Reebok 2012 Annual Report Download - page 204

adidas Group
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2012 Annual Report
Group Management Report – Financial Review
182
2012
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03.5
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Risk and Opportunity Report
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Strategic and operational opportunities
Marketing and communication opportunities
Given the diverse tastes and expectations of a highly fragmented
consumer market, there is a natural limit to the audience size a single
brand can appeal to. Our multi-brand approach provides us with the
opportunity to leverage the power of our brands in a more precise and
meaningful way
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SEE GROUP STRATEGY, P. 68. We are able to utilise the
combined strengths of each brand to compete for a higher percentage of
the total market, covering a greater number of demographics, consumer
needs and price points.
Advances in digital communication also offer significant opportunities
for our brands to engage with consumers in a deeper and more
meaningful way, and enhance our potential to build long-lasting
relationships and brand loyalty. The adidas Group constantly monitors
the latest developments and trends in communication technologies. The
emergence of social media and social networks is one such example
which is helping our brands increase their consumer reach. In this
regard, we are investing considerable resources to present the adidas
Group’s brands through a variety of social media platforms, such as
Facebook, YouTube or Twitter. This is reflected in our far higher growth
rate of fans and viewers on these different social media platforms
compared to industry peers. For example, the adidas Originals Facebook
page alone has attracted over 18 million followers, adding more than
six million fans over the twelve-month period. A key advantage of these
tools is that they allow our brands to engage in a direct dialogue with
our consumers. For example, by offering consumers the opportunity
to actively participate in brand campaigns or in the design and creation
of new products, we can generate a far superior brand experience. In
2012, we made substantial progress in developing and offering many
different mobile applications to our consumers. By the end of the London
2012 Olympic Games, adidas topped the PRINT Potential Rankings on
the London 2012 Social Scoreboard, which was devoted to ranking the
social media performance of the 25 Olympic sponsors. The research
highlighted that the adidas brand “#takethestage” campaign created
the best fan experience by telling the Olympic story in a new, exciting
and relevant way.
Another opportunity for the Group is the activation of promotion
partnerships with individual high-profile athletes such as Derrick Rose
or Lionel Messi. Working closely with these athletes on joint marketing
and product initiatives could, in addition to their on-field performance,
help establish them as true icons. Depending on their success and
popularity, as well as our ability to sign new future iconic partnerships,
this could generate additional sales for the Group via signature product
lines as well as increase brand equity.
We assess the potential impact of marketing and communication
opportunities as significant. Due to our strong portfolio of promotion
partnerships with world-class athletes in key sports, we regard the
likelihood that those opportunities materialise to such an extent in the
short term as likely.
Acquisition opportunities
Although the Group’s focus is on organic growth initiatives, we consider
acquisitions of smaller, fast-growing or innovative companies as an
opportunity to generate additional sales and profits. Furthermore,
acquisition opportunities may arise as a result of challenging macro-
economic and competitive conditions that could lead to financial distress
of companies which, while not as financially healthy as industry leaders,
possess certain assets that could help the adidas Group further improve
its business performance. However, we regard the potential impact of
acquisition opportunities only as minor and the likelihood that such
opportunities materialise as possible.
Personnel opportunities
Recruiting highly qualified employees, in particular for our own-retail
segment, may help us generate better than expected top- and
bottom-line results. For example, a reduction of the attrition rates in
our own-retail stores could increase conversion rates as well as store
productivity and also lead to lower expenses for recruiting activities.
In addition, successfully establishing a performance culture as well
as developing key talents across the Group may contribute positively
to sales and profitability improvements. As a result, we consider the
potential impact of such opportunities as significant, but we assess the
likelihood of an impact of such magnitude in the short term as unlikely.