• Dassler Brothers: Adolf (Adi) and Rudolf
• Guiding principles: match show design to requirements of sport, protect athlete from injury, and make product durable

• Jesse Owens wins gold in Dassler Brother's shoes
• First documented "sports endorser"

• Adi launched Adidas (3 striped logo)
• Rudolf launches Puma

• Kinesiology: physiological processes and anatomy of body with respect to movement
• Hired kinesiologists: study how shoes help athletes perform. This increases use value
• Shoes offered greater benefits to target segment- world class athletes
• Different athletes=different kinesiological needs
• Broad array of products: sprinting, distance running, boxing, fencing etc.

• group of similar products with range of product attributes that target related market segments
• Adidas was adopting "customer orientation" and adhering to "marketing concept"

• Adi 1st entrepreneur to heavily use sports promotion to make public aware of innovations
• Well-known athletes as advertising for products
• Examples: Jesse Owens & Muhammad Ali

• process of purchaing goods and services that could be performed in house. (offshoring)
• More than 75% of businesses outsource some aspect of their work

• Core competency
• Economies of Scale
• Reduce labor costs

• Avoid contracting cost
• Avoid taxes/ circumrent regulations
• Extend market power
• Supply is more assured
• Protection of proprietary information or brand
• Quality control

• Breakeven Point
• Variable costs (ex. materials, hourly pay)
• Fixed Costs (Indirect): costs incurred in general operations of business. Ex. factory, equipment, managerial salary
• Decreasing breakeven point is a good thing

• outsourcing can lower fixed costs
• outsourcing can lower AVC
• For Adidas: TFC lower, so sell fewer units to break even. Makes Adidas more profitable

• Heath Craze: 1960-1970
• Running Culture
• Consumers thought of their bodies in different ways

• Bill Bowerman: Innovator
• Phil Knight: Marketing Major (Business Man)
• Nike is the greek goddess of victory
• 1972 shoes first appeared in competition of Olympic trials
• 1974-Bowerman invents waffle sole
• 1981- 50% market share and Adidas losing ground

• Copied Adidas: expanded product line, endorsement contracts, outsourced with asian factories
• Emphasized R&D: over 100 scientists
• Research committees and advisory boards
• Broader product line: 140 models of shoe for each athlete
• Distribution channels more extensive
• Bowerman introduced kinesiology
• Targeted Rural America

Attributes→Benefits→Values

• Used to look at the links between product/brand and culture

• Characteristic of product/service: tangible and intangible. (ex of intangible is country of origin)
• Designed to cause certain consequences or benefits

• Companies like to know how much attributes are worth to customers.
• "Bundle" attributes into product

• Positive consequences of product use
• Functional: immediate physiological outcome
• Psychological: how they make you feel
• Social: how others view you (social integration)

• Enduring beliefs about desirable outcomes that transcend specific situations and help shape behavior
• Terminal values: end state we hope to achieve in life (ex. a comfortable life)
• Instrumental values: means of achieving the terminal values (ex. ambitious, honesty etc.)

• 1982 developed freestyle
• Women's aerobic dance shoe

• Imitated Nike and Adidas
• Focused on 3 trends:

1. Aerobic exercise movement
2. Increase in women's exercise
3. Casual footwear= athletic footwear

• A pair of top of the line basketball shoes priced at $130
• Assumed brand loyalty
• Price went up and people wouldnt buy
• Quality of shoes demanded was elastic

• Price changes and there's little effect on demand....inelastic
• Price changes and it effects amount demanded....elastic

>1, demand is elastic (Liquor)

=1, unitary price elasticity prevails (Wine)

<1, demand is inelastic (Beer)

• High involvement in choosing shoes
• $130 shoes were ridiculous for the 80's

"If you sell below our suggested retail price your supplies will be cutoff"

• Reebok wanted higher prices to increase revenue
• Feds didnt like this and price fixing charges were filed.

1. Consumers
2. Retailers (Mainly Foot Locker)

• Their own shoe line that they could exclusively sell
• Reebok said No

Account manager responsible for developing long-term relationships

1. Shoe Pricing Strategy
2. Operating Cost too high
3. Mismanagement of their relationship with Foot Locker