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SBJ/20090413/This Week's News

Whats next for Reebok? Fun and fit

By Terry Lefton, Staff Writer

Published April 13, 2009

Over the past two decades, while Nike was swelling from a $1.2 billion company to an $18.6 billion empire, the most consistent characteristic of Reebok was its proclivity for ditching agencies and tag lines nearly as often as consumers change shoes. Nike introduced Just Do It in 1988. Since then, Reeboks ads have preached that it is Time to Play, and that Life is Short Play Hard. It encouraged consumers to Pump Up and Air Out, to Wear the Vector Outperform, and Defy Convention. Reebok asked Are You Feeling It? and told consumers they were living on Planet Reebok, a place where yet another tag line, Reebok Lets UBU, is likely the law of the land. More recently, Reebok advised weekend warriors to Run Easy, before following with the unassailable logic, if not marketing savvy, of I Am What I Am, an effort some derided as The Popeye Campaign. Three U.S. presidents after Time to Play, consumers are understandably befuddled about what Reebok stands for. Adidas purchased Reebok for $3.8 billion in early 2006, saying the union would allow Adidas to challenge Nikes footwear dominance, especially in America. However, since the Reebok acquisition, both companies have lost market share in the U.S. (see chart). The Reebok brand didnt have any direction at all, acknowledged Adidas Group Chairman and CEO Herbert Hainer during a rare interview recently at Reeboks Canton, Mass., headquarters. Consumers didnt know what the brand stands for: Is it a hip-hop brand or a football brand or a womens brand or a licensed brand? Announcing the Reebok acquisition in 2005, Hainer called it a once-in-a-lifetime opportunity, a perfect fit for both companies, because the companies are so complementary. For this merger to keep from replicating the failure of Daimler/Chrysler, to cite another attempted German/American business union, Reebok must find its way. Its decades of brand incoherence are even more marked, considering that its chief rival, Nike, is one of the worlds most consistent and distinct brands. Reeboks latest marketing agenda, as expressed by Hainer and Reebok President and CEO Uli Becker, is to
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Whats next for Reebok? Fun and fit - SportsBusiness Daily | SportsBusiness Journal | SportsBusiness Daily Global

focus on three areas: womens fitness, where it has deep roots; mens fitness and training, where it lags badly but must compete to be a credible athletic footwear brand; and classics. Reeboks foundation models have always moved well, but lately price points have been slipping to less than desirable levels, especially at places like Kohls, where some Reebok shoes sold as low as $25 or were perennially buyone-get-one-free. Distribution decisions compromised the brand, but weve cleaned that up, Becker said. Its just taken longer than we hoped.

On the product side, Reebok wants to dominate womens fitness, Becker said. Theres no ownership there, but everyone knows Nike owns basketball. In mens sport, we will become a challenger specifically in training and running but try to be the best at soccer or [American] football. Were not there yet. The idea is to focus on how fit someone like [Formula One driver] Lewis Hamilton is, so we dont make him the Tiger Woods of F1, but focus on how fit he is. Market-research firm SportsOneSource analyst Matt Powell questions Reeboks brand relevance, also noting that youve got to have great product before you can market it. Becker and Hainer cite recent innovations like Reeboks SelectRide shoe, which switches from a running to a training shoe with the push of a button, or the EasyTone trainers, which claim to provide women a workout just by wearing them, as signs of innovation. As for a new marketing approach, Reebok hopes to put the fun back in sport and counter the sports as life and death messages from competitors, perhaps best exemplified by Nikes You dont win silver, you lose gold ad from the 1996 Olympics. Fun and fit are key words from which all our marketing and products will start, Becker said. Omnicoms DDB Worldwide recently won Reeboks newly consolidated global creative account, so it will get the assignment of turning that sports as fun positioning into advertising and perhaps even an enduring tag line. However, this is not a year for a big-budget media launch, and over the past two years, Reeboks traditional media spending in the U.S. dropped from $18 million to $12 million. I dont have $100 million to spend and I am not a believer in the big-budget TV campaign any more as a solution, Becker said. So aside from a digital investment, a big focus of our marketing now is bringing the brand to life at retail. At least

I am not a believer in the big-budget TV campaign any more as a solution, says Becker, who wants to bring the brand to life at retail.

This I Am What I Am campaign piece featuring Allen Iverson showed Reebok in hip-hop mode. FINDING THEIR FOOTING
Since the 2006 acquisition of Reebok by Adidas, both brands have lost U.S. market share of athletic shoes. Data presented here is U.S. market share of retail dollars for 2006 to 2008. Brand Nike* New Balance Adidas Reebok 2006 29.73% 9.26% 10.62% 4.68% 2007 31.52% 8.03% 6.93% 4.43% 2008 34.61% 6.26% 5.86% 2.66%

* Does not include the Nike-ow ned Jordan or Converse brands. Source: SportsOneSource
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Whats next for Reebok? Fun and fit - SportsBusiness Daily | SportsBusiness Journal | SportsBusiness Daily Global

half your consumer contact is at retail, and weve looked like shit there because of bad products and bad price points. One reason for that kind of investment is that many sneaker retailers are just as skeptical about Reebok as consumers. As former Adidas and Fila marketer Robert Erb points out, Its mostly kids selling sneakers to other kids at retail, and neither of them can probably remember a time when Reebok was relevant here [in the U.S.]. Whatever the plan, the choirlike response from industry types is that for Reebok, marketing consistency is more important than strategy. Patience is a virtue and Reebok hasnt had it, said Foxboro, Mass.based footwear industry consultant Mark Bossardet, who spent 16 years in sales and marketing at Reebok. Theyve been a sailboat, with the wind always changing. But I still believe theres a lot there as a brand. Theyve just got to make their play, create an emotional connection and resolve to stick with it. What remains to be seen is whether Germanic dogmatism can keep Reebok on course. Some believe that new management will mean more increased resolve. Paul Fireman, the supreme Reeboker, had much to do with the sudden changes in marketing direction, and hes no longer involved, noted Andy Berlin, retired founder of ad agency Berlin Cameron & Partners, which handled Reebok in the late 1990s and early 2000s. It stands to reason that things will be a little steadier in marketing. Reeboks roots in Reebok wants to portray sports as fun rather than a life-orthe apparel business had a strong effect on the brand character, from death proposition. soft leather for womens athletic shoes to their deeply ingrained willingness to abandon any direction for a new one. I suspect that influence is also gone. Since the merger became official in 2006, the footwear industry has been waiting for the post-Fireman Reebok to take shape. In the meantime, the market share Reebok lost since the merger was picked up by Nike and new footwear competitor Under Armour. You had this perfect storm of Reebok being unfocused and Nike adding strength with the expansion of Jordan brand and the Converse acquisition, said Brian Cupps, the former general manager/global director of basketball at Reebok, now vice president and group account director at Amplify Sports and Entertainment, New York. Paul was the ultimate salesman. He could always find a way to put Reebok back on track after it wandered, but now more than anything, they need the discipline to stick to a blueprint and not go sign whomever as the hottest new athlete in 14 months. A notion lingering since the Reebok/Adidas merger was announced in August 2005 is that Adidas eventually would make Reebok a downstairs brand to sell cheaply at mass merchandisers like Target and Wal-Mart. It is exactly the opposite, insisted Hainer. We are building up price levels, he said. Give credit to Fireman he was great at chasing business. He came up with this whole music and hip-hop positioning, then three years later it was completely gone. I just dont think that is a long-term, sustainable business model when you just chase opportunities. Were looking
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Whats next for Reebok? Fun and fit - SportsBusiness Daily | SportsBusiness Journal | SportsBusiness Daily Global

longer term. Given the loss of market share since the acquisition, there is also some industry sentiment that retailers dont need both Reebok and Adidas on their shelves. Asked to explain what differentiates his two sneaker brands, Hainer equated Adidas to a lightweight, form-fitting running shoe, while he said Reebok is footwear built with comfort as a top priority. Reebok says have fun with sports, whatever you are running, Hainer said. Adidas says if you want to win a marathon, you have to wear Adi shoes. At a time when retailers are trimming inventory, that may not be enough to convince them they need to carry both brands. There is plenty of sentiment that the womens market is Reeboks best and only play. There are also those in the industry who say the reason no major athletic brand has solely targeted the female market is that there isnt enough of a connection on which to base a large business. Overall, after years of these zigzags, theres natural skepticism about the new Reebok. Hainer is trying to build up price levels for Reebok, not make it Adidas bargain brand.

I didnt believe they [Adidas] picked up anything especially complementary when the deal happened and Ive seen no reason to change my mind, said Sports Authority founder and former Chairman and CEO Jack Smith. Sports are about authenticity, and their roots are a fashion and women aerobics brand. Thats what they need to get back to. Hainer vows Reebok will not become a one-trick pony. Womens fitness is where consumers have the most and best connections to Reebok and where we have the most opportunity, he said, but we will not become just a womens brand. Becker promises a continuing presence in sports licensed apparel, where Reebok has on-field rights with the NFL and NHL, its former NBA apparel rights shifted to Adidas shortly after the merger. Dennis Baldwin, Reeboks last CMO before the merger, said the brand still has enough equity to rebuild as a broad-based athletic label. If you ask consumers to name the top three athletic footwear brands, theyll still say Reebok as one, said Baldwin, now general partner at Breakaway Ventures, a Boston venture capital and private equity firm, but you dont see the brand represented at retail to that degree. Its just a question of harnessing the marketing to reflect the brands awareness in North America. Theres a real opportunity for an American-inspired sport brand thats not as heavy-handed as Nike. After all the fits and starts, there is also some thinking that this latest relaunch is Reeboks last and best hope for success in sporting goods specialty channels, and that its next stop is downstairs. Becker and Hainer are adamant that the new face is by no means Reeboks last stand. Thats crap, retorts Becker. So many brands have lost their way and come back: Apple, IBM, along with Puma and Adidas in this industry. Do we need to change perceptions by retailers and consumers that we are cool? Absolutely. But it can be done. We just need to change the paradigm here from being sales-driven to becoming brand-driven, and sales will then follow. Its not our last shot. This is a long-term investment not something driven by two years perspective. Related Topics:
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