Adidas, a leading sports brand known for its innovative and stylish products, has been in the market for more than 70 years. Over the years, the company has expanded its product range and penetrated various markets. However, as with any business, Adidas faces challenges in managing its product portfolio to ensure sustained growth and profitability.
To help with this task, Adidas has employed the BCG matrix to analyze and categorize its products. In this blog post, we will delve into the BCG matrix of Adidas and understand how it contributes to the company’s strategic management.
Introduction to BCG Matrix of Adidas
The BCG Matrix analysis is an effective business tool for analyzing Adidas’s product portfolio in terms of revenue generation. The matrix divides the products into four categories: Stars, Cash Cows, Dogs, and Question Marks.
Stars have high market share and high growth potential, while Cash Cows have high market share but slower growth.
Dogs have low market share and growth potential, and Question Marks have low market share but high growth potential.
In implementing business level strategies, the BCG Matrix will guide Adidas in prioritizing its different product lines. By identifying star products requiring investment and cash cow products that generate income, Adidas can effectively allocate resources to achieve a competitive advantage.
BCG Matrix of Adidas
Adidas has several products that belong to the stars category in the BCG Matrix analysis. These are products with high market share and high growth, indicating that they are generating substantial profits and have a promising future.
These products are likely to continue to be popular in the market, and Adidas can capitalize on their success by investing in them further.
Adidas apparel is one of the examples of Stars as it has a significant presence in the market and has a constant demand for it.
Adidas also has a successful product line of running shoes, which is considered as Stars in the matrix due to its high market share and high growth rate.
Another example of Stars in the product line of Adidas is the Ultraboost shoe, which has gained a lot of popularity among athletes and has made its mark in the competitive market.
Overall, these products have constant demand in the market and contribute a significant portion of revenue to the company.
Adidas has several products that fall under the category of cash cows in the BCG Matrix analysis. These products are high market share products that generate steady revenue for the company with little need for further investment.
One of the cash cow products for Adidas is its Originals line, which includes classic footwear designs. Another example is the brand’s soccer cleats, which are popular and widely used among sports enthusiasts.
Also, its brand’s athleisure clothing line, which has become increasingly popular in recent years. With these products generating consistent revenue streams, Adidas can allocate resources to other areas of the business, such as question marks or stars, and invest in their potential growth.
Dogs Products of Adidas are those that have a low market share and slow growth. It means these products are not generating much revenue for the company, which is a concerning situation.
These products need a new strategy that can help increase their market share and growth. For example, Adidas’s sunglasses and certain accessories are considered dog products.
It’s clear that Adidas needs to improve its marketing efforts and product offerings if it wants to generate more revenue from these products. While it might seem like an uphill battle, Adidas can turn these Dogs into Stars by investing in innovation and product development.
This will not only help the company grow but will also help it maintain its position as a leader in the sports apparel industry.
In BCG Matrix analysis of Adidas, there are some products that fall under the category of Question Marks. These are the products that have low market share and high growth potential. They require further analysis to determine whether they will become Stars or Dogs.
Adidas has some products that fall under this category: Golf equipment and Fitness equipment. Although these products have potential, they have not gained significant market share yet.
For example, Adidas Golf equipment faces tough competition from established brands such as Nike and Callaway.
Similarly, Adidas Fitness equipment faces competition from brands like Reebok and Under Armour. Therefore, Adidas needs to invest more in these products to make them Stars in the future.
Implications for Adidas’s future
The BCG matrix analysis has enabled Adidas to identify the strategic position and future course of action for their different business units. With the Stars products, which have high market share and high growth, Adidas can focus on increasing investment to maintain that position and further growth.
The Cash Cows products, with high market share and slow growth, need to be maintained rather than expanded, while the Question Marks products, with low market share but high growth, require investment to turn them into stars or phase them out.
However, the Dogs products, with low market share and slow growth, require careful consideration and may need restructuring or phasing out.
Through the BCG matrix, Adidas has gained a clear overview of their portfolio and can make more informed decisions about investment and resource allocation for the future.
The importance of BCG Matrix for Adidas
The BCG Matrix is an essential strategic tool for Adidas as it helps the company prioritize its different business portfolios.
The BCG Matrix enables Adidas to identify its Cash Cows and Stars, which bring in consistent revenue and have high market share, respectively. At the same time, it also helps to identify the Question Marks and Dogs, which require further investment or consideration of phasing out.
By using the BCG Matrix, Adidas can continue to develop and improve its products and stay ahead of its competitors in the market.
In conclusion, the BCG matrix analysis of Adidas has provided valuable insights into the strategic position of its product portfolio. The implications of this analysis for Adidas’s future involve investing in the stars and question marks categories to maintain growth and divesting or reducing investment in dogs and cash cows categories.
Overall, the BCG matrix is an important tool for Adidas in making effective decisions about its business units and product offerings.