Table of ContentsMarketingAdvertisingAdidasNikeConclusionWherever we go out or even stay at home watching TV alone, our life is always open to advertising. Due to the many advertisements that appear in front of your eyes repeatedly when watching TV, people may get bored watching this over and over again. However, even if they want to move away from advertising, it is inevitable. Indeed, in the 21st century market, even large companies such as Samsung and Apple cannot survive in the face of competition without making their new products known to consumers. However, who knows how advertising encourages consumers to buy their products? Are there specific metrics or methods to accurately describe the practicality and intensity of the marketing strategy? In this project, our group mainly focused on indicating the method that could accurately measure the effectiveness and intensity of marketing strategy using formulas such as Lerner Index and Advertising Model of Vidale and Wolfe. Next, we used two major sports companies, Nike and Adidas, as a model and compared their effectiveness in advertising power. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayMarketingMarketing is defined as “the management process by which goods and services move from concept to customer.” In other words, marketing is a fundamental activity for the functioning of an economy. Marketing aims to meet needs and desires through exchange. Contrary to its stereotype, marketing is not just about selling. On the contrary, the ultimate marketing is that which does not need promotion or sales. Various variables constitute a marketing environment. Laws, natural disasters, producers of substitute goods, etc. are among the many forces that can influence profits. The marketing mix refers to the impacts that companies are able to manage in order to effectively market their products. The marketing mix is ​​classified into four groups called the “Four Ps of Marketing”: product, price, place and promotion. Product refers to the good and price refers to the amount for which the good is charged. Place is how the good will reach consumers, while promotion is how awareness of the product is increased. A fifth questionable P, positioning, also exists. Positioning concerns how a product is perceived by the consumer. For example, Pizza Hut manages its four Ps effectively. Its product is moderately priced pizza. The place for Pizza Hut is Pizza Hut stores in over 70 countries and delivery. Promotion is diversified for this multinational company: television, radio, Internet, etc. are all used to show that Pizza Hut pizzas are safe and delicious. Advertising Advertising is a form of promotion in marketing. It is defined as “the act of drawing public attention to one’s product”. Advertising proves crucial to the survival of businesses as they must compete to attract consumers. Advertising comes in various forms. A glimpse into everyday life gives you insight into the many ways companies try to contact you and how desperate they are to take over their market. Although all businesses know that advertising is vital, the biggest question for businesses is how to advertise. effectively. John Wanamaker said: “Half ofthe money I spend on advertising is wasted; The problem is I don't know which half. » Over the years, various methods have been applied to distribute the wasted half. The 1954 Dorfman-Steiner theorem was successful in measuring advertising intensity. This neoclassical economic theorem states a simple equation: A/S=e_A/eA represents advertising spending while S means sales. e_A and e denote the elasticity of demand with respect to advertising costs and price, respectively. Simply put, the greater the elasticity, the degree of sensitivity, of the advertising elasticity of demand and the marginal cost of production, the higher the level.of advertising. This equation is also called the Dorfman-Steiner condition. Using the Lerner index, we can draw further conclusions about the Dorfman-Steiner condition.LI=(Pc)/P=1/|e_D |The Lerner index, as shown above, measures the power market of a company. LI represents the value of the Lerner index. P symbolizes the market price of a company's products while c is the marginal cost charged to the company for each product. The Lerner Index has a range between 0 and 1. Higher values ​​translate into higher degrees of market power. A company with a Lerner index of 1 would be considered a monopoly while an institution with a Lerner index close to 0 would be an extremely fragile company. By applying the Lerner index to the Dorfman-Steiner condition, we can also state: A/ S=e_A LIThree conclusions can be drawn. First, it is confirmed that advertising intensity and market power have a positive correlation. Second, companies with the ability to respond quickly to sales through advertising will have more intense advertising. Finally, if the advertising elasticity of demand and the price elasticity of demand are similar, then advertising similarity can also be expected. The Dorfman-Steiner model showed a rough model of how advertising works. However, we assumed that advertising had a consistent positive effect on sales, as the linear equation suggests. This assumption is clearly not true. As most know from personal experience, advertisements become ineffective after a while. These two graphs show the behavior of the advertisements. The graph on the left is a graph that looks at the impact of advertising over time. This is called advertising lag. The graph on the right is the advertising saturation graph which shows that sales stabilize as a function of advertising intensity measured in gross rating points (GRP). In 1957, Vidale and Wolfe further expanded this relationship between sales and advertising. The relationship is illustrated in the equation below:(s(t)) ?=?µ(1-(s(t))/M)-ks(t) (s(0)=s_0)s(t ) represents the sales function. µ embodies the advertising budget and ? is a coefficient that measures the effect of advertising on new markets. M is the sales intensity threshold. k is the decay constant. This equation is the direct relationship between advertising and demand. In total, advertising can be summed up as an action aimed at maximizing profits from sales. Dorfman, Steiner, Vidale and Wolfe take a closer look at how advertising works with profits. With this basis, it will be much easier to determine the winner of the World Cup advertising battle between Nike and Adidas. AdidasAdidas is a German multinational corporation (multinational corporation) specializing in footwear, clothing and accessories. It is currently the world's second largest sportswear manufacturer, behind Nike. However, this companyfounded by Adolf Dassier has grown from a small company in 1948 to a giant group that currently owns Reebok and TaylorMade. The three iconic parallel bars have established themselves as one of the most recognized brands in the world. Adidas' marketing strategy is successful in attracting a wide range of customers and maximizing profits. Adidas subcontracts its production and manages marketing nationally. Adidas cooperates with famous designers to stay ahead of fashion. Additionally, Adidas has many official relationships, including being an official sponsor of FIFA. By associating its brand with major sporting events such as the World Cup and the support of renowned athletes, Adidas positions itself as a high-quality sports product. The market strength of Adidas can be measured using the Lerner index.LI=(P- M_C)/PThere are some variables that cannot be measured using the Lerner index. Adidas offers various goods and services at different prices, with each type of product produced at a different marginal cost. Therefore, we found the average price of all Adidas products using the range, finding an average price using the highest and lowest prices. The marginal cost of production also remains to be determined. Using revenue and profit, we can find the marginal cost.Quanity=Revenue/PriceCost=Revenue-ProfitMarginal Cost˜Cost/QuanityThe turnover of the Adidas group is 3.533 billion euros. The price value we found was almost €187. The number of units sold by Adidas during the first quarter of 2014 can be estimated at approximately 18,893,000 units. Adidas' profit in the first quarter amounted to 1,736 million euros. We can therefore estimate that the total cost amounts to nearly €3,514,000,000. By dividing this value by the estimated quantity, we can predict that the marginal cost is approximately €186. Finally, we can conclude that the Lerner index for the Adidas group is around 0.005. Although this seems very low, it is completely normal for Adidas to participate in a competitive market, making extremely high market power impossible. With an estimate of Adidas' market power in the global economy, we can then analyze the advertising intensity of the Adidas Group. A/S=e_A/e=e_A LILThe advertising intensity of a specific company is measured using the Dorfman-Steiner theorem. Adidas declared 444 million euros for its sales and marketing operations budget. The overall turnover, turnover, is equal to the previously announced amount of 3.533 billion euros. Using this ratio, we can assign a numerical value to advertising intensity. This value is expressed by the number 7.9. It should be borne in mind that the Dorfman-Steiner theorem indicates the optimal amount of advertising for a company. By integrating prices and sales values, we assumed that the Adidas group invests the optimal amount of resources in its advertising sector. The Vidale-Wolfe model also takes into consideration the quantity of advertising carried out, expressed by the variable µ. The variable µ is equal to 1/T_A or the inverse of the observation time of an advertisement. Under the assumption that all viewers of the ad will watch an ad from start to finish and that Adidas will air an ad of average length (around 30 seconds). As a result, we can define the variable µ as 1/30 or approximately 0.033.(s(t)) ?=0.033?(1-(s(t))/M)-ks(t) (s(0) = s_0)dS/dT=0.033?(1×-(s(t))/M)-ks(t)We can approximate the derivative of the sales function. Using Adidas' last two sales records over time, we can approximate the derivative of the sales function. The first quarter of 2014.