Reebok- Marketing Analysis

A Detailed Study on Marketing Strategy of Reebok India

By: Amit Hosley(13)Ashish Kulshrestha(30)Gautam Jain(35)Girdhari Saran(36)

Submitted To:Prof Chinmaya Kulshrestha

Acknowledgement

We express our deepest gratitude to Mr. Ankit Gupta, Area Sales Manager Reebok, for his invaluable guidance and blessings.

We are deeply indebted to our Prof Chinmaya Kulshrestha, Marketing Faculty MDI, who helped us in choosing this topic and provide direction in which the analysis needs to be accomplished. She also encouraged and did support us throughout our course, especially for useful suggestions given during the course of the project period.

Finally, we take this opportunity to extend our deep appreciation to our family and friends, for all that they meant to us during the crucial times of the completion of our project.

Table of Contents1. Project Overview...........................................................................................................................4

2. Methodology.................................................................................................................................4

3. About Reebok................................................................................................................................4

4. Reebok Marketing Strategy...........................................................................................................5

5. Four P Components of Marketing Mix...........................................................................................6

5.1 Product..................................................................................................................................6

5.2 Price.....................................................................................................................................10

5.3 Promotion............................................................................................................................12

5.4 Place....................................................................................................................................21

6. Marketing Challenges..................................................................................................................25

7. Recommendation........................................................................................................................27

8. Limitations...................................................................................................................................27

9. Future Research Scope................................................................................................................27

10. References...............................................................................................................................28

1.Project OverviewThis is a detailed analysis report of Marketing Strategy adopted by Reebok in Indian Market.

2.MethodologyThis is an analysis report on Marketing Strategies deployed by Reebok. This study will help us understand various tactics used by companies in order to drive growth in top line and bottom line business. This report also captures various innovative ideas implemented to achieve their goal.

The overall data has been collected in collaboration with Mr Ankit Gupta and under his guidance. Also we have analysed the mission and vision of Adidas Group and attempted to relate it with the ongoing efforts from the company’s marketing team. This information is available on official websites of Reebok and Adidas Group.

Also we have incorporated the view points from various studies and articles published in newspapers in last one year.

3.About ReebokReebok is an international brand that sells sports and lifestyle products. It came to India in the mid-90s primarily to develop the middle segment of footwear market. Reebok was the first among the big three to identify India as a huge emerging market and a base for global exports.

It's more than 15 years in 2010 that Reebok has established its brand throughout India. The first three years in India were very difficult for Reebok to figure out the right marketing mix. Reebok started making profits in 1999 and was one of the first MNCs that posted profits post liberalisation. When Reebok entered into India, fitness was a very nascent industry and people used to buy branded shoes only for image, fashion and comfort. Though over the years, once Reebok established its brand, a descent market segment started purchasing shoes for some form of fitness activity.

15 years ago, In Reebok’s target segment only one in ten was indulged in any physical activity, however now seven out of ten people indulge in some kind of physical activity. Consumers has also started recognizing value for money products and are willing to shell out more for the product they want.

Reebok also invited visitors from abroad to share fitness perspective and conduct the Reebok Resolution with the Indian fitness fraternity at large. It is not only instrumental in redefining the attitude of fitness in India but also increasingly made it a career choice for many people.

Reebok India has bagged the prestigious Subsidiary of the Year award many times. It has a market share of 47 per cent in sports footwear and apparel category in Indian market. The company has also started expanding in Pakistan and Sri Lanka.

In August 2004, Adidas-Salomon acquired Reebok in USD 3.8 billion that created a USD 11 billion sportswear giant. Post its acquisition by Adidas, both the entities have integrated very well. Particularly in India, nothing has really changed as far as its strategy is concerned. Today, Reebok uses Bawa Shoes in Jalandhar and Moja in Sonepat to manufacture its low-priced shoes but imports most of its high-end shoes from around the world. Its brand is becoming stronger day by day. As

products get more and more commoditised and consumer choices soar, branding will provide the key differentiation to break through the clutter.

4.Reebok Marketing StrategyEver since it established its presence in India in 1995, Reebok has dominated the Indian sports- wear market. While its major competitors Adidas (now its sister concern) and Nike have not been as successful in the Indian market. Reebok's main advantage has been that it understood the Indian consumer very well and has made an effort to grow alongside him. For instance, when the company came to India, all that the consumers wanted was an international brand of footwear and Reebok gave them that at an affordable price.” Today, with sports becoming fashionable, the bulk of the sales come from the Rs 2000 to Rs 4000 segment compared to two years ago when most of the sales would come from the Rs 1000 to Rs 2000 segment. One aspect to Reebok's success has been its ubiquitous retail chain. The company is retailing from almost 750 exclusive stores. It also retails from two thousand multi-brand outlets. Reebok has been adding a store a week, for the next year the company has lined up even more ambitious plans to open a store every 72 hours. Reebok’s biggest investment has been in the field of marketing infrastructure, creating an international and uniform retail ambience in all their exclusive stores. A functional issue that was arguably instrumental in aiding the company establish itself early in the country was the fact that its shoes have a broader forefoot, which suits the Indian consumer. In contrast, the shoes of international rivals have narrower forefeet. It has made efforts to vibe with the customer for its apparel range as well, that contributes 45 per cent to the company's turnover. Lately the company has come up with its NBA-NFL range of T-shirts that are flying-off shelves in retail stores due to the customer demand for the Americana look.

Reebok is becoming stronger as a brand day by day. Investment in building a strong brand is a means of securing Reebok sales and business for the future. As products get more and more commoditised and consumer choices soar, branding will provide the key differentiation to break through the clutter. Fitness will be the key driver in lifestyles, and Reebok is undoubtedly the fitness enabler in the country. To inspire Indians at large to lead a fit lifestyle is Reebok’s goal and vision.

To reinforce Reebok’s position as a premium sports and lifestyle brand, Reebok intend to significantly improve and increase their product offering at high- and mid-price points to drive growth in average selling prices. Although this approach may slow Reebok’s top-line development in the short term, but they believe it enables them to build a platform for future sales and profitability growth. As a result of their new pricing strategy, there will be a certain level of competition between the adidas and Reebok brands, particularly at mid-level price points. To prevent cannibalization, Reebok will clearly differentiate both brands by communicating distinct brand messages targeted at different consumer types.

Even after its merger with Adidas, the Reebok brand has continued to execute its old strategy, positioning itself as a premium sports and lifestyle brand focused on fitness and training. Based on its roots and heritage in fitness/training, consumer insights and positioning within the adidas Group, Reebok developed a clear roadmap for its key businesses going forward: Own Women’s Fitness, Challenge in Men’s Training/Sport and Revive Classics. Central to Reebok’s brand heritage is the courage to challenge convention. Unlike many other brands, Reebok is committed to make fitness

fun again – challenging men and women to fulfil their potential in sport and in life by providing them with the opportunity, the products and the inspiration to have fun staying in shape.

On the promotions front as well the company has increased its spend and is roping in top sportspersons to push its brand. Reebok has tied-up with cricketers like Rahul Dravid, Mohamed Kaif, Yuvraj Singh, Irfan Pathan, Dhoni and Harbhajan Singh. In tennis, it sponsors the Davis Cup and backs Prakash Amritraj. In the upcoming field of motor racing it is sponsoring the fastest Indian Narain Kartikeyan.

5.Four P Components of Marketing Mix

5.1 Product

In alignment to the Marketing strategy discussed in previous section, Reebok has strategically launched various new products in Men’s and Women’s segment. This study has described all those products range launched by the company in recent past. Broadly speaking, the product range of Reebok consists of footwear, apparels and sports related accessories.

Shoes

ReeTone: Reebok conducted a survey and concluded that Women are busy and don’t always find the time to fit in their daily workout. Based on this relevant consumer need, in 2009, Reebok launched the EasyTone footwear collection that allows consumers to “take the gym with them”. EasyTone is based on Reebok’s proprietary “moving air” technology. It involves two balance pods under the heel and forefoot of the shoes that create natural instability with every step, forcing the muscles to adapt and develop tone. Building on the huge success of EasyTone in 2009, Reebok will launch an integrated marketing campaign around the world in 2010 under the motto of “ReeTone”. Reebok is also expanding its footwear offering into the running and training category, launching RunTone and TrainTone in 2010.

ReeGym: Through Reebok’s partnership with Cirque du Soleil, the brand will continue to develop new inspiring workout experiences and product collections to strengthen its position in the gym. The overriding aim of this collaboration is not just to create physically demanding workout routines, but to create exercises that are fun, unique and enjoyable.

In spring 2009, Reebok and Cirque du Soleil launched JUKARI Fit to Fly, taking inspiration from the theatrical and physically demanding artistry of Cirque du Soleil. Building on this, in 2010 Reebok and Cirque du Soleil are launching JUKARI Fit to Flex – a workout that enhances flexibility and muscle tone with the help of a specifically designed JUKARI band. The JUKARI training experience is accompanied by a fully integrated women’s fitness range, the Reebok Cirque du Soleil collection, which combines the performance demands of the workout with the creativity of Cirque du Soleil. In addition, Reebok launched the On The Move collection of apparel and footwear, created for the needs of a woman’s busy lifestyle. The collection is versatile and able to be mixed and matched in or out of the gym.

ReeZig: In spring 2010, Reebok will introduce ZigTech, a completely new training shoe for endurance sports like running and agility sports. In product testing, a host of enthusiastic athletes and consumers confirm that ZigTech is not only visually striking, but more importantly it addresses an unmet need of fitness runners and athletes. This need is to get more out of their workout and reduce wear and tear – thus allowing them to enhance their lifetime as an athlete. By maximising energy transfer through its zigzag geometry back to the actual running stride, this shoe allows the wearer to train longer, faster and healthier.

This is achieved as the unique energy and cushioning system reduces stress on muscles by up to 20%, therefore reducing wear and tear on the runner’s body. The introduction of ZigTech will be supported by an integrated global marketing campaign “ReeZig” – featuring key athletes from Reebok’s roster – with major launches planned to coincide with global event milestones such as the Super Bowl.

ReeTrain: In 2010, Reebok has introduced a complete range of strength training products for men based on its muscle toning platform of “moving air”. Air-filled pods under the heel and forefoot of the shoes create a natural instability with every step, forcing the muscles to adapt and work harder. This allows the consumer to “get more out of their workout”. The offering includes EasyTone for walking and casual wear, TrainTone for training exercises and the gym, RunTone for running and JumpTone, helping to strengthen key leg muscles and thus allowing athletes to improve their vertical leap.

Reebok Junior:

Going forward with its strategy of retail segmentation, Reebok’s latest retail venture, Reebok Junior, is largely to satisfy the company’s ambition to “become India’s largest kids apparel brand by end-2009.” Small surprise that other kids apparel retailers like Liliput are already having nightmares. Reebok Junior has 30 stores across the country as of now and Company says that the plan is to roll out 100 stores by the end of this year. Given the aggressiveness, in its debutant year itself, the kiddies segment contributed about 5% to the total turnover of the company.

Although Reebok Classics was born from sport in the early 80s, today it represents the intersection where sport meets style, offering lifestyle footwear, apparel and accessories. In rebuilding the Classics business, a key tenet of the strategy is to control distribution by segmenting the product

offering available for retailers, as well as keeping a tight rein on supply. In 2009, Reebok has continued to tightly manage its directional sport and generalist retail channels particularly in the United States and in Europe, with the primary aim to clean up old inventory and reduce the brand’s exposure to low price points. In addition, Reebok has launched new product initiatives in a controlled and disciplined way. At the same time, the brand has begun to strengthen its position in the select and trend channels with limited editions and special projects. An example of this is “Pump20” which was kicked off in November 2009 to celebrate the 20th anniversary of The Pump™. Through a partnership with 20 select retailers around the world, custom collaborations of The Pump™ were developed and exclusively launched in select stores.

To leverage its iconic sports heritage, Reebok revives its Classics business by focusing its product range with two priority pillars that define the Classics product architecture: Always Classic and New Classic.

Always Classic: Always Classic products harken back to the brand’s roots and merge iconic models from the 80s and 90s with new midsole/outsole technologies.

New Classic: The New Classic segment represents the modern interpretation of Reebok’s roots. Inspired by the past, New Classic collections merge sport and style to re-energise the category. The launch of the Women’s Fly Generation collection represents this new direction with products like the Top Down and Courtee Mid.

Apparels

EA 7 / Reebok – Apparel: The apparel is inspired by the ‘alter ego’ concept of sport and fashion and can be combined with the footwear for a confident, total look. Rich, luxurious fabrics from the

fashion world of Emporio Armani have been infused with cutting-edge Reebok technologies to maximise comfort, fit and performance. Signature fashion detailing inspired by crocodile skin changes according to movement in the fabric and expresses a dynamic visual effect during performance.

For men, the apparel features sophisticated key colourways of black, misty grey and white, punctuated with fashion tones such as fluorite yellow for a confident, sexy look. Sleek, fitted running tanks and tops incorporate reflective branding, zip closure, bonded mesh panelling as well as PlayDry, a moisture management system that wicks away perspiration. Stylish, highly functional running tights employ isolated compression for optimised functionality. Long-sleeve technical tops utilise 2-way front zip detailing and elbow articulation. Running shorts incorporate X-static, an anti-microbial, odour free, anti-static thermo-regulation technology. Fitness fleece hoodies with dual button closure, stand-up collars and built-in hoods are completed by kangaroo front pockets and branding on the left arm.

For women, relaxed fit harem pants are teamed with asymmetrically fastening hooded tops. The look is flattering, slim on the hips and baggy around the ankle, with snap button closure at the lower leg. A PlayDry base layer moves moisture, accelerates evaporation and reduces abrasion without trapping the body’s thermal energy. Slim fitting fitness pants, tunic dresses in magenta flash and double breasted snap button fleece hoodies compliment the fitness story. Running apparel for women offers soft, supple, sexy fabrications. Chaffing is eliminated by the use of SmoothFit technology which wraps around the body and creates interior surfaces that eliminate friction during movement. Running tanks show tonal crocodile print on the back mesh detail while running tights, tees and all weather H20 jackets complete the collection.

Reebok men’s clothing consists of Reebok t-shirts, Reebok polo shirts, Reebok jackets, Reebok hoodies, Reebok tracksuits and sports training clothes made with Reebok Play Dry fabrics to keep body temperature perfect. All of these clothings are designed to suit the training needs, the Reebok Lightweight Track Jacket is great for outdoor running.

The Reebok Run t-shirt is perfect for running at the gym and outdoors. Reebok Play Dry fabric, the Reebok Pace Run men's t-shirt works to manage moisture and keep you feeling cool.

Sporty and sleek, the women's Reebok Evolution training range provides high fashion sports and gym clothing. Women’s Reebok sports tops, Reebok t-shirts, women’s Reebok shorts, Reebok tank tops, women’s training pants, Reebok 3/4 pants and women’s trainers. Perfect for working out at the gym and running you’ll find everything you need for sport.

Designed with an elegant cut, the women's Reebok Polo Shirt is great for standing out - whether you're working out or enjoying your leisure time. These outfits are perfect for gym training, running, and dance and relaxing. Lightweight and designed to keep you at the optimum temperature, the Reebok Play Dry Tank is great for exercising at the gym. The women's Reebok Core Long Bra is excellent for intense workouts at the gym, aerobics, dance and running.

5.2 PriceReebok follows the common pricing strategy. Their main aim is to survive and grow in the market. But as such Reebok follows maximum market skimming strategy. Whenever Reebok unveils a new

technology in market they set a high price for it. Reebok starts for such products with high prices and then slowly drop prices over time.

As Reebok can sense that whenever they launch a product they have sufficient number of buyers for that product and Reebok keeps the price high so that they are able to control the demand, earn more profit and communicate to buyers with high price that the product is superior.

Reebok usually follow skimming strategy but when it entered into the apparels and other accessory market in India it followed penetrating pricing, i.e. Reebok set low prices for apparels to attract the customers at the start to an introductory price, and as the products became more popular the prices were raised to a normal level.

Companies usually set their prices to stay ahead in the market. In 2006 when Nike and Puma were also getting popular among youth, Reebok came up with destroyer pricing strategy and set deliberately very low prices hoping that the competitors cannot match it and infact it helped Reebok acquiring a major share.

Reebok usually puts its product on Sale for clearance purposes two times a year.

Reebok came to India in the mid-90s mainly to develop the middle segment of 69 the footwear market in Africa, the Middle East, and Central and South Asia, and as a fallback in the event of an interruption in Chinese supplies. The annual threats of adverse action against Chinese imports into the United States, prior to the admission of China to the World Trade Organisation in 2001, were noted in each Reebok annual report as having a potentially negative financial impact. Reebok was the first among the big three that identified India as a huge emerging market and a sourcing base for

global exports. In order to combine the popularity of its soccer and athletic brand with the popularity of football and basketball enjoyed by Reebok, Adidas-Salomon bid $3.8 billion in early August 2004 to acquire the latter. This deal has created a $11 billion sportswear giant and poses a formidable threat to arch rival Nike.

5.3 PromotionAdvertising Agencies

To promote its brand, Reebok has been taking services from advertising agencies for quite some time now. During 2004-2007, McGarry Bowen was Reebok’s brand agency globally. During this period, Reebok had done advertising and marketing for various products. Pump sneakers advertisements, “Two People in Everyone” ad campaign, Runners head game- I am What I am ad campaign were all under this advertising agency.

In March 2009, Reebok changed its advertising agency to DDB Worldwide. This agency handled Reebok’s brand advertising and marketing communications as Reebok is trying to establish its brand in the women's fitness market. The ad campaign “Your Move” was done under this agency.

However, Reebok handed its regional advertising business to WPP subsidiary Soho Square, which was supposed to manage Reebok's key markets in the Asia Pacific including Hong Kong, Japan, Korea, Australia and India and China.

Key Market Segments

Reebok has started to shift its focus on specific market segments. It has developed a clear roadmap for its key businesses going forward: Own Women’s Fitness, Challenge Men’s Sport and Revive Classics.

Promotional Methods

Reebok offers great deals on footwear, apparel, and fitness equipment for women, men, and kids. The company uses various promotional tools to bring awareness among its customers. It offers discounts, vouchers, coupons and custom made sneakers on their products. Apart from this, Reebok uses various media tools to promote its brand and create awareness about the products. Reebok uses television commercials, print ads, billboards, online advertising, sponsorship events and various advertising campaigns for its promotion.

Above the Line Method

Print Media Advertising

Reebok promotes its products through print media advertising which includes newspapers and Magazines. It also includes outdoor billboards, transit posters, the yellow pages, and direct mail.

In India, Reebok features its print ads on magazines like Flimfare Magazine, Cineblitz Magazine, Stardust Magazine. The recent popular print ad campaign of Mahindra Singh Dhoni and Bipasha Basu were featured in these magazines.

Newspaper

Reebok also features its ad in supplement papers of national dailies like HT City of Hindustan Times, Delhi Times of Times of India, Mumbai Times of Times of India

Television Media

Reebok uses many celebrities in India to shoot in a television commercial for promoting its different categories of products. For sports related products, it has primarily used Indian Cricketers such as M.S. Dhoni and Rahul Dravid. Recently, It has signed a deal with the great Sachin Tendulkar as well.

Reebok uses this marketing tool to gain recognition for its products and promote specific stores or products. Reebok had used various sportsmen and non-sportsmen as their brand ambassadors.

In terms of general fitness, Reebok usually endorses famous models of bollywood stars.

The Reebok segment is comprised of the Reebok brand, Reebok-CCM Hockey and Rockport. In 2008, the Reebok brand has further refined its strategy considering the brand’s heritage and values, consumer insights and positioning within the adidas Group port folio. Inspired by its roots in sport and women’s fitness, Reebok developed a clear roadmap for its key businesses going forward: Own Women’s Fitness, Challenge Men’s Sport and Revive Classics. Central to Reebok’s brand heritage is the courage to challenge convention. Unlike many other brands, Reebok is committed to make fitness fun again – challenging men and women to fulfill their potential in sport and in life by providing them with the opportunity, the products and the inspiration to have fun staying in shape

In 2008, Reebok commercial of “Your Move” ad campaign featured celebrities like Bipasha Basu and Mahindra Singh Dhoni.

Infomercial

Reebok also does its marketing through infomercials. There are two types of infomercials, described as long form and short form. Long form infomercials have a time length of 30 minutes. Short form infomercials are 30 seconds to 2 minutes long. Infomercials are also known as direct response television (DRTV) commercials or direct response marketing.

The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and often demonstrate products and their

features, and commonly have testimonials from consumers and industry professionals. Reebok arrange several infomercials in the sports based program.

Reebok first infomercial was on April 2001 for the Reebok Core Board, a stationary muscle- training program. It was a 28-minute infomercial which demonstrated the system, including the workout regimens, user testimonials and the system

Internet

Online purchase and marketing has been a great revolution in last 2-3 years in India. Thus, Reebok is also selling its same products as they do in stores through web as well.

Reebok.com has not done much to promote its web site, but they do put their web site address at the bottom of all their television commercials and print advertisements.

Sponsorship Advertising

To cater to its major market sports playing people, Reebok had sponsored many sports both internationally and nationally. The company had tie-ups with various sports for providing apparel, footwear and cricket equipments

Reebok has sponsored sports kits for the great rich Indian Premier League teams, such as the Royal Challengers Bangalore, Kolkata Knight Riders, Rajasthan Royals, Chennai Super Kings and Deccan Chargers in the first edition of the league held in 2008.

Reebok also became the official partner of Force India on February 2009. Force India - India’s only Formula One Team - is all set to speed its way into the fast-paced lives of more and more Indians by partnering with premier sports and lifestyle products giant Reebok as its official apparel and footwear merchandising partner for the next 5 years. After inking the association in 2008, the partnership between Force India F1 team and Reebok has rolled out with the 2009 Force India Team wear collection.

Film Promotions

Reebok, the world’s leading sportswear brand, is unveiling its ‘My Name is Khan Collection’, showcased in the most awaited movie of the year starring Shahrukh Khan, Kajol and other stars. The new range consists of footwear and apparel and will be available across Reebok stores in the country.

Below the Line

Reebok is also directly interacting with its customers to promote its products. In 2007, Reebok India had started with its Run Easy Campaign and to encourage consumers to participate in the campaign, Reebok has given away ten thousand pairs of shoes in the first phase.

The company has decided to explore the parks frequented by joggers to undertake promotional activities for the campaign. Reebok Easy Vans along with trainers will demonstrate the spirit of Reebok Run Easy at the parks in cities like Delhi, Mumbai and Bangalore. The trainers will also teach fitness steps like warm ups, breathing patterns and foot movements to the joggers.

The campaign enables Reebok to associate directly connect with the consumers, unlike cricket where they are involved as mere viewers. Reebok has launched three new footwear collections to attract the consumers who have just started running.

Reebok Taglines Development

Tag lines always give a brand its identity as well as a momentum, if it is used the right way. It is very important to develop a catchy corporate tagline in addition to a great corporate logo that will effectively communicate in one sentence what services or products your company sells.

Over the years Reebok has constantly changed its taglines and highlighted on different aspects of fitness. Reebok’s taglines are focused on women fitness - where it has deep roots; men’s fitness and training, to be credible an athletic footwear brand; and classics.

In 2008, Reebok has signed an endorsement with Bipasha Basu to make fitness fun with Reebok. Reebok pinpointed the consumer insight that women perceive exercise as a boring, and would work out more often if the gym was fun. Reebok tried to make fitness fun again through an exciting partnership with top instructors from around the world.

Reebok's challenger approach was to provide consumers with the choice to take the boredom out of working out. Running online, out-of-home, in-store, and in print, the campaign features fun, engaging taglines such as, "Less work, more play. Fitness is what you make of it. Your Move" and "Confusing fitness with fun? Your Move

In 2006, Reebok had a tagline “Run easy”. The Run Easy campaign took a 180 degree turn from traditional sport advertising. It addresses the majority of runners, emphasizing on running as a social activity and more importantly, fun. The campaign was well liked by the people and Reebok had created a companion site called GoRunEasy.com to emphasize the social aspect of running.

Some of the other Taglines of Reebok are:

“Have Fun While You Run”

“I am what I am”

“Take the gym with you”

“Eye candy for your feet”

“Little Said, greatly Felt!

5.4 PlaceReebok reaches out to its target customers through its 1000+ exclusive stores, 200+ shops in the shop outlets & 2500+ dealer outlets. The footwear franchise provides a range of footwear such as for Adventure, Basketball, and Casual and Cross Training. The Reebok franchise also has shoes for Running, Soccer, Tennis, Walking and basic sandals for the men. The clothing and footwear franchise has its apparel section for the women and men.

Reebok India’s footwear and athletic apparel market share was 54 percent as 2009 came to a close, up from 51 percent the year before. That’s a far cry from Reebok’s United States numbers. The company was the first to introduce women’s athletic shoes in 1982 and once enjoyed a dominant share of that market. The company had just a 2 percent share of the women’s footwear market in 2009, down from an almost 9 percent share just two years ago. Reebok was purchased by German sportswear giant Adidas in 2006 as the companies sought to catch U.S. market leader Nike.

Store selection strategy

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

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

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 up a store there or not? What products should it stock?

For Reebok, the country’s 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 the first 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 for expensive Reebok sneakers. It proved to be a gross overestimation of the market’s potential. Little did it realise that cars were bought on instalments here, and a large number of drivers didn’t own the cars — these were provided by the office!

In fact, India is the only market in the world where Reebok has such dominance in the market place.

Franchise model

In 2009 Reebok joined hands with the largest integrated franchise and retail solution provider Franchise India Holdings Limited (FIHL) in order to expand the franchise opportunity. Interestingly, all of Reebok’s stores in India are franchisee-owned. The Company has taken great pains to deal with the accompanying trouble of maintaining brand consistency in such retail models. It is very choosy in selecting our franchisees and even our sales team. But once on board, every month, the company sends their own sales people visiting each Reebok store to address any issues that crops up. Besides, the company tries to always stay on top of new trends through product proliferation, brand extensions and segmentation strategies. For example, Connaught Place, Delhi where Reebok has four stores and each of these stores offers different things in a different ambience to different consumers, adding that the one floor of the first store has lifestyle products and the second floor has sports goods. Another store only displays apparel for women, while the third store is for the kids. Such a segmented retail strategy allows Reebok to rake in Rs.2.5 crore annually from Connaught Place itself.”

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 a pair of jogging shoes, to be precise. The two basic requirements for going mass-market have thus been fulfilled. The task in hand is to reach its shoes to consumers all over India.

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 of the 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 they constitute 50 per cent of the revenue. And to keep costs down, over 80 per cent of the footwear is manufactured in the country.

As per the company, it is difficult to identify where to locate a Reebok store, as demographic and psychographic data available in the country is scanty. As per company, the division of cities, towns

and rural locations based on socio-economic data is imperfect because in reality you can never know when a city has ended and rural area has started. The census 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. The company has developed its own yardstick: It believes any location which has a population of 10,000 to 15,000 can sustain a Reebok store, especially if it is a service hub. So the whole idea is to go ahead, put in a store and see if it works. The good thing is that 95 per cent of the time Reebok is successful while launching the new store.

Tier-II cities

Reebok India sees rising aspirations among people in tier-II cities as their counterparts in the major cities, as customers in smaller towns too have started to look at branded products. The company firmly believes that the all these towns are having market, but agrees with the fact, that these market are not only price sensitive but also value sensitive.

With the launch of world's biggest showroom for Reebok in Hyderabad the company has been expanding into tier-II cities in the last two years.

Out of the 1000 Outlets Company owns at present, about 40 per cent are in tier-II cities. However, he admitted to the fact that contribution to the sales turnover from these cities was less. Though, It is about 15 per cent in turnover.

The company claims to have a market share of 51 per cent in the Rs 2,000-crore premium sportswear market in the country. Reebok plans to have a total of 600 outlets by the year-end.

The company strategy in India is retail-driven and it is opening, on an average, one store every second day. Having covered the big cities, the idea now is to have a presence in tier-II,-III towns and cities across the country.

According to Company, with higher disposable incomes, people are aspiring for lifestyle products. As a strategy, Reebok has been focused on blending sports technology with lifestyle products. Prominent designers have been roped in to design lifestyle apparel even as celebrities from Bollywood have endorsed Reebok-branded fitness equipment.

The company has a growth prospects in India. However, the challenge is to position our brand and products appropriately in the smaller towns. In the big cities, we shall have large format retail outlets while in smaller towns, the show rooms will be smaller.

From being the first athletic footwear brand to use soft garment leather, Reebok will now venture into the manufacture of denims. The idea also is to leverage on the synergy between music, fashion and sports, a trend that continues to grow stronger across the globe. This, perhaps, explains Reebok India’s association with the ongoing Indian Premier League (IPL). Reebok is the sponsor of four (out of the eight) IPL teams, and also of 33 cricketers playing the league.

Store layout and design:

Taking retail to new heights, Reebok’s new store offers the finest shopping ambience to customers with products displayed by categories such as ‘Running’, ‘Walking’, ‘Aerobics’, ‘Tennis’, ‘Cricket’ and ‘Lifestyle’, 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 shopping experience. It’s the only single brand store with an escalator built inside the store with a two floor high glass wall carrying footwear, built in a circular fashion around it. So its literally a ride through a maze of footwear, giving you a complete sense of the brand coupled with an over whelming sense of stylized shopping and delight of choice. With the focus on service and exceptional ambience paramount to Reebok's objective to providing an experiential shopping experience, the newly opened Reebok store promises to offer a larger-than-life feel to the customers.

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 women’s 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 choosing the colour, lace, type of sole etc and buy it too!

Reebok India commands a 51% market share in the premium sportswear industry. It plans to increase the store count from the existing 500 to over 600 before the next financial year. Reebok reaches out to its target customers through its 500 exclusive Reebok Stores, 200 Shop in the shop outlets & 2500 dealer outlets.

Reebok’s Managing Director for India, Mr. Subhinder Singh Prem expressed his delight at the opening of their largest single branded store in the world. “The opening of biggest Reebok store in the world in the city of Hyderabad is indeed a proud moment for us. With 500 stores across the country and now the launch of this store, we hope to delight our customers with greater and more easily accessible choice. The store would house all categories of Reebok sports, fitness products and our Lifestyle collection catering to both men & women.”

Future expansion plans

Reebok's other brand Rockport seems to be getting the rough edge of the deal so far as expansion and even promotions are concerned. But Company is quick to deny any insinuations to that effect and says that Rockport is for a comparatively older customer set and for those who pick up a brand for the self-goodness factor.

In 2009, reebok paired up with Franchise India in order to renovate its current franchise business as well as to enter in to the growing market of Tier II and Tier III cities of India.

So what's Reebok India's next move? The next move of reebok in words of its CEO "India is changing and there is so much to work on, like the way mobile has evolved from a communication device to a fashion accessory, we want to bring a huge change to our industry." replies Prem.

The focus of Reebok is in the area of women's fitness. As per company analysis the female consumer is not 'owned' by anybody yet and they see an opportunity there. Also the company is working on men's fitness and training. And they will try and get close to the most popular sport according to the regions where they operate. The company is looking at cleaning up the business and getting our distribution right. Along with marketing and innovative products they need to have the right ammunition to execute our strategy.

6.Marketing ChallengesReebok had some time back hired an international agency to help it identify locations for its stores on the basis of income pockets. The agency devised a plan that looked good on paper: Divide each city according to the postal codes. 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 up a store there or not? What products should it stock?

For Reebok, the country’s largest seller of sportswear and apparel, it has to wrestle with this challenge every day. It wants to become a mass-market brand, and the location of stores holds the key to that. This is not the first 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 for expensive Reebok sneakers. It proved to be a gross overestimation of the market’s potential. Little did it realise that cars were bought on installments here, and a large number of drivers didn’t own the cars — these were provided by the office.

But it has got over the initial hiccups. Though fourth in the global sweepstakes after Adidas, Nike and Puma, it leads the pack in India with a 53 per cent share of the branded sports footwear market (estimated size: Rs 3,500 crore per annum).

Mass vs class

Detractors and competitors, however, say that the company’s strategy may take the sheen off the brand. “You can’t be a prestigious brand and at the same time sell it for under Rs 1,000. Also you will compromise on quality and these shoes are known for their performance. You can’t be both a mass as well as a class brand,” says a rival.

Reebok is aware of the challenge. One way to overcome it is to segment the market, and have sub-brands for each segment. For instance, Reebok has created a segment for health- and figure-conscious women. It has launched 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. Similarly, to cater to the fashion-conscious, Reebok has tied up with designer Manish Arora for the Fish Fry range. It’s a 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. The company caught on to the potential when he saw his father and his friends not using sports shoes while walking in the morning.

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.

Price barriers

The biggest challenge in front of company is to produce quality products at even lower prices and break the existing price barrier. The company has brought down its entry level price from around Rs 1,390 a few years ago to Rs 990 now. And, of course, Reebok’s research and development centres abroad are working to break new price barriers.

For that, company is also experimenting with new mediums which will supplement his already large advertising budgets. The focus now is to leverage social websites and offer consumers knowledge about its products. One idea which has been floated is to set up Reebok Clubs across websites were people can exchange notes on fitness and Reebok products, and give their independent opinion. The company feels it can extract more value this way 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 shoes much faster than before. Middle-class buyers now change their footwear every three months, down from eight to 12 months earlier. And at the lower end of the market, consumers are changing once in every 15 months compared to three years earlier.

“The customer who buys entry-level Rs-990 shoe upgrades to the next level just like you upgrade your car. And as he is already hooked on to Reebok; so, his next shoe will also be the same brand, provided of course we offer him wide variety 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.

7. RecommendationReebok has been very cleverly playing its marketing strategy for last few years. It has been segmenting its market very precisely and then aggressively promoting their products specifically to that segment. For example, Women’s segment or kids segment. Recently, it has launched reetone category specifically for women.

In terms of price as well, Reebok has been offering its products at different price levels for different targeted segments. Its products range from Rs. 500 onwards. Thus, it tries to cover everyone from mass to class. Reebok has also expanding its apparels section now along with shoes, which is gaining popularity day by day.

In 1990s, Reebok stores were only present in metros, however, nowadays; it has opened its stores in remote areas as well. Also, in metros, it has opened its specialized stores as women’s, kids, apparels or shoes stores.

Reebok has also tied up with many strategic channels in India to promote its brands at different levels, which helped it to grow its market in urban as well as rural areas.

In conclusion, Reebok has been expanding its products categories, price range, geographic presence and promotion channels over the last decade. Despite being acquired by Adidas, Reebok brand has been growing at a good pace.

The above strategies have been very successful till now and we recommend Reebok to continue doing these things. In addition, Reebok can also explore the segment of formal wear, where it is not present at all. With growing Indian economy and large number of working people, Reebok can very well tap this market. Reebok has already established its brand in the market and it can leverage its brand to enter in new segments.

Also, Reebok should promote Indians more to go for physical exercises, for which may be it can announce monetary incentives as well, such as Discount coupons at Reebok outlets if one loose n kgs of weights in n number of days.

Thus, we recommend Reebok to continue expanding its reach in new areas, geographies, segments and cover the whole class as well as mass.

8. Limitations This study is based on limited data that was available on internet and guidance provided by

Mr. Ankit Gupta.

We were able to conduct limited surveys from customers.

Given the vast presence of Reebok in India, it was difficult to collect first hand information from tier-2 and tier-3 cities

9. Future Research ScopeThis study is limited to the marketing strategy of Reebok in Indian context only. As part of future research, individual product performance and market strategy of Reebok in international market can

also be done. This study can also perform on various sports sponsored by Reebok and to become common brand in sports fraternity.

10. References- http://www.fibre2fashion.com/news/company-news/reebok-india/

- http://www.business-standard.com/india/news/reebok-straddles-massclass/395093/

- www.reebok.com

- www.adidas.com

- http://reocities.com/TimesSquare/1848/reebok.html

- www.ibef.org/download/running_jan19.pdf

- www.franchisebusiness.in/c/REEBOK-INDIA-COMPANY

- www.wikipedia.com

-