Adidas Navigates Japanese Market With Creative Flair

Well-Known Soccer Brand Seeks to Build Credibility and Boost Sales in the Running Category

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Running enthusiasts in Tokyo face a problem that will probably sound familiar to urbanites everywhere. The most popular circuit -- the leafy, five-kilometer route around the Imperial Palace -- is in the heart of the city, taunting commuters who work nearby. Where can office workers change and leave their laptop bags if they want to run before heading home to the suburbs?

Adidas' Runbase center
Adidas' Runbase center
Enter Adidas' "Runbase," a few blocks from the palace and near a major subway station. The center is a facility where runners can rent a locker and shower, as well as a branded space selling a variety of shoes and apparel. Runbase hosts regular running events and staff is on hand to provide training tips. Visitors can even rent Adidas running shoes for 100 yen -- about $1.20 -- the price of a bottle of water.

"It always staggers me, on a beautiful day, to see someone drive to a gym and run on a treadmill," said Dave Thomas, VP-marketing for Adidas in Japan. "At the moment [Runbase] is only in Japan ... but there's a lot of interest from my counterparts around the world. When people come here, it's one of the things they always want to see."

Japan is among Adidas' top-five global markets, but what sets the country apart are its stylish, discerning, tech-savvy consumers, who make it a unique testing ground for product and marketing innovations. TBWA/ Hakuhodo is Adidas' ad agency in Japan.

Leading the way for Adidas is Mr. Thomas, 40, a 14-year veteran who joined the company in his native Australia from Procter & Gamble. Before taking charge of marketing in Japan, he headed Adidas' Creation Center Tokyo, a team of more than 50 designers and marketers who tailor products for Japanese consumers. (There are similar market-specific centers for the U.S. and China.)

Dave Thomas
Dave Thomas
In apparel, for example, as much as 60% of Adidas' products are items made just for Japan, Mr. Thomas said. An extensive selection is routine for much of retail in Japan, with a staggering number of choices even offered at convenience stores. But economics are also at play. Big -ticket purchases such as houses and cars are out of reach for many urban Japanese, so consumers tend to demand more out of the smaller items they can afford.

"Detailing is valued, whether it's the quality of the zip or little extras that in other parts of the world are either not valued or seen as adding a cost to a product that 's not necessary. Here it's seen as representing extra value," Mr. Thomas said. "The trick is to make sure it doesn't blow the price up so much that it becomes too expensive to buy. That's become more of a challenge in Japan because of the economic outlook, but also because of fast-fashion stores who are also doing sports products for a lower price. That just didn't exist 10 years ago; the competitive landscape has gotten tougher."

Adidas also faces stiff competition from local brands such as Asics and Mizuno. Adidas, known more as a soccer brand, has launched a number of initiatives to build credibility in the key running category. For example, the kutsukasu (Japanese for "shoe rental") program last year let consumers try out AdiZero running shoes for several days and return them if they weren't satisfied. Sales went up 17%.

Sports marketers said Japan is a good testing ground for programs such as Runbase and the kutsukasu initiative, though they might not translate well in other countries.

The Adidas Runbase lockerroom
The Adidas Runbase lockerroom
"I don't think Japan is an apples-to-apples proposition with Europe or the U.S.," said Chris Renner, president of Helios Partners, Europe and China. "If you're going to test this type of program, Japan is a good place to start because of the culture. People are very honest and engaging in a system or a program." Helios, an international sports-marketing consultancy, advised Adidas on its sponsorship of the 2008 Beijing Olympics, as well as other projects.

"What they're trying to do is reach out, make it easier for consumers to run every day, but there's a certain trust level -- if you're going to use my stuff, you will return it on time and not damage it and do it on a consistent basis," Mr. Renner said. "Japanese are very consistent in general. When they do something, they stick with it, so I think the mentality matches up nicely with these programs."

More recently, Adidas partnered with master craftsman Hitoshi Mimura, a longtime designer at Asics whom The New York Times once called "the distance-running equivalent of Manolo Blahnik." The lightweight Takumi shoe he helped create is the most expensive Adidas running shoe in Japan at about $180 a pair, but Mr. Thomas said it's part of the brand's strategy for taking on fast- fashion retailers.

"I don't think going head-to-head with monobranded cheaper retail is going to get us very far. We actually decided to try and add more value into the product. It doesn't mean we just drop the price, it means we make sure the product offered has more value," Mr. Thomas said. "In the sporting industry, [Mr. Mimura] is well known and has been associated with a lot of Olympians over the years. ... We've received a lot of coverage, and sales have been very strong."

Mr. Thomas would not disclose Adidas' marketing budget in Japan, but the brand has been able to amplify the impact of recent campaigns by playing off current events. As Japan struggled with power shortages last summer and citizens sweltered from buildings' weak air conditioning, Adidas offered discounts on its line of ClimaCool apparel that matched the day's temperature. When it reached 95 degrees, the website played a cheerful movie with the message "Happy Hot Summer."

"It was a way to take potentially a miserable situation ... and turn it into something positive of , "Hey, I want it to get hotter. If it gets to be 35 degrees, I'll get a benefit and we'll celebrate,'" Mr. Thomas said.

The brand also tapped into Japan's love of manga, or comics, as it cheered on the struggling national soccer team ahead of the 2010 World Cup. Giant comic panels were sent to players' hometowns, where they were colored by young fans and covered with supportive messages. They were then assembled into a comic strip, the world's largest, according to Guinness World Records, and set up along a runway where players could see it as they departed Japan for South Africa. Fans unable to write on the comic strip were encouraged to send messages of support online and through mobile devices.

"The story goes that several of the players were crying on the plane, feeling that support and strength and knowing there was a country back here supporting them," Mr. Thomas said.

"They went on to play very well. We can't take the credit for that , but we like to think that we helped," he said. "They gave it everything they had when people had written them off ... but we tried to turn that story into something positive and sure enough, luckily, they responded."

Japan reached the Round of 16 for the first time on foreign soil. And "Sky Comic" won a variety of awards, including a bronze Cyber Lion at Cannes.

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