What Has Reebok

8/3/2019 What Has Reebok

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what has reebok's indian experience been like? reebok made an entry into india

six years ago. in the first two years, the company did not sell anything close to

what we expected so we put up discount sales all over. now, things are very much

under control. reebok is being accepted as a popular brand by the masses and we

are on our way to tap our target market. i attribute reebok's success to many

marketing, advertising and sales lessons that we have learnt over a period of

time.what is typical about the buying habits of indians? one of the biggest

lessons we have learnt is that 80 per cent of buying related decisions are taken

inside the showroom. no matter how much you advertise, if a particular size, style

or colour of shoe is not available at the store you can lose a potential customer. a

well stocked showroom and friendly salespersons are the key to good selling.

moreover, we can't afford to keep sky-rocketing prices as india is not a very rich

country and most indians buy shoes only annually or bi-annually. how do you deal

with knock-offs? knock-offs are not a real threat to our brand. as and when we get

to know about duplication, which is common as far as apparel goes, we follow thelegal procedure of raids and goods are confiscated. though such practices are more

profound in clothing than shoes, there are always some give-aways which any

regular reebok customer can identify on close inspection of the product. how

technically sound are reebok's fitness instructors? the reebok instructors'

alliance is a very highly reputed fitness coaching programme, which produces

around 600 instructors every year. these instructors can train people in any fitness

centre and, needless to say, those trained by reebok are always in great

demand. what are reebok india's immediate plans? lots! to start with, we want to

reach out to as many people as possible, and make the brand more visible. we are

also targeting indian women as potential customers and have come up with the

workout salwar-kameez, in alliance with vlcc. indians are becoming increasingly

conscious about appearance and fitness and we want to make use of the

opportunity as effectively as possible.

The case, "Reebok's Game Plan in India" gives an overview of the entry of Reebok, the international sports shoegiant, into India, the entry of its global competitors, Nike and Adidas into India and the strategies adopted by thethree players to build up their market shares.

The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and

Adidas.

The case gives insights into Reebok's venture into the kids market and its emphasis on fitness. The challenges thatthe company could face in India have also been discussed.

The case deals with the market conditions that prevailed in India during the entry of these players, the competitionamong the domestic players and the changes that the multinational companies brought about in their strategies toincrease their market shares.


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With 50 percent market share of the Indian sports shoe market in 2001, Reebok India (Reebok), the Rs.950 millionIndian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd. had leftcompetitors Adidas and Nike behind. Being the first of its kind to enter India, Reebok had an edge over itscompetitors. In 2001, its business had grown by 18 percent. The firm was confident of a 35 percent growth, byDecember 2002 by achieving a sales target of Rs.1.3 billion. The average growth of the industry was less than 15percent at that time. In 2001, the three global brands, Reebok, Adidas and Nike, together sold sportswear worth lessthan Rs.1.8 billion in India.

According to Siddharth Varma (Varma), managing director, Reebok India, creating a motivating and relevant brandposition in India would increase the sales volumes.

However, the parent company had issued a mandate that its Indian subsidiary should stick to the company's vision ofinstilling fitness consciousness among people and, at the same time stay focused on maintaining its leadershipposition in India.

Reebok underwent several changes in order to increase its visibility in the Indian market. It forayed into the kidsfootwear market where the sales volumes were higher. However, Reebok did not want to lose sight of what itoriginally was - a fitness brand.

The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports.However analysts felt that the fitness footwear and apparel market in India were at a nascent stage, and had limitedscope.

While Reebok made some adjustments in its marketing strategy in India, Nike and Adidas were very cautious whileentering the Indian market. Both Nike and Adidas positioned themselves as lifestyle products.

Background Note

The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the country's middle

class. This created optimism among industry players regarding sales in the premium segment (Rs. 700 - Rs. 1,200) of

footwear.

During the same period, many Indian manufacturers also came up with a wide range of sports shoes (Phoenix's

Power Range, Liberty's Force 10 and Geosport, Action)1. They catered to the middle class sports lovers with shoes

priced between Rs.500 and Rs.750...

Excerpts

Competition

Reebok India

The major activities of Reebok International Ltd. included designing and marketing of sports and

fitness products including footwear and apparel. In October 1995, Reebok International Ltd.

entered into a 80:20 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co.).

Initially, Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts, shortsand sweatshirts in 5 exclusive stores in Delhi and Mumbai...

Nike India

Based in Oregon, USA, Nike Inc. was one of the world's leading sports footwear and apparel. The company sold its

products through independent distributors, licensees and subsidiaries in numerous countries around the world...
http://www.icmrindia.org/casestudies/catalogue/Marketing/Reebok-Marketing.htm#bot1http://www.icmrindia.org/casestudies/catalogue/Marketing/Reebok-Marketing.htm#bot1http://www.icmrindia.org/casestudies/catalogue/Marketing/Reebok-Marketing.htm#bot1http://www.icmrindia.org/casestudies/catalogue/Marketing/Reebok-Marketing.htm#bot1


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Adidas Salomon AG

In 1948, Adolf (Adi) Dassler founded Adidas in Schienfield, Germany. In 1956 Adidas started manufacturing sportsapparel, balls and other sports accessories.

In 1997 the company acquired the French Salomon Group, the global leader in the manufacture of winter sportsequipment.

The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach, Germany.The company marketed its products in more than 160 countries...

How Fit is Reebok's Fitness Platform?

Globally, Reebok was positioned as a complete fitness brand. The Indian subsidiary's stated vision was to enhance

fitness consciousness, while staying ahead of its competitors. Reebok believed that this vision would do well in India,

as this concept was more popular here than sports...

Targeting The Kids

Another area where Reebok India was trying to make its presence felt was the kids' line of apparel, footwear and

accessories. The kids apparel market was estimated to be Rs. 4.8 billion, and the kids footwear market was

estimated to be Rs.10 billion.

The company realized the need to identify a segment in the kids' market where sales volumes could be high and

prices would be acceptable to the parents. So, in 2001, Reebok launched its new footwear range called 'Reebok Kids',

targeted at schoolgoing kids...

Adidas & Nike: Selling Lifestyle

In India, Adidas decided to stick to its basic image as a performance brand, while potentially entering into the

lifestyle market. To do this, the company divided its products into three categories: sports performance, sports

heritage and sports lifestyle...

The Challenges Ahead for Reebok

Reebok was the first multinational footwear company to enter India after the liberalization of the country's economy

and post profits. It set up India's third largest chain of exclusive brand stores with about 100 stores across the

country...

n the initial years when we launched Reebok, our product offering was dominantly for the male consumer. At the

time, sports and fitness was predominantly a male activity.

However, there was always the realisation that there is a female consumer who lives an active lifestyle -- who walks

regularly, or even works out -- and who we could attract with our product offerings.

At Reebok, we believed that, although small, here was a business to be taken. And we started to play the percentage

game, as I call it.


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We adapted the format of all our stores and introduced a women's collection -- we created a small corner with 20-30

SKUs in apparel and shoes. It worked out well and soon our women's business was 15 per cent of our main

business.

Our marketing to women took the grass-root path. We trained fitness instructors -- from 20 in 1996, we now have 700

Reebok-certified instructors in India -- who started a small fitness revolution in India under our RIA programme.

Our short-sighted approach showed up -- and showed us up -- in another initiative. In 2003, based on our finding that

most women wear their husbands' T-shirts and trackpants, or salwar-kameez for walking, we launched a sports

salwar-kameez in knit fabric.

The focus groups who were shown the product praised it and even suggested changes such as a closed neckline

that would do away with the need for a dupatta.

But the product bombed. Indian women wanted clothes the rest of the world was wearing -- and we hadn't given them

that. It was perhaps the only product in Reebok India's range that failed.

Still, we thought we were doing great. After all, the women's business accounted for 15 or 20 per cent of our income,

15 per cent of our SKUs, our marketing strategies were spot-on and we had a huge presence in gyms across the

country.

But we never realised that we were doing lip service to this huge opportunity and business potential. The biggest

problem with incremental results is you start believing you are on the right path... a sort of being happy with the

progress and never dreaming of or going for transformational results.

As they say: Good is the biggest enemy of great.

We could have achieved a lot more if we had beefed up our product line or given a more exclusive focus to this

segment. But we never challenged ourselves or pushed with our supremacy in the fitness business and aerobic

expertise, which was so relevant with our female consumers.

And this when we had the claim of authenticity, the ability to touch this segment in a special and distinct manner.

We had the credentials. But the opportunity had not been funded or supported in its fullest form in order to stand up

to be counted. Our commitment to women consumers was also following the percentage game -- it was a 15 per cent

focus.

Naturally, then, consumers were not taking note of Reebok's initiative. Nobody notices the grass growing or pays

attention to a trend that is slow in developing. Even the media ignored this initiative.

All this changed last year. At Reebok we realised that any company that starts by asking itself what the market size

is, is taking the wrong road to success.

Our learnings were clear: "Ask not what percentage of an existing market your brand can achieve. Ask how large a

market your brand can create by putting resources behind creating a category."


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The most efficient, most productive, more useful aspect of branding is creating a new category. Start something

totally new. After all, what was the market for home-delivered pizzas before Domino's began operations? Zero.

In 2004, we began to treat our womens' business initiative as if we were launching a new brand. We started

promoting the category by opening women's-only stores that would meet the special needs of our women customers.

The dcor and style of these stores is completely different; importantly, the testosterone level -- most sportswear

stores are brimming over with male hormones -- is toned-down.

Over 200 SKUs in apparel and footwear are sold and the promotions in the store are laid out keeping the mindset and

buying behaviour of this segment of customers.

For instance, we have a "Gang up for rewards" promotion for women shopping in groups -- I don't know of any

women who shop alone!

Today, our women's business is a strategic business unit of its own, which sustains its own distribution stores and

touches its audience in a sensitive and special manner.

Our learnings from our mistakes? If you believe in a concept, go for it; put your marketing branding dollars behind it.

The concept will take off, pulling the brand along with it.

After all, percentage efforts get only percentage results. But breakthrough efforts get breakthrough results.

We could have been happy with the incremental results of yesterday and continued with the percentage treatment.

But we challenged the paradigm and experimented with a more focused and positive approach.

And the efforts paid off.


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Reeboks very own change agentFrom a sports company to fashion, Reebok has walked a long way and the companysmarketing director reveals to Angshuman Paul the secret strategies of this journey. Issue Date - 07/10/2010

Sajid ShamimDirector Sales and Marketing, Reebok

India

As we sauntered into the third floor ofSignature Tower the office of Sajid Shamim,Director, Sales & Marketing of Reebok India we were delighted to see a group of buoyant,dynamic people in casual track-suits. A look atthis energetic and vibrant team made us

wonder how valuable they were for Sajid andReebok. And the protagonist answered, Itsthe team that knows the pulse of brand

Reebok. All our marketing strategies, which make Reebok the biggest apparel brand in India, area cumulative effort of this team. I individually am a nobody. A believer of autonomous corporateset-up and empowerment of his team, Sajid is a leader who provides directions, hence allowingample scope to his team for creativity, innovation and experimentation.

Sajids professional life is a classic example of how destiny drives ones life irrespective of variousplans. While pursuing his MBA at XLRI Jamshedpur, Sajid was bent on joining the field of sales and that too in the area of sports marketing. However, post MBA, he joined Coca Cola, somethingtotally away from his earlier objectives. But it worked. He shares, Working in Coca Cola wassurely very interesting and it was the initial part of my career. Most importantly, it was duringmy two and half years with Coca Cola that I actually learned the practical aspect of marketing

strategies. Bucked up with valuable experience, he moved on to achieve his pre-decided goaland joined Reebok, which according to him was a very unique industry at that point of time, andrequired the type of challenges that he was looking for.

Reeboks India venture, now a subsidiary of Adidas, happens to be the single nation success forthe global sportswear conglomerate. And that has happened as a result of smart game planswoven by two adroit leaders who, surprisingly, came from very different backgrounds. WhileSajid came from an FMCG background, Subhinder Singh Prem, MD, Reebok India joined Reebokafter a stint with pharmaceutical major Ranbaxy. However, lack of experience in the sportsretailing space didnt stop the duo from adding the requisite glitz to Reebok. Throughinnovations, careful go-to-market strategies and various strategic tie-ups (examples of whichinclude the likes of Shiamak Bollywood Workout for Reebok, getting Manish Arora into their

branding et al) within a time period of around a decade, these two have successfully helpedReebok occupy a unique space as a sporty yet fashionable brand in the minds of Indian

consumers. Shares Sajid, The challenge with us was to blend sports with fashion and we felt itwas necessary to bring together sports and Bollywood. So, I came out with Bipasha-Dhonicampaign along with launch of radical womens products.

From a mere sports brand that was only limited to mens wardrobe, Reebok has now moved overnot only to womens, but also kids and fashion wear segments with the launch of Reebok Classic,Reebok Fishfry, Reebok Junior, Rockport and EasyTone et al. At the same time, the apparelmaker has maintained a balance between value and quality. It has ensured that every consumersegment is offered something exciting without compromising on the brand. But the mostchallenging thing for Sajid was to come up with a brand momentum along with a touch of


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fashion. Sajids idea of associating sportsmen and not just the sports star was a big booster inthe process. Today Reebok has associations with more than 100 national and internationalcricketers and upcoming football and tennis stars. It is also considerably involved in IPL4 . On thesame lines, Reebok is also associated with Bollywood movies and stars in order to connect withthe people. Such aggressive initiatives have not only been a boon for the company, but have alsobagged a number of awards for Reebok, including the Emvies for Reeboks partnership with themovie Goal, the Images Business of Fashion Award for the most Admired Footwear Brand being

the more recent ones.

Large retail presence is another potential area where Sajid has majorly focused and has derivedencouraging results. Reebok successfully used the franchisee model within India and currently

has a mammoth 900 plus stores in India; Reebok presently is the leader in the sportswearindustry in terms of retail presence. But then, large retail presence always comes with its ownloopholes. There is a constant fear that by opening multiple stores in the same locality, thecompany will cannibalize sales of its own stores. Sajid has a fundamental viewpoint to this. Heclaims that constant and deep research about consumer taste, proper estimation of buyingbehaviour based on the research and proper customisation of stores in terms of store designing,

timing et al helps Reebok to turn this issue of cannibalization into an opportunity.

Sajid shares with us that he is a football and chess fanatic; to that effect, Sajid makes sure thata chess board is present in his cabin all the time. He also apparently has a penchant for

electronic music. When he is free which of course is a rare occurrence Sajid indulges himselfwith reading a book or two.

Today, with constantly increasing competition, Sajid is not blind to the issues facing Reebok. Heshares, India is changing and theres so much to work on. The way the demographic andconsumer preferences are changing, it will keep us really busy. The biggest challenge ismanaging a billion plus consumer and the enormous fragmented media. Commonwealth is onevenue where Reebok is planning to launch many of its new brands. And which ones of the variousbrands are Sajids top choices? Sajid parries the question with a shrewd smile and a well plannedanswer, No mother will tell you, which one is her favourite child. Points noted and notes taken,though we conclude the meeting, we know theres much in this story that still left to written, andmuch of the well trodden path still to be beaten!


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Reebok straddles mass and class

Surajeet Das Gupta / New Delhi May 17, 2010, 0:01 IST

The sportswear giant is targeting a bigger share of both the lower and upper ends of the market. Has it got thebalance right?

Reebok had some time back hired an international agency to help it identify locations for its stores on the basis ofincome pockets. The agency devised a plan that looked good on paper: Divide each city according to the postalcodes.

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The assumption was that people covered by one post office would have somewhat similar incomes.Within no time it was proved that the formula will not work. The Greater Kailash post office in New Delhi, for instance,is a high-income neighbourhood but also includes the mid-income locality of Zamroodpur. Should Reebok then put upa store there or not? What products should it stock?

For Reebok, the countrys largest seller of sportswear and apparel, this is a challenge it has to wrestle with every day.It wants to become a mass-market brand, and the location of stores holds the key to that. This, mind you, is not thefirst time that its market research and assumptions have gone awry.

When it first entered India in the early-1990s, it had assumed that every car owner could be a potential buyer forexpensive Reebok sneakers. It proved to be a gross overestimation of the markets potential. Little did it realise thatcars were bought on installments here, and a large number of drivers didnt own the cars these were provided bythe office!

But it has got over the initial hiccups. Though fourth in the global sweepstakes after Adidas, Nike and Puma, it leadsthe pack in India with a 53 per cent share of the branded sports footwear market (estimated size: Rs 3,500 crore perannum).
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In fact, India is the only market in the world where Reebok has such dominance in the market place. So much so, twoof its Indian honchos Muktesh Pant and Sidharth Verma were given prestigious assignments abroad. Thoughthe brand is owned by Adidas, it was decided to let it run as an independent entity in India, lest the momentum belost.

No guts, no glory

Reebok enjoys almost total brand recall in the country. And its lowest price point is below Rs 1,000 Rs 990 for apair of jogging shoes, to be precise. The two basic requirements for going mass-market have thus been fulfilled. Thetask in hand is to reach its shoes to consumers all over India.

The choices are clearly defined: You can tread slowly, open a few stores in the top metros and grow cautiously,which is what most of Reeboks rivals have done; or you can go by your gut feel and move fast to touch theconsumer. The second option is riskier, but the rewards, if it succeeds, are higher too. And this is what Reebok hasdone.

It has over 1,000 stores in over 325 cities and towns across the country, which is more than double of any of its rivals,and the numbers continue to add every day. About one-third of its stores (over 300 outlets) cater to the lower end ofthe market. And it offers over 80 stock-keeping units (SKUs) under Rs 2,590, which form the bulk of its sales.

About 70 per cent of its sale volumes come from low-end products, though in terms of value theyconstitute 50 per cent of the revenue. And to keep costs down, over 80 per cent of the footwear ismanufactured in the country.

This business is less about strategy, more about intent and marketing courage, says ReebokIndia Managing Director Subhinder Singh Prem. India is changing every three years. Today, wehave 300 million consumers. Our aim is to cater to at least one billion Indians and become both aprestigious and a mass brand.

Prem admits that it is difficult to identify where to locate a Reebok store, as demographic and psychographic dataavailable in the country is scanty. He says the division of cities, towns and rural locations based on socio-economicdata is imperfect because in reality you can never know when a city has ended and rural area has started. Thecensus data of 2001 is too old, and everyone has to add in some multiple to get to the real numbers of a town or city.

You cannot wait for the data to come; it will be too late and you will miss the market opportunity. So you must go tothe consumers, says Prem. In other words, use your instincts.

Thats not to say there is no method in the madness. The company has developed its own yardstick: It believes anylocation which has a population of 10,000 to 15,000 can sustain a Reebok store, especially if it is a service hub. Sothe whole idea is to go ahead, put in a store and see if it works. The option to pull out is always there. Says Prem:The good thing is that 95 per cent of the time we are successful, which could be because we are not taking enoughrisks.

Of course, Reebok has to ensure that the franchisee doesnt lose too much money if the store does not work. SoPrem says the exit costs have been kept low and even the lock-in for the franchisee is short.

Rivals in the business say that the cost of opening a Reebok store in a semi-urban market is not more than Rs 2 lakh.There are basic fixtures in these stores. The person who runs the store also owns the place; so there is no rental to

give. Even if he sells three or four pairs a day, he will make a profit of Rs 30,000 to Rs 40,000 a month which isgood, says a rival.

The other advantage is that the company gives the shoes on a consignment basis, so you pay the company onlywhen you sell. The flip side is that Reeboks cash flow can get stuck if a store does badly. The companys revenuewould always be lower than the number of shoes dispatched from its factories.


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Price barriers

Some others say that Reeboks prices arent low enough for the bottom of the pyramid. We sell well as compared toReebok. With similar specifications, our shoes would be priced at a third of Reeboks. There are always people whodo not have that kind of d isposable income, and they come to us, says Liberty Retail Managing Director AnupamBansal.

Can Reebok produce quality products at even lower prices and break the existing price barrier? This is necessary ifPrem wants to hit his target of one billion customers. There is hope. The company has, after all, brought down itsentry level price from around Rs 1,390 a few years ago to Rs 990 now. And, of course, Reeboks research anddevelopment centres abroad are working to break new price barriers.

Says Prem: On one hand we expect to offer more lower-priced shoes to expand the market, on the other we expectmore people will see a r ise in their incomes (so that they can afford the shoes). And we will reach somewheremidway.

Does Reebok run the danger of ignoring the well-heeled urban buyers in its quest to reach the masses? For that,Prem is also experimenting with new mediums which will supplement his already large advertising budgets. Thefocus now is to leverage social websites and offer consumers knowledge about its products.

What makes this medium powerful is that it is a two-way dialogue and there is credibility of information, says Prem.One idea which has been floated is to set up Reebok Clubs across websites were people can exchange notes onfitness and Reebok products, and give their independent opinion. The company feels it can extract more value thisway than from an advertising campaign.

But different markets and segments have different requirements and aspirations from a sportswear or lifestyle brand.So how does Reebok cater to the varying choices? Data shows that consumers are changing their old pair of shoesmuch faster than before. Middle-class buyers now change their footwear every three months, down from eight to 12months earlier. And at the lower end of the market, consumers are changing once in every 15 months compared tothree years earlier. This, Prem says, offers an amazing opportunity for Reebok.

The customer who buys entry-level Rs-990 shoe upgrades to the next level just like you upgrade your car. And as heis already hooked on to Reebok; so, his next shoe will also be the same brand, provided of course we offer him widevariety and a new offering at every level and price point, says he. So Reebok launches over 42 SKUs every month

and at least a new footwear technology every two months.

Mass vs class

Detractors and competitors, however, say that the companys strategy may take the sheen off the brand. You cantbe a prestigious brand and at the same time sell it for under Rs 1,000. Also you will compromise on quality and theseshoes are known for their performance. You cant be both a mass as well as a class brand, says a rival.

Indeed, apart from airlines like Virgin and Kingfisher, there arent too many brands that straddle all ends of themarket. Remember, Toyota had to come out with Lexus to tap the top-end of the car market.

Reebok, of course, is aware of the challenge. One way to overcome it is to segment the market, and have sub-brandsfor each segment. For instance, Reebok has created a segment for health- and figure-conscious women. It haslaunched Easytone footwear which promises to help tone the legs and butt. These are, of course, global products

launched recently and available at a stiff price starting from Rs 4,999. Says Prem: Its a challenge to segment themarket, but we need to do that to grow and address the specific needs of customers.

Similarly, to cater to the fashion-conscious, Reebok has tied up with designer Manish Arora for the Fish Fry range. Itsa small market but if offers a style statement and that gives the brand an extra dimension.

Reebok recently found that people above the age of 60 prefer to use sandals in their morning walk with friends. Premcaught on to the potential when he saw his father and his friends not using sports shoes while walking in the morning.


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The challenge here was to encourage them to sample our Rs 990 shoe so they could understand the superiority ofthe product, says Prem. So, it has taken steps to reach such prospective customers. For instance, it has done apromotion with Mail Today under which it offers free Reebok shoes with an annual subscription. The whole idea isthat when the above-60 consumer uses the shoe, the next shoe he will buy also will be Reebok says Prem.

For the mass market, Reebok has bonded well with cricket. It has set up exclusive cricket stores which stock pads,wickets and other cricketing gear. It has extended its sponsorship with Kolkata Knight Riders by opening an exclusive

store in Kolkata which sells KKR merchandise. As many as nine players in the Indian cricket team use a Reebok bat.It has benefitted from tying up with cricketers much before they become stars.

For instance, Yuvraj Singh was taken on board nearly nine years ago. Will Prems gamble pay off? Coca-Cola, forinstance, some years ago decided to go mass with packs priced at Rs 5. It did get volumes but its profit & loss sheetbegan to bleed. Prem needs to avoid that trap.

Reebok vs Nike: Sneaker Wars

Reebok Reebok goes back to the 1890s when Joseph William Foster made the first known running shoes

with spikes.

In 1958 the Reebok company was formed by Fosters grandsons and in 1979, at the height of therunning shoe boom, three models were introduced into the US market. Although they were the

most expensive shoes on the market, demand soon outgrew supply

By 1981 sales were $1.5 million

Reebok anticipated three major trends that would transform athletic footware: the aerobic

exercise movement, the embracing of sports by women and the trasference of athletic footware

for street and casual wear.

Growth exploded (especially with the introduction of the first-ever athletic shoe designed for

women) and sales soared from $13 million in 1983 to $307 million in 1985 sales tripled in oneyear, reaching $919 million in 1986. $1.4 billion was reached by 1987 and $2.7 billion was

reached by 1991

In 1993, a company publication stated that their objective, is to become the best, most

innovative and exciting sporting goods company in the world.

In 1987 Nike had sales of only $900m while Reeboks was soaring at $1.4b. But Reeboks salesslowed and by 1990, Nike overtook it with $2.24b in sales compared to Reeboks $2.16b in sales.

Reebok began to steadily lose ground.

Part of the shift could be attributed to Bikes savvy advertising and to its two well-paid

endorsers: Michael Jordan and Pete Sampras. But as the mid 90s approached, Reeboks internal

flaws became more and more obvious.

As sales increased so rapidly in the mid 80s, Fireman, who was Chairman and CEO gave up his

position to a management team more experienced in handling such a large company. While

Fireman (who owned 20% of the stock) was busy building golf courses on Cape Cod, the new

management team proved to be inept. The company went through three different top

managers in five years.

In August 1992, Fireman took charge and wasted little time in bringing in a new team and

planned an aggressive thrust back into the market.


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Reebok attacked Nike on the basketball market. Jordan was retiring from basketball and Reebok

signed up Shaquille ONeal (the next enduring superstar) to promote its products for $3m in

1992

Reebok advertised its new instapump shoe (using a pump instead of laces) very aggressivelyand expected $100m in sales

The Just do it slogan of Nike was devastatingly effective Reebok also signed up 400 football, baseball and soccer stars for its advertising and promotion

But these efforts did not pay off:. The Shaq Attaq shoes, aimed at teens, bombed the colours

were wrong and the price was $130US basketball shoes fell 20%

By 1995 operating costs soared to 32.7% of sales, exceeding the industry average of 27%

Reebok signed up 3,000 athletes to wear Reeboks at the 1996 Olympics in Atlanta; NFL teams;

and Rebecca Lobo (a basketball star) which blew out the budget

Other endorsements failed: Michael Chang was on a $15m contract, but he never made it

against Sampras and Aggassi who were both Nike endorsers and Shaquille ONeal became

unhappy with his $3m contract and started to look elsewhere for bigger and better money

The Reebok company also hit distribution snags and opened a new facility in Memphis, which

also cost big dollars

There were problems at the topthe turnover of top management was high, How do you

attract first rate talent when theres been a history of turnover at the top?

There were also price-fixing charges laid by the Federal Trade Commission and in May 1995,

Reebok paid out $9.5m to settle

Reebok also lost ground in the Foot Locker market. Footlocker (a Woolworths company) was thebiggest retailer of sports shoes. Footlocker saw its biggest weapon as its exclusive lines but

Reebok denied exclusivity to Foot Locker regarding their aerobic shoes. In contrast, Nike had

been working with Foot Locker and by 1995 had a dozen items sold only by the Footlocker chain.

Reebok also failed to get its samples in to Footlocker on time and that virtually guaranteed that

they would not be sold in Footlocker stores.

Senior management, even Presidents of firms need to become involved in the development of

relationships with major customers, such as Foot Locker

Reebok, the worlds leading sportswear brand launched its largest exclusive store that spans across15000 sqft. Located at Jubilee Hills, Hyderabad, the store was inaugurated by Mr. Subhinder

Singh Prem, Managing Director, Reebok India, followed by a fashion show unveiling their fallwinter 2007 collection.

Taking retail to new heights, Reeboks new store offers the finest shopping ambience to customerswith products displayed by categories such as Running, Walking, Aerobics, Tennis, Cricket andLifestyle, to help customers make better purchase decisions. Built across 2 floors with individual

customized sections for fitness, sports, lifestyle etc, the store offers a world class shoppingexperience. Its the only single brand store with an escalator built inside the store with two floorhigh glass wall carrying footwear, built in a circular fashion around it. So its literally a ridethrough a maze of footwear, giving you a complete sense of the brand coupled with an overwhelming sense of stylized shopping and delight of choice. With the focus on service andexceptional ambience paramount to Reeboks objective to providing an experiential shoppingexperience, the newly opened Reebok store promises to offer a larger-than-life feel to thecustomers.


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It offers different segments for both men and women like sports and fitness footwear, apparel,accessories, fitness equipment and the lifestyle section. A stupendous cornucopia of womens dance,

fitness, training, and sports collection is also present at the store. The store also has a corner KREATE YOUR OWN SHOE in which a customer can actually design their own shoe by choosingthe colour, lace, type of sole etc and buy it too!

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