Erich Stamminger, 48, has spent 23 out of 24 years of his professional career with adidas, the second-largest global sports and apparel company. He was appointed to the Executive Board of the company in 1997 and since 2000, he has been the Board Member for Global Marketing. Stamminger is credited with the transformation of adidas into a truly global sports brand in the past one decade. No wonder, early this year, when he was appointed the President and CEO of the adidas brand, Herbert Hainer, the Chairman and the CEO of adidas AG, commented that "there was no other person in the world who had a better and deeper understanding of the adidas brand". On his first-ever visit to India, Stamminger, along with Asia-Pacific and India heads, Christophe Bezu and Andreas Gellner, respectively, met BT's R. Sridharan and Archna Shukla and discussed adidas' marketing and brand strategy for smaller markets like India, growth plans for Asia and Reebok, the other big sports and lifestyle brand that adidas acquired last year. Excerpts:

If one takes out the Reebok acquisition, growth for adidas has been modest over the last five years.

Experience shows that it makes much more sense to grow consistently and to build a solid foundation rather than going up and down. When I moved to the US three years ago to take charge of the market, I decided not to push the business but to consolidate it. I decided that we would look at growing in solid double digits on a consistent basis instead of looking for brief spikes. And this has been the overall strategy for growth of the adidas brand.

"We aim to be the #1 player in each and every market and segment, but this ambition will never be realised at the cost of profitability"

Are you saying that for you profitability is more important than market share?

Definitely. We are the leading global sports and apparel company in the world and, of course, we aim to be the #1 player in each and every market and segment that we are present in, but this ambition will never be realised at the cost of profitability. It is our philosophy that if you have a profitable business, you generate enough resources that, in return, can be invested back in building the brand and thus, you create a solid long-term business model.

But your profit margins, both for Reebok and adidas, have been under pressure and have declined in the first half....

That's mainly because our marketing spends went up significantly this year on account of the World Cup. And we look at our branding expense as an investment. Marketing and communication is paramount for a lifestyle brand like ours. For instance, in 2002, we made heavy marketing investments in Asia, mainly Korea and Japan and the result was that we soon became market leaders in Japan. So, this kind of expense is a part of our strategy, as it helps in building a strong foundation for the brand.

Asia seems to be a very important market for adidas. That's somewhat surprising because one would have expected the US to be a stronger market for you. So what do you think has helped adidas better connect with the consumers in Asia?

One key point is that a lot of consumers see adidas as a truly global brand. Most consumers in this part of the world don't even know where adidas comes from and they confuse it as an American brand. Whereas in the US, there is higher brand consciousness. Then, we have had an excellent management in Asia in the last 5-10 years, which also had a voice in the global development team. We have our design centres in markets like Japan, Korea and Hong Kong and are building a new centre in Shanghai. We are developing new products in Asian markets. So this brings us close to the local consumers and builds a better rapport with them.

Where does India stand in terms of your Asian strategy? Are there any learnings from the other Asian markets that you have brought to India or is this a different animal?

India is a fairly small market for us, with an addressable consumer universe of around 5-6 million as against China's 35 million. Yet, for market strategies, it cuts both ways. Since in other Asian markets we are further down on the road and, hence, have a better consumer perspective, which we try to bring into India. That said, India is as distinct as any specific market is from another and hence, calls for a different local growth and development strategy.

What are the insights that adidas has gathered about the average Indian consumer who shops in your stores?

I won't know the difference in comparative terms, but I am told that Indian consumers are very rational in their purchase decisions. For them, the brand name is important. I think they will consider entering your store only because of the brand you are but they always need a rational argument about the functionality and utility of the brand before making the final purchase decision. So brand is important but not the only trigger for a purchase decision. As for Asian consumers put together, our research shows that they are generally better educated.

Have you had to do any innovations for Indian consumers given the fact that besides the brand name, functionality is an important issue for them?

We usually launch all our international innovations in India. One Indian innovation, however, has been the launch of our cricket shoe range, although even this range was developed internationally with inputs from India. So, we can't really call it an Indian innovation. India is not an innovation centre for us.

Reebok, so far, continues as an independent company. Are there any plans to merge the two businesses?

As of now, we are only looking at back-office integration, if possible. There are no plans to bring about any frontal alliances because that will require huge investments. Then, both the brands being strong and vibrant, we want to retain their individual identity because consumers are interested in the brand and not the group behind it. But there will be integration in areas where we could bring in synergies for both the companies.

"We prefer stand-alone stores to multibrand stores. Then, we are able to ensure a better brand experience for consumers"

Since both Reebok and adidas operate in the same sphere and target the same consumer, how will you ensure that the two don't cannibalise each other? And what will be the differentiators for the two brands?

You are right that both Reebok and adidas are strong sports brands, but, then, both have distinct roots and backgrounds. adidas, for instance, is a more global brand with a stronger focus on sports. We are involved with all big sports with a thrust on performance and we develop the fashion part in a smart way without jeopardising the basic brand premise. Then, the brand also has a strong European image. Even if consumers don't know that it comes from Germany, they know that it is a European brand. Reebok, on the other hand, is more of an American brand. It stands for everything American and is popular among consumers who identify better with American way of life. Reebok is more aligned with American sports. And, we intend to keep this difference in the two brands alive. Yet, there will be some common ground where the two brands might come in direct competition. In such situations, our effort will be to ensure a healthy competition between the two brands.

What will be your retail strategy for India now that majority foreign ownership is allowed in single-brand chains?

Our focus has been on establishing our own stand-alone stores instead of multi-brand stores. A year ago, we had 101 stand-alone stores, whereas now we have 226 stores. And now, almost 75 per cent of our business comes from stand-alone stores. We prefer stand-alone stores to multi-brand stores because, for one, logistics management becomes fairly streamlined in our own stores, and we have a better control over inventory movement. Then, we are able to ensure a better brand experience for consumers. Also, in single stores, we get better consumer insights than multi-brand stores.