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PROJECT REPORT

On

REEBOK

By

ABHISHEK SINGH

A0102218013

MBA Class of 2020

Under the Supervision of

Dr. Ashok Sharma


Professor
Department of Marketing

In Partial Fulfillment of the Requirements for the Degree of


Master of Business Administration – Finance
At

AMITY BUSINESS SCHOOL


AMITY UNIVERSITY UTTAR PRADESH
SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA
About Reebok
Reebok 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.

Reebok Marketing Strategy


Ever 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.

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.
Reebok vision

Fulfilling Potential

Reebok is dedicated to providing each and every athlete - from professional


athletes to recreational runners to kids on the playground - with the
opportunity, the products, and the inspiration to achieve what they are
capableof.

We all have the potential to do great things. As a brand, Reebok has the
unique opportunity to help consumers, athletes and artists, partners and
employees fulfill their true potential and reach heights they may have
thought un-reachable.
My understanding about the vision
Reebok is for everyone. Everyone has dreams, passion. No matter what
they are, Reebok is trying to say that everyone is able to do what they want
to do, to be what they want to be. And Reebok will accompany them on
thewaythere.

Reebok Mission

Always Challenge and Lead through Creativity


At Reebok, we see the world a little differently and throughout our history
have made our mark when we’ve had the courage to challenge
convention. Reebok creates products and marketing programs that reflect
the brand’s unlimited creative potential.

My understanding about the mission

Reebok is trying to be the trendsetter is its field by always being creative


with the products they make.
It will always explores its potential to create creative products that
customers want, as well.
Porter Five Forces Analysis of Reebok

Threat of New Entrants

Barriers to Entry

The athletic shoe industry is slowly becoming a global oligopoly. There are
many barriers to entry preventing new entrants from capturing significant
market share. Large athletic shoe manufacturers enjoy economies of scale
that create cost advantages over any new rival. Today’s athletic shoes are
highly technical. An extremely large capital investment is required for new
firms to open athletic shoe factories and conduct research and design to create
a popular athletic shoe.

Recently, Nike has incorporated forward vertical integration into their


corporate level strategy. Nike opened discount factory outlet stores in rural
areas and retail stores in urban shopping meccas. Monolithic athletic
manufacturing companies utilize economies of scale by spending millions on
product endorsements and advertisements by spreading the high cost over
their entire yearly sales. The aggressive marketing campaigns turn their
products into household names making it arduous for new firms to compete.
Athletic shoe manufacturers greatly attempt to differentiate their products
from all shoe manufacturers. For example, Nike aggressively markets their
shoes with a visible air chamber in the sole. Reebok pushes their “Pump”
feature to increase product differentiation.

The capital requirements can be a high entry barrier to a new firm to the
industry. However, an existing dress shoe manufacturer may enter the athletic
shoe industry simply by re-tooling their manufacturing plant.

Access to athletic shoe distribution channels is a moderate barrier to entry.


This all depends on the status of the entering firm. If they are a startup firm, it
is extremely difficult to get shelf space at major shoe retailers. If the firm is
currently in the dress shoe industry, and is entering the athletic shoe
industry, they may use their existing connections to easily access athletic
shoe distribution channels.

Switching costs are very low for the athletic shoe industry. Shoes are
relatively inexpensive personal goods that are frequently replaced.

Cost disadvantages independent of scale are moderate. Many athletic shoe


customers are brand loyal and are reluctant to try a new athletic shoe.
Additionally, previous aggressive marketing campaigns have increased not
only brand and individual product name recognition. Government policy is a
low entry barrier, as all manufacturers in every industry are subject to factory
safety laws.
Threat of Retaliation

The threat of retaliation is high in the athletic shoe industry. For example, if a
small new competitor attempts to gain market share by dumping their
products, the much larger computer firms are more capable of absorbing
losses associated with driving the new competitor out of business.
The threat of new entrants to the profit potential of athletic shoe
manufacturers is minimized through high entry barriers, but incumbent
manufacturers must stay aware of other shoe manufactures attempting to
enter the athletic shoe industry.

Rivalry Among Existing Firms

In the athletic shoe industry, corporations are mutually dependent. A


competitive move by one firm directly effects competitors, forcing
retaliation For example, Reebok’s expansion of the women’s walking
shoe, inspired other firms to follow.

The number of competitors is stable, partially due to high entry barriers. This
adds to the rivalry among existing firms. Manufacturers watch each other
carefully and make appropriate countermoves to match a competitors move.
The rate of industry growth is stable, but the quest for global market share is
eminent. Nike and Reebok are not as dominant globally, compared to the
U.S. This increases global rivalry. Product characteristics are related to
market share. Name recognition alone sells athletic shoes. The larger the
market share, the greater advertising capabilities and hence increased name
recognition.

Athletic shoe manufacturers relentlessly try to minimize fixed costs. Many


shoe manufacturers reduce their costs by assembling athletic shoes abroad
where labor is less expensive and tax laws are minimal. This increases
rivalry, when manufacturing savings pass to the consumer.
Capacity has minimal impact on rivalry, because most firms have means to
manufacture the demanded amount of athletic shoes. This ability to meet
demand reduces market because most firms overproduce and drive down the
selling price.

Low exit barriers and diversity among competitors has minimal impact on
profit potential. If the athletic shoe industry becomes too unprofitable, firms
could switch to other shoe markets. Additionally, diversity among firms is
small because every firm follows one another.
The rivalry among existing firms is high where weak firms are easily
acquired by fierce competitors. This may have a high impact on profit
potential.
Bargaining Power of Buyers
Woolworths’s shoe chains account for 23% of the U.S. athletic shoe sales.
Their dominant retail market share gives them a large amount of power.
Furthermore, Woolworth’s dominant market position contributes to
concentration of the buyers industry. Smaller firms have difficulty competing
with mighty Woolworth’s chains and other large shoe retailers.

Woolworth’s chains pose a moderate to low threat of backward integration.


In the event of backward integration, Woolworth’s would be subject to some
of the high barriers to entry. Plus, they would have to continue to sell their
competitors products because retail shoe sales are the core competency of
their corporation.

Buyers have high switching costs in regards to opportunity cost. If an athletic


shoe retailer decided to drop one of the popular athletic shoe brands, their
sales would fall due to high consumer brand loyalty. Most buyers have a
medium profit margin so price sensitivity of buyers is moderate. In the
athletic shoe industry, price increases pass to the consumers.
The overall impact from buyer’s bargaining power to profit potential is
moderate.

Bargaining Power of Suppliers

Athletic shoes are manufactured primarily from raw materials including


rubber, leather and nylon. These materials could be classified as commodities,
where the manufacturing process adds to their value. For this reason, the
suppliers have limited bargaining power, and little impact on profit potential.

Threat of Substitute Products and Services

Athletic shoes are designed to improve comfort and personal safety during
periods of increased movement. Substitutes for athletic shoes are using other
forms of shoes, or going barefoot. A large population of athletic shoe
consumers wear athletic shoes strictly because they are comfortable.
Comfortable dress shoes or sandals are equally interchangeable with minimal
switching costs. If the athletic shoe is used for sports, then there are relatively
few substitutes. Given these reasons, the threat of substitute products is
moderate and the impact to profit potential is moderate to high.

PESTELANALYSISOFREEBOK

Reebok is the international brand, which deals with the manufacturing of


sports goods and it provides its products almost all countries of the world. This
sports brand has introduced number of sports products like footwear, dresses,
wrist bands, caps and many other products. It parent company is Adidas,
which got tremendous popularity due to its unique collection of apparel and
accessories. The company became well known because of innovation and
excellent quality of footwear and sports apparel. Initially Reebok USA was
made to supply the products in USA but after few days it was merged into
Reebok International to spread its business of other countries of the world.

PoliticalFactors

US has consistent and easy atmosphere in which the corporate activities can be
continued easily. The government introduced many reforms for the
development of the business and also appreciated the companies to start their
working internationally. When the brand finds the favorable condition in any
country, then it introduced its products there. The company introduced its
products in the emerging economies like China and India, where the
consumption of products is excessive. Almost all of the countries make rules
and regulations to enhance the business activities in the country and this
expansion of business activities can remove the unemployment and earn the
revenue through tax collection or import and export dutiesontheproducts.

Economicalfactors

Reebok is considered among top 3 sports brands, which has largest sale of
athletic apparel and footwear across the world. The company prepares the
products in premium and mid-range and it targets the lower income groups,
which are in billion and it also categories its products for different classes and
genders of the society. Through its distant and large number of sale of the
products, the brand earned huge profit and its new and innovative products are
getting popularity. The company has given the attention to the lifestyle of the
people and provides products, which are suitable for their needs (BrandGuide,
2015).

The brand has its GDP growth rate at 7.3% for year 2012-2013, which was
6.8% more than the previous year. Due to its strong policies, the inflation rate
falls to 6.8% if compare it to 8.0% of last year. The value of the currency fell
and fiscal deficit and high trade put great pressure in the financial markets.
The position of the middle class was improved and it increased the sale of
branded products like sports shoes of international brands (Ruchi Dalal, 2013).

SocialFactors
Almost all of the countries of the world participate in different sports activities
and they have introduced their policies to encourage them. The young
generation of these countries takes part in different games and they look for
best and suitable apparels and sports shoes, which can give them convenience
during their games. So the sports products of this brand are getting popular
among these young people and they feel comfortable while running during
their sports. The young generation is health conscious and they are adopting
such healthy lifestyle, which can give them health and make them strong, so
they like to do exercise and play different sports (Ruchi Dalal, 2013).

The brand has made some tie-ups with different sports academies and schools
across the world so that they can create awareness among the people about use
of their sport products and remain fit and strong after playing the games. The
middle aged and the old aged people want to walk and come to the healthy
lifestyle

TechnologicalFactor
The brand has developed its own website, where the products are shown in
complete range. The new and innovative style of the sports products are also
shown as their new arrival in the market and it helps the clients to choose their
favorite product sitting in their homes. Reebok also offers the online shopping
to its clients, so they do not need to go to the retail shop to buy the products.
The online retail marketing has the annual growth rate of 35%, which is still
increasing and it is hoped that it will reach to maximum in next few years. The
countries, which have developed their economies and introduced new
technologies, the online retail shopping is increasing rapidly (Ruchi Dalal,
2013).

The sports brand brings new changes and technological advances in its
products every year so the people can find consistent innovation in the
products of this company. If this brand wants to make consistent development,
then it will have to continue new technological development to make its
products unique and up to the expectations of the clients (BrandGuide, 2015).

EnvironmentalFactors

Reebok has made the strong and consistent efforts to set the responsible
workplace standards and it has minimized the impact on the environment. The
company continued its help to achieve the fair, safe and healthy conditions of
factory and it is following various rules and regulations, which are governed
this industry. The brand also abides by the environment laws and regulations,
which are made by the countries and it strictly adheres to them (Nikhil
Sharma)

LegalFactors
Reebok has to follow different legal aspects during their business activities.
The brand has to pay the taxes in the countries, where it is operating and also
meet the labor wages according to the provision of their regulations. This is
the responsible fashion brand in sports, so it follow the local policies and
follow their rules and regulations ensuring their safe and quick supply of
products and get good profit over the sale of the products. The brand has to
pay the taxes according to the taxation policy of the operating countries. The
products of this brand are user friendly so these are getting popular but some
of the products may have restriction in any particular country so they need to
understand their policies and avoid any potential threats.

SWOT analysis of Reebok:

Reebok is a popular brand of sportswear and related merchandise which is


based out of United Kingdom. Founded by Joseph William Foster in the year
1958, the company started off by making athletic footwear. Today the
company manufactures shoes for various sports, sportswear, and accessories
for men, women and kids and is one of the leaders in the global sportswear
market. Currently, Reebok is headquartered in Massachusetts and has around
1.84 billion Euros as annual revenue in the year 2017.

With close association with a number of major sporting events through


sponsorships and through a series of endorsements from renowned
sportspersons, Reebok has won the trust and loyalty of most sports enthusiasts
across the world. Reebok currently makes merchandise for training, running,
walking, crossfire, studio, dance and yoga.

Strengths in the SWOT analysis of Reebok

The following are the strengths of Reebok:


 Segment: Reebok has a very clear segment to which it offers its products.
On a broad level, Reebok sells shoes and other sports accessories to
sportspersons or exercise enthusiasts.

 Feature-rich products: Reebok products are known for their features and
styling. Each type of footwear manufactured by Reebok has features that
suit their need or benefit and this has always been a strong selling point for
the brand. For example, their athletic footwear Crossfit has been designed
to provide the best running experience to athletes whether they are first
timers or seasoned professionals.

 Multi-channel distribution strategy: Reebok sells their products through


a range of distribution channels. Right from their own independent stores to
popular retailers as well as online shopping portals like Amazon or their
own website Reebok has the multi-channel presence. This makes it
convenient for the customer to shop from

 High customer engagement: Reebok has used social media to reach


out to more than 35 million customers in a boost to improve customer
engagement. For example, Reebok identified a huge opportunity in
combat training shoes and they have used Facebook and Instagram to
understand the needs of their target group or create forums where they
can discuss their concerns or get suggestions from experts. The
same strategy has also been mirrored in other niche categories.

 Celebrity Endorsements: Reebok is endorsed by the best sportspersons


in the world. Some of their endorsers have been Floyd Mayweather Jr,
Shawn Kemp or Allen Iverson. Recently Reebok has also been listing
musicians and rappers as their endorsers. Some popular names in this
category are Jay Z, Alicia Keys, Swiss Beats or TYGA.

 “cool ”Image: Reebok was quick to realise that the millennials as well
as Gen Y were also looking for the cool quotient in their sportswear. In
order to incorporate this Reebok roped in Chris Kwiatkowski, a graphic
designer from their Sports Licensed Division, and design leaders Peter
Quagge and Chuck Gates into mainstream decision making. The move
has not just made their products cooler but also improved the in-store
ambience.

Weaknesses in the SWOT analysis of Reebok


Weaknesses are used to refer to areas where the business or the brand needs
improvement. Some of the key weaknesses of Reebok are:
 Excessive commercialisation: The sportswear segment is so
competitive that brands are trying their best to commercialise their
interests. The results of this is that products like Reebok which were
once considered to be premium are now categorized alongside local or
regional players who cater to the mass market. This dilutes the brand
image.

 Poor awareness: Though Reebok has a lot of products which cater to


specific sporting needs of customers the company has been hugely
unsuccessful in educating customers with the result that the brand has
today largely become associated with sneakers.

Opportunities in the SWOT analysis of Reebok


Opportunities refer to those avenues in the environment that surrounds the
business on which it can capitalise to increase its returns. Some of the
opportunities include:

 Looking at new markets: Reebok which was once the leader in


sportswear has lost out to arch-rival Nike. But the brand has huge
plans to revamp itself by moving into new categories such as ethnic
designs, women’s speciality sportswear and kids shoes.

 Niche areas: In fitness today there are various niche categories such
as combat shoes, dancing shoes, aerobics shoes or training shoes.
Though Reebok has the presence in most of these categories
customers need to be educated more on why such specific needs
have to meet. This will result in the growth of such sectors.

Threats in the SWOT analysis of Reebok


Threats are those factors in the environment which can be detrimental to the
growth of the business. Some of the threats include:

 Competition:The main competitors of Reebok are


Nike, Adidas, Converse, New Balance and Puma.

 Steals: Designer sportswear brands like Nike and Reebok also face
serious threats from cheap imitation which are sold at throwaway prices.
Customers who are on the lookout for just the styling and not very
concerned about features often prefer to purchase these cheap
imitations.
EFE (External Factor Evaluation) Matrix
Opportunities Weight Rating Weighted Score

0.0-1.0 1-4 (WxR)


Established objectives 0.15 4 0.60
Restructured production creation teams 0.05 2 0.10
“It’s a Woman’s World” – young women 0.10 3 0.30
“The Sounds and Rhythm of Sport.” – fashion 0.05 2 0.10
consumers
National Football League campaign 0.05 2 0.10
Changed leadership for difficult brands 0.05 1 0.05
Ability to create synergy between brands 0.03 1 0.03
Special Technology 0.10 4 0.40
Threats Weight Rating Weighted Score
Strong US dollar 0.10 2 0.20
Weak department store channel 0.03 1 0.03
Foreign market is suffering 0.05 2 0.10
Economic decline in key markets 0.05 2 0.10
Chinese products 0.09 2 0.18
Strong Competition 0.10 2 0.10
Total(Opportunities & Threats) 1.00 2.38

Conclusion
Reebok gain 2.38 EFE total weighted score which is above 2.50 that‘s why
Reebok is Externally facing strong competition.

Competitive profile matrix


Athletic Market Share

Tows Matrix:

S-O strategies
 Use the expertise and experience of Fireman and Yankowski to carryout
objectives (S2, S3, O1)
 Further increase profits by utilizing the restructures production creation
teams (S1, O7)
 Further strengthen the multi-brand strategy with planned campaigns
(S5, O3, O4, O5)
 Further strengthen the multi-brand strategy with changed leadership and
synergy to grow quality market share (S5, O6, O11, O12)

S-T strategies
 Utilize the teams’ connection to the consumer to counteract sales lost
because of the strong US dollar, weak department store channels, and
suffering foreign market (S4, T1, T2, T3)
 Utilize multi-brand strategy to find a connection to foreign markets (S5,
T3)
 Use the increased profits to research other profitable markets to
strengthen the foreign market and avoid the negative effects of declining
key markets (S1, T3, T4)
W-O strategies
 Strengthen objectives to curb the effect on heavy dependent brands (O1,
W4)
 Utilize the changed leadership to correct difficult brands (O11, W4)
 Strengthen campaigns to correct difficult brands and lessen the need to
rely on department stores (O3, W1, W4)

W-T strategies
 Maintain brands to lessen the effect of the US dollar and foreign
markets (W4, T1, T3)
 Strengthen brands to be less dependent on department store channels
(W4,W1, T2)
 Lessen the reliance on retail stores to avoid the effects of weak
department store channels (W2, T2)
 Promote brands in different markets to lessen the reliance on suffering
key markets (W4, T4)

BCG Matrix:

STARS Question Mark


 Greg Norman  Athletic footwear
 Reebok Apparel  DMX2000
 3D Ultralite
 Ralph Lauren
Apparel line

Cash Cows Dogs


 Rock Port  Avia
Using the BCG Box (an example is illustrated above) a company classifies all
its SBU’s according to two dimensions:

On the horizontal axis: relative market share- this serves as a measure of


SBU strength in the market

On the vertical axis: market growth rate- this provides a measure of market
attractiveness

By dividing the matrix into four areas, four types of SBU can be distinguished:

Stars -Stars are high growth businesses or products competing in markets


where they are relatively strong compared with the competition. Often they
need heavy investment to sustain their growth. Eventually their growth will
slow and, assuming they maintain their relative market share, will become
cash cows.

Cash Cows- Cash cows are low-growth businesses or products with a


relatively high market share. These are mature, successful businesses with
relatively little need for investment. They need to be managed for continued
profit – so that they continue to generate the strong cash flows that the
company needs for its Stars.

Question marks- Question marks are businesses or products with low market
share but which operate in higher growth markets. This suggests that they have
potential, but may require substantial investment in order to grow market share
at the expense of more powerful competitors. Management have to think hard
about “question marks” – which ones should they invest in? Which ones
should they allow to fail or shrink?

Dogs- Unsurprisingly, the term “dogs” refers to businesses or products that


have low relative share in unattractive, low-growth markets. Dogs may
generate enough cash to break-even, but they are rarely, if ever, worth
investing in.

Using the BCG Box to determine strategy


Once a company has classified its SBU’s, it must decide what to do with them.
In the diagram above, the company has one large cash cow (the size of the
circle is proportional to the SBU’s sales), a large dog and two, smaller stars
and question marks.

Conventional strategic thinking suggests there are four possible strategies for
each SBU:

(1) Build Share: here the company can invest to increase market share (for
example turning a “question mark” into a star)

(2) Hold: here the company invests just enough to keep the SBU in its present
position

(3) Harvest: here the company reduces the amount of investment in order to
maximise the short-term cash flows and profits from the SBU. This may have
the effect of turning Stars into Cash Cows.

(4) Divest: the company can divest the SBU by phasing it out or selling it – in
order to use the resources elsewhere (e.g. investing in the more promising
“question marks”).

THE BOSTON CONSULTING GROUP BOX (“BCG BOX”) OF REEBOK


STARS

 Greg Norman Apparel


 Question Mark
 Athletic footwear
 DMX2000
 Cash Cows
 Rock Port
 Dogs
 Avia

Stars: [high share; high growth]

1. The Collection’s moisture-wicking innovative Play Dry® technology and


unique Performance. Luxury.

2. Style. combination continue to differentiate the brand.

Influenced by one of the world’s leading golf professionals and identified by


the four-color shark logo, Greg Norman Collection has become a complete
lifestyle brand since beginning as knitwear line in 1992.
India is now a major sourcing hub for Reebok International’s golf apparel and
accessories brand Greg Norman Collection. The $100 million brand which
retails at $60 to $90 per piece globally sources about 30-40% of its total
apparelneedsfromIndia.

According to Ms Biszantz, the entire Greg Norman range was being


outsourced from India including the regular knitwear polos, the fragile rain
suit and even Greg Norman’s patented play dry technology apparel range.
At present, the range is being outsourced from five vendors located across the
country,theseincludetextilemajorslike: Ahmedabad based Arvind Mills and
Gokuldas Exports, apart from companies like Gurgoan-based Matrix and
Faridabad-based Super Fashion and Gupta Exim.
The design and merchandising inputs are however still coming from New
York.
The Greg Norman Collection made its debut in the Indian retail market
through the opening of an exclusive brand store in Gurgaon

Grand Strategy Matrix

QUADRANT 2 (Proposed Strategies)


 Market development
 Market penetration
 Product Development
 Horizontal Integration
 Divestiture

Conclusions
A major weakness of Reebok is located in their top management. They lack
top management depth and face high management turnover. This is attributed
to the CEO, Paul Fireman’s inability to delegate efficiently. Key employees
and top management were sometimes left out of the "loop". Additionally, the
board of directors felt Fireman’s salary was too high.
In advertising, Reebok had difficulty positioning itself. Reebok changed
advertising agencies eight times and they earned a reputation as a difficult
client. Reebok aimed to differentiate its shoe and apparel lines and hired
Shaquille O’Neal as a superstar endorser.

Then Reebok changed advertising agencies and Shaq’s new role was
contradictory to the old.

Reebok largest customer is Footlocker, yet they established poor relations with
them, when they ignored their request to manufacture a specialty line
exclusively for Footlocker. Reebok was a poor listener to Footlocker, which
has a good ear to consumer wants and needs.

Recommendations
Immediately, Reebok should drastically improve its relation with its largest
distributor Footlocker. Then evaluate its manufacturing situation in the Far
East, to see if the benefits outweigh the costs of a lowered reputation. The
firm’s ROI has decreased and they need to manage their new assets better. We
would recommend a brief turnaround strategy. Contraction would include
increasing their accounts receivable turnover to increase profits by collecting
their accounts sooner and divesting in unprofitable divisions that don’t follow
their marketing strategy like the health and fitness clubs. Then in the
Consolidation phase they can measure their success by aiming for increases in
their fixed asset turnover and ROI ratios.

Lastly, and most importantly, Reebok needs to improve their top management
environment and utilize the skill that they are paying for. Ignoring delegation
duties in the top management will not reduce the management turnover and
will limit management’s progress.

Reebok has a strong name and even stronger campaign plans. However, the
company has a few areas that need to be analyzed and corrected. The areas
include:

 Reliance on department store channels


 Suffering foreign markets
 Find markets that are not in an economic decline
 Strengthen the brand name and message of suffering brands
 Need strong goals and plan to grow the sales & global reputation
 By changing advertising agencies frequently, Reebok has dug
themselves in a marketing hole. To accomplish their current goals they
need to produce better marketing campaigns.
 Change Management.
Decisions
Primary: Focus on finding the most promising customers (kids and women)
and introduce more products or improve current ones to satisfy potential
increase in demand

Alternatives:
 Keep expanding into current and future foreign markets by being
aggressive and the worldwide leader of the footwear industry
 Accelerate funding for numerous marketing campaigns in order to get to
specific markets or customer groups
 Focus on improving working conditions and human rights at
international manufacturer centers and at the same time increasing their
productivity
 Implement product diversification with company’s newest technologies
so resulting increased earnings could be reinvested into R&D plans

Why This Strategy?


 U.S. Women: Prefer fashion, not footwear, they prefer clothing; we
must create a shopping style based in athletic shopping.
 U.S. Kids: E-commerce, influenced by innovation and design, not only
comforts or sports
 Reebok need to consolidate US sales compared to international sales
and international competitors
 Difficult to expand towards other sports or population segments

Implementations (Actions):

Women:
 Open specific stores specialized only for women
 Increase R&D expenses by in women products
 Increase Marketing expenses by designing a specific campaign for
women using female endorsements
 Create a new logo for women market which would be associated with
fashion trends and introduce new products

Kids:
 Increase R&D expenses in kids products
 Increase Marketing expenses by designing a specific campaign for kids
 Introduce more soccer and basketball products targeting potential youth
market
 Research in international market to find out what are the new trends
related with women and kids products (Long-term)