Adidas V. Payless

Order Description
1. What role does a brand like Adidas play in the purchase of products such as sports shoes? What role, if any, does a symbol like the three-stripes trademark play in consumers’ purchase decisions?

A brand is essentially a mark that is used by an organization to distinguish its products from its competitors. This is the main role played by a brand like Adidas in the purchase of products such as sports shoes. Ryder & Madhavan (2014) contend that a the value of a company’s brand can surpass the value of all its physical assets. A good example of this is the Coca-Cola brand, which was valued at US$66.3 billion by Interbrand in 2018 and yet the technology on which the company was founded is nothing more than a recipe. Addidas’ main competitor is Nike. The latter has over the years managed to dominate the market because it has the highest valued brand in the sportswear industry. This suggests that the sales revenue for sportswear companies is positively correlated to the value of their brand.

The three stripes trademark plays a significant role in consumer’s purchase decisions due to various reasons. First, the trademark makes it easier for customers to find Adidas products. In this regard, it mostly helps the company to distinguish its products from its competitors while at the same time indicating a consistent level of quality. Brand awareness and goodwill, which often take decades to establish are embodied in the trademark. This not only helps to catch customers’ attention but also makes the company’s products stand out.

The three stripes trademark also helps to avoid market place confusion. Adidas already has a reputation for making high-quality products. Nonetheless, most customers tend to purchase products from companies they are aware of so that they know where to return the products in case they are defective. The trademark can, therefore, be considered as a source of consumer protection.

Finally, the three stripes trademark is a very economically efficient communication tool that conveys intellectual and emotional attributes about the company’s products. In some cases, the reputation of a brand like Adidas might have the potential to boost the reputation of the customer and such, they will be inclined to purchase products with the three stripes trademark (Lopes & Duguid, 2010). Because Adidas is a multinational brand, the three stripes trademark is readily identifiable across borders, cultures, and languages.

2. What images are in consumers minds when they think of brands such as Adidas? What images are in their minds when they think of a brand like Payless?

When clients think about brands like Adidas, they picture style, durability, and comfort. On the other hand, when they think about brands like Payless all they picture is economy or paying less as the brand suggests. [Continued…]
3. Does it make sense for Payless to sell shoes that seem to resemble Adidas shoes?

It makes a lot of economic sense for Payless to sell shoes that seem to resemble Adidas shoes. Because Adidas is an established brand, which is renowned for style durability and comfort, selling shoes that seem to resemble Adidas shoes will lead customers to either associate their shoes within similar attributes or confuse their shoes for actual Adidas shoes [Continued…]
4. Do you agree that the Payless shoes were likely to have been confused with Adidas shoes? Use your knowledge and understanding of consumer psychology and the facts of the case to evaluate both Adidas’s and Payless’s positions regarding this critical issue

Payless shoes were definitely confused with Adidas shoes [Continued…]

5. Do you agree that Payless shoes were likely to dilute the Adidas brand by tarnishing and blurring it? What would that mean from the standpoint of consumer psychology? And how does it relate to your answer in Question 2?

Payless would eventually end up diluting the Adidas brand by tarnishing and blurring it because of two main reasons. First, because Payless shoes are cheaper than Adidas shoes, there is a very high likelihood that they are not as durable as Adidas shoes. Moreover, because Payless is a relatively new entrant in the sportswear industry, the company might not have the capacity to match Adidas’ production capabilities which have been amerced over a long period of time. Given its capital base, Adidas can afford designers and has superior supply chain management capabilities.

Even if Payless were able to produce the same quality as Adidas owing to the current climate in the manufacturing sector, which is mainly characterized by outsourcing [Continued…]

References

Interbrand, 2018. Activating Brave: Best Global Brands 2018. [Online]
Available at: https://www.interbrand.com/best-brands/best-global-brands/2018/
[Accessed 14 March 2019].

Lopes, T. d. S. & Duguid, P., 2010. Trademarks, Brands, and Competitiveness. 1 ed. London: Routledge.

Ryder, R. D. & Madhavan, A., 2014. Intellectual Property and Business: The Power of Intangible Assets. 1 ed. New Delhi: SAGE Publishing.z