transportation cost. ¹¹ Managers should also work to understand demand patterns throughout all stages of the supply chain by sharing information and collaborating with other managers of different supply chain participants. All participants of supply chain should know what the final customer needs, and are aware of the outstanding inventory of their suppliers and customers. There must be effective communication and sharing of information between internal departments and throughout supply chain system to avoid discrepancies in inventory management, ordering and shipment. Communication with customers is utmost important to have real time information on demand of products and thus match need of customers in contingencies easily with no stock outs or inventory surplus.

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References:

1. “What is Bullwhip effect” retrieved from https://ibf.org/knowledge/glossary/bullwhip-effect-42.

2. Michael Ignatiadis, Head of Supply Chain & Logistics Solutions (July 10, 2020) Too many eggs: Supply chain shocks arise from COVID-19 retrieved from https://www.jll.co.in/en/trends-and-insights/investor/too-many-eggs-covid-19-turns-focus-on-the-bullwhip-effect

3. Mike Hockett (Jul 16th, 2020) The Pandemic's Bullwhip Effect on Food & Beverage Inventory retrieved from https://www.foodmanufacturing.com/supply-chain/article/21140181/the-pandemics-bullwhip-effect-on-food-manufacturers-inventory.

4. Mahesh Rajasekharan (June 8, 2020), The COVID-19 Supply Chain Impact – Avoiding the Bullwhip Effect retrieved from  https://www.sdcexec.com/sourcing-procurement/article/21134023/cleo-the-covid19-supply-chain-impact-avoiding-the-bullwhip-effect.

5. Jenny Reese (March 24, 2020) Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper retrieved from Preparing for COVID-19 and the bullwhip effect: What happens to the supply chain when you buy 100 rolls of toilet paper.

6. Tiago Horvath. LATAM Supply Chain Development Manager at Nestlé Purina Latam (April 20, 2020) retrieved from https://www.linkedin.com/pulse/great-lockdown-supply-chain-bullwhip-effect-tiago-horvath/?articleId=6657742452385996800.

7. Shweta Sarma (April 2, 2020). The impact of Panic Buying on the Retail Supply Chain retrieved from https://blog.locus.sh/impact-of-panic-buying-on-the-retail-supply-chain/.

8. Sam Wood (16 March 2020). The damage panic buying does to supply chains and retailers retrieved from kent.ac.uk/news/society/24684/expert-comment-the-damage-panic-buying-does-to-supply-chains-and-retailers.

9. Michael Ignatiadis, Head of Supply Chain & Logistics Solutions (July 10, 2020) Too many eggs: Supply chain shocks arise from COVID-19 retrieved from https://www.jll.co.in/en/trends-and-insights/investor/too-many-eggs-covid-19-turns-focus-on-the-bullwhip-effect

10. TRACC (17 April 2020). Demand variability: 5 action steps to take in a time of crisis retrieved from https://traccsolution.com/blog/demand-variability/.

11. Whang and Lee (1995): Eliminating the Bullwhip Effect in Supply Chains retrieved from https://www.gsb.stanford.edu/insights/whang-lee-eliminating-bullwhip-effect-supply-chains

Adidas Marketing case study solution: Adidas Marketing mix, Adidas website SMART Analysis, Adidas SWOT Analysis, Adidas Brand Identity, Adidas Digital Marketing Communication, Three Adidas Collaborations, Adidas Brand Elements & Evaluation, Adidas Brand positioning, Nike versus Adidas Brand comparative analysis

 Case Snippet: 

Identify and evaluate the strong and weak features of a website as marketing tool of a given company

Identify and describe the targeted customers group/s of a given company

Examine branding strategies of a given company (Adidas)

Explain the brand image, brand identity and brand relationship of a given company (Adidas)

Case Questions:

Part A:

1. Identify and evaluate the strong and weak features of a website as marketing tool of a Adidas company.

2. Identify the customers being targeted by the website of Adidas by explaining with suitable evidence and examples. Describe one of the groups being targeted.

Part B

1. Identify how Adidas brand is currently expressed in the company website of Adidas you have chosen. Evaluate elements used to assemble the brand.

2. Explain the brand image of the company (Adidas) you have considered. Is there a gap between your brand image and the brand identity which is portrayed on the website? Explain your reasons.

Marketing Mix of Adidas Website 

SMART Analysis for setting objectives of website of Adidas 

SWOT Analysis of website of Adidas Adidas 

Digital Marketing Communication 

The three Adidas Collaborations 

Brand Element of Adidas 

Evaluation of Brand elements on Adidas website 

Brand positioning of Adidas on website 

Adidas Brand Identity

Nike versus Adidas Brand comparative analysis  

1. Identify and evaluate the strong and weak features of a website as marketing tool of a Adidas company.

About Adidas	·         Founded in 1949, Adidas AG is the largest sportswear company in Europe and second largest in world. ·         Revenue € 23.6 Billion and net profit € 1.9 Billion (2019).
Brand Mission	To become best sports brand through design, build up and sale of best sports products with best service and experience to its customers.
Products	Athletic shoes, apparel and sporting goods and accessories.
Website	www.adidas.com
Reasons for selecting Adidas	Adidas is a multinational company engaged not only in offline sales but also through its website. Analysis will be more goal oriented and specific for this assignment.

Marketing Mix of Adidas Website

Online Product

Products are categorised on the basis of men, women, kids and sports shoes, clothing and accessories. Customisation of products is also offered by the website. Products have also been displayed brand wise. Features, description and all other necessary information on products along with product images have been exhibited to keep customers informed to meet their expectations. Mega offers and discounts are being displayed on first page of website.

Online Price

Price of all products is mentioned along with products.Customers can navigate through website and search products of their choice, add products to cart, order online and also cancel the order anytime before product is dispatched directly using the website.

Discounts and offers are being displayed along with product display. Method of payments offered on website is through pay on delivery, credit & debit card, net banking and other UPI apps. Option of payment in instalments is also offered to customers through EMI.

Online Place

Products are being shipped to all parts of the country including remote areas. Website has also option to order online and pick products from stores for its customers. Billing address and shipping address can be same or different as per the choice of the customers. Products are generally shipped and delivered within 3 to 15 days of time. In case of customised products delivery time ranges between 1 month to 3 months.  Website also offers fast / emergency delivery system but charges extra for the same on request of the customer. Products are being shipped through courier partners of Adidas.

Online Promotion

Adidas has dedicated team of SEO, SMO and web developers and designers to manage its website. It uses Google analytics tools and other web tools to keep an eye on traffics, returned customers, customers who have added products in cart but not purchased. It regularly conducts online survey to enhance customer experience on its website. It makes use of Google paid services and Facebook paid services to promote its products online. Company performs press release on regular basis and also offers feedback and product review option to customers to improve customer interactivity and experience on website.

Target Customers & Intended positioning

It targets young adults, adults as well as children who have passion for fitness & sports 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

SMART Analysis for setting objectives of website of Adidas

Specific	·         E commerce sales to rise by 35 % in 2020 with revenue target of 4 Billion Pound. ·         Reduce delivery time by 2 days for normal orders and 7 days for remote areas within 6 months. ·         Shorten period of customised products delivery by one fourth time than current time period within one year.
Measurable	·         Adidas maintains customer relationship management software to track record of sales, tracks new entrants on website initiating purchase, tracks shipping and delivery time period and has vendor management system to track record of manufacturing and delivering customised products and other products.
Attainable	·         It has speed factories which can help to reduce manufacturing time of customised products. ·         Efficient courier delivery management system and inventory management can help to reduce shipping period in remote areas and normal orders. ·         In 2019, E Commerce revenue sales were up by 34 %.
Realistic	·         Reducing shipping time will help Adidas to beat its competitor Nike. ·         Increase in E Commerce sales will help Adidas to achieve its overall sales growth of 8 % in 2020. ·         Reduction in time of delivery of Customised products will help it to become global leader in the sporting goods industry which is ultimate mission of Adidas.
Time-based	Increase in sales revenue is targeted to be achieved within one year, shipping period for normal and remote areas to be 6 months and decrease in delivery time of customised products to be achieved in one year time frame.

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SWOT Analysis of website of Adidas

Strength	Dedicated team to manage the operations of website to enhance customer experience. Order online and collect from store. Easy Cancellation of order and refund of money even after shipment. Return of product within 30 days. App to support browsing and conduct purchase through smart phones. Prompt Online customer support to help on queries of customers. Content updates on regular basis. Detailed information of products.
Weakness	Longer delivery time in remote areas. Long waiting time for customised orders. Delay in delivery of products.
Opportunity	Tapping of new markets and customers in areas where Adidas is not physically present. Design and development of innovative products to attract more and more customers.
Threats	Competitors like Nike have also entered into E Commerce and offering customisation. Local laws such as varying tax policies prevailing in other countries with regards to E Commerce. Customers’ can’t review products on thee website.

 Adidas Digital Marketing Communication

Informativeness

Website contains adequate information on products being displayed and are regularly updated to enhance customer experience.

Usability

Navigation on website is very easy from point of searching a product to check out. Process has been kept very simple to avoid confusions and anxiety while navigating from one product search to another.

Quality of information

Information on website is apt to its users as it shares minute details regarding manufacturing material to its delivery to the customers.

Commercial transaction

Website offers easy to process order, make payment either online or pay on cash, delivery tracking mechanism and easy to cancel order, get refund and return policy of 30 days.

Company policies

Price inclusive of taxes is being displayed on website. Packaging and shipping are free of cost.

Business Environment

China US trade war and US imposition on tariffs can have negative impact on sales.

Web Based Commercial Communication

Interactivity

Online chat support to offer two way communications through website.

Creators club membership program to strengthen relationship with customers.

Flexibility

Cancellation of order anytime, change of shipping address, replacement of products, and return within 30 days of purchase is some of the features to promote flexibility.

Addressability

One to one support to its customers through online support, emailing to update on new products and offers, customisation of products to offer personalisation to its customers.

Accessibility

Website remains operational 24x7. Online Chat support is available during office hours. Orders can be placed anytime.

2. Identify the customers being targeted by the website of Adidas by explaining with suitable evidence and examples. Describe one of the groups being targeted.

Adidas through its website uses demographic and psychographic market segmentation to target customers of its products. Being a sports products company, it targets male and female customers of age between 14 to 40 who are athletes and fitness freak. The company is focused on targeting and strengthening its brand with the next generation of athletes of age of 14 to 19 years. However, Adidas is also popular among people of age between 40 to 65. It offers different sub brands to target different customer segments like Adidas Originals, Adidas Neo, Porsche design, Stella McCartney.

Psychographic segmentation is based on socioeconomic and personality variables of customers which are done using Niche pricing strategy and superior quality products of Adidas. Thus it targets upper middle class consumers to affluent consumers by premium positioning of its products among consumers.

To target its customers it has defined a segmentation grid which comprises of comprises six key quadrants Male Athlete, Female Athlete, Young Creator, Street wear Hound, Amplifier, and Value Consumer. Within this grid, it is key to win the most influential consumers, defined as the creator archetype. Major categorization of products have been done on the basis of male, female, kids and A separate sports category with on the website directly targets athlete customers to navigate products in that section. Navigation on the basis of male, female and kids category is meant to segment customers in small group on the basis of gender and age to target customers who are into sports or fitness lover.

Exploiting opportunity of  changing social proposition of and growing culture of remaining fit and healthy, Adidas website is targeting customers of all age groups by displaying products under Male, female and kids category. Product display on the basis of brand categorization is done to easily locate the product and prompt buying decisions. Brand such as Adidas NEO is meant for kids products which are price competitive in market. Customisation of products offer competitive advantage as well as company’s thrust to remain innovative and create best and new as per the requirement of the customers to remain customer obsessive and offer great experience to them.

Potential Barriers Adidas Company is facing in implementing its idea:

·         Pricing issue- Products of Adidas are expensive.

·         Stiff competition from its rivals such as Nike, Armour, Puma.

·         Availability of Fake and duplicate Adidas products in market.

·         Delay in delivery due to shortage of inventory

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Part B

1. Identify how Adidas brand is currently expressed in the company website you have chosen. Evaluate elements used to assemble the brand.

Expression of brand on company website:

Adidas Brand

To be best in world in sports brand through design, build up and sale of best products and services empowered with advance technology and innovation to share best consumer experience.

Brand Identities:

Adidas Sport Performance

Focus: Products with advance technology and innovation

Group targeted: athletes and sports persons with a desire to remain strong smart, cool and excellent in their performance. It also targets customers who are inspired by fitness and sports.

Adidas Originals

Focus: Products that set trends including life style products.

Group targeted: consumers willing to express their individuality.

Adidas Neo

Focus of Adidas NEO:  Stylish, fresh and young Products related to sports, Fashion and Lifestyle

Group targeted: Teenage consumers between 14 to 19 years.

The three Adidas Collaborations

Y-3, Porsche Design, and Stella McCartney focus on extraordinary products aligned with most updated technologies and top fashion designers.

Brand Element of Adidas
Criterion	Brand Name & URL	Logo & Symbol	Characters	Slogans & Jingles	Packaging & Signage
Memorability	Easy and simple to memorise and recall.	Three stripes logo with Adidas tag is appealing helpful in easily recalling products of Adidas.	Useful in recalling brand name and its products.	Helpful in recognising brand	Makes easy to recognise products of Adidas.
Meaningfulness	Strong, positive and high quality	Represents sports challenges athletes face.	Performance based products as tools to face challenges	Convey mission of Adidas to become best sports brand in the world.	Convey association of brand with its customers.
Likability	Offer verbal imagery and mission of brand.	Three stripes using black and white colour depicts simplicity and likability.	Depicts boldness and strength.	‘Impossible is nothing’ enhances motivation of customers specifically sportsperson.	Energises customers through its visual and verbal appeal.
Transferability	Easily transferable through sub brands inclusion.	Smart and excellent.	Unlimited additions in product ranges.	Promotes innovation and implementation of technology to adapt changes	Very good.
Adaptability	Difficult Near to impossible.	Modified multiple times in the past to adapt changes.	Responsive brand in redefining itself.	Modified to meet new requirements.	Redesigned multiple times in past.
Protectability	Fully protected through acquisition of domain name	Fully protected through trademarks and copyright registration.	Strong, excellent and comprehensive.	Protected through copyrights.	Can be copied.

Evaluation of Brand elements on Adidas website

Memorability

Since name Adidas has been derived from its founder, Adi Dassler a strong, versatile, enthusiastic and top quality shoe maker, the brand also depicts these three features accompanied with innovation and technology. The three striped with black and white logo along with its website name is not only easy to remember but also simple and catchy.

Meaningfulness

Brand logo signifies challenges and products displayed on website are considered as tools to overcome those challenges by athletes and fitness lovers.

Likability

Brand likability through website is visible through increase in its E commerce sales by 34 % in 2018. Also Logo of brand characterises boldness and strength to the consumers’ thus increasing likability.

Transferability

Website can easily incorporate sub brands and new products as per the design and resemblance of features into it, thus reflecting easy transferability through technology and innovative products.

Adaptability

Website URL may not be modified, however website is adaptable to changes to environment. Adidas logo went through multiple modifications since its inception and its mission supports adaptability.

Protectability

Adidas has copyrights and trademark rights for its URL, Logo and slogans & patent rights for design of products and products. Hence company has protected its brand elements in all respects.

 

4. Explain the brand image of the company you have considered. Is there a gap between your brand image and the brand identity which is portrayed on the website? Explain your reasons.

Adidas Brand identity
1. As a product	Product Scope- to cater needs of athletes, sports persons and health & fitness freak at competitive price. Product attributes- innovative design to match customer expectation, long lasting, customised, size fit for all, eco friendly raw material used, Quality- Unmatched quality embedded with innovation and advance technology sports products much ahead than its competitors. Users- athletes, fitness and health conscious people of age group between 14 to 65. Uses- fitness and sports apparels shoes and accessories to deliver high performance in sports. Country of origin and year of establishment- Herzogenaurach, Germany, 1924.
2. As an organisation	Organisation attributes- To deliver most innovative and best technology sports products to offer best consumer experience with a motive to become best sports brand in the world. Local versus global- Multinational brand with presence in more than 160 countries worldwide physically and all around the globe through its Ecommerce website and distribution network.
3.Brand as a Person	Personality- 1. Sincerity- Real, original, honest, genuine 2. Excitement- Daring, trending, imaginative, independent, unique, adventurous 3. Competence- Reliable, successful, technical, confident, and efficient 4. Sophistication- Upper Class, smooth 5. Ruggedness – tough, strong. Brand Customer relationship - committed to providing premium retail experiences to consumers with executions that connect, engage and inspire them. Brand strives to build a strong image, trust and loyalty with consumers through its brand strategy of ‘creating the new’.
4. Brand as Symbol	Visual imagery & metaphors – Providing strength to accept challenges and overcome it. Brand heritage – Long lasting heritage with high brand value in market. Brand is 95 years old.

Brand positioning of Adidas on website:

Messages transmitted:

Product- Most innovative and best technology based sports shoes, apparels and accessories to offer best consumer experience.

Price- Competitive pricing for normal product launches and skimming pricing for unique and technologically advanced product launches.

Place – Shipment and delivery of products in all parts of the world including remote areas to create trust and loyalty among customers.

Promotion/ Communication- Slogan of Adidas ‘Nothing is impossible’ rejoice consumers’ strength and empower them to overcome challenges and encourages them to become effortless in what they do. It portrays itself as a creators’ sports brand through its website Regular discounts and offers are made to customers on the website to increase sales and web traffic.

Nike versus Adidas Brand comparative analysis

The major competitor of Nike on E Commerce Platform is Nike. Both more or less follow similar branding strategy to lure customers but Adidas has leveraged the Internet and E Commerce marketing and sale more aggressively than Nike. Nike’s Ecommerce strategy created a strong brand position of its products and leader in this market contributing to its success in this market. However, Adidas has revamped its branding strategy from being a minor insignificant player during 1998 to reach to second position in the industry. Thus, it can be said that Adidas has really worked hard in strengthening its brand position in market through its continuous effort of designing and developing innovative and highly advanced products for its consumers to win their heart and maintain long lasting relationship through enhancing customer experiences.

Brand image of Adidas as perceived by consumers

Adidas through its website and E Commerce business has been successful in understanding the customer’s needs and design and development of innovative and technological products that suits their requirements. Adidas has been continuously accelerating on graph of having strong brand equity among customers in terms of an innovative, reliable, brave, tough, independent, daring trending and unique brand delivering promising and long lasting sports products to customers.

Gap between Brand image and brand identity:

Adidas fails in portraying itself as a company whose pricing is competitive among rivals. Local competitors can exert tough competition when it comes to target customers who seek low pricing with similar features. It will become difficult to target those customers who decide their buying decisions on the basis of pricing of products. Hence company should also focus on manufacturing products to cater needs of such customers in order to remain competitive in market. 

Reference

Adidas Group. (2019). Adidas Annual Report 2019. Retrieved from https://report.adidas-group.com/2019/en/group-management-report-our-company/corporate-strategy/sales-and-distribution-strategy.html

Omer Khan. (2018). Retrieved from https://www.academia.eduv /19958453/Brand_ elements_ of_Adidas_and_Nike

Adidas Group (2019). Adidas Brand Strategy. Retrieved from https://report.adidas-group.com/2019/en/group-management-report-our-company/corporate-strategy/adidas-brand-strategy.html

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