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Adidas-Reebok Merger

INFORMATION

The shoes are no longer considered a product that no protection for the feet. What I previously thought a "desire" is now a basic necessity. " Trade in footwear today is a vast operation dynamic in which large economies of scale. The low-cost countries are gaining ground in international markets for industrial imports and outsourcing to meet their needs. The footwear segment is very competitive sport in nature with large firms such as Nike, Adidas, Reebok and New Balance struggle to maintain their market share and small players such as Puma seeks to gain market share. The main characteristics of this segment of the competition is intense advertising, celebrity endorsements, awareness programs, etc. Until the 1970s, Adidas, the German sports, has been the market leader in the U.S. because of its innovative products. In the years 1970 and 1980, Nike and Reebok took their share, by redefining the range of products and aggressive marketing. Adidas has not retaliate. Its market has suffered several crises due to changes leadership. In the 1990s, but Adidas has been relaunched by a specialist on the other hand, there has been a challenge for Nike. Adidas expects the acquisition of Reebok to give more weight gain lever effects distributors of promotional contracts and sponsorship and access to a broad consumer base. The Adidas-Reebok merger entity vaulted Newspapers second in the U.S. market behind Nike athletic shoes. The acquisition of Reebok North doubled the sales of the German group in the United States. Adidas acquired Reebok for the Group of North America have shown a clear stand to ensure that the overall objectives of the Company will be achieved. With the acquisition, the focus on increasing the supply of clothing from the band and focus on the brand image was created. This will allow an expansion of the global position and gain a greater presence in key markets. For highlight this aspect, Adidas Reebok has been replaced as official supplier of clothing for Americans in the NBA for 10 years. With the combined strengths of both companies, to expand the overall profile of the organization and world domination is now more than ever it is possible

 

EXECUTIVE SUMMARY

The three major sports in the world are Nike, adidas and Reebok. In August 2005 Nike was the leader of the worldwide market share, with 32.9% compared with the newly formed organization Adidas-Reebok had 26.3% market shares. In the market largest in the world, America (USA), Nike had 36.3% of the stock market in August 2005. After the acquisition of Reebok in August 2005, the share Market Adidas-Reebok in the U.S. increased to 21.1% from 8.9%.

The purpose of this study is to provide an analysis of the new fusion of the shoe and apparel by Adidas and Reebok. It is also to identify and examine ways including the Adidas Group will seek to achieve a sustainable competitive advantage compared with the market leader (Nike). Readers are informed about the nature of the current classification of market synergies in the sector and developed to identify specific through acquisition in order to assess the impact the Adidas-Reebok merger in the sports industry.  

 

 

 

 

INTRODUCTION

 

On August 3, 2005, Adidas-Salomon AG has announced its intention to purchase all outstanding shares of Reebok International Ltd. shares at $ 59.00 per share, for a total of $ 3.8 million. After the announcement, shares Reebok has increased 30%, while Adidas was up 7%. As said Herbert Hainer, Adidas CEO, "This is a once in a lifetime opportunity to combine two of the known and most respected companies in the sports industry worldwide. Together, we will expand our geographic reach, particularly North America, and create a footwear, apparel and hardware offering that addresses a broader spectrum of consumers and demographics "(Adidas.com). One of the main objectives of the acquisition was to challenge industry leader Nike for increased participation of the United States sporting goods market and the global sporting goods market. The acquisition has generated much discussion about what the future holds sports industry and its key players.

Athletic Wear market share

I-Basic Skills and competitve ADVANTAGE

Competitive advantage is a special benefit that allows an organization to deal with market forces and the environment better than their competitors. Whereas, a sustainable competitive advantage is one that is difficult for competitors to imitate. This distinction is important when assessing the acquisition and effects.

The merger of this magnitude is complex in nature, addressing issues such as global positioning companies, corporate cultures, and allocation of resources. To better understand the benefits of the Adidas-Reebok merger were analyzed as follows: Through these various tests, we found that The importance of image branding is essential for success in this industry. This research also identifies the risk of competition between Adidas and Reebok.

Our analysis of the Adidas-Reebok merger shows how you will gain a sustainable competitive advantage that could one day dominate the footwear industry at the national level and internationally. The fact that Adidas and Reebok control of these different aspects of footwear will help ensure its success.

The Adidas-Reebok understand how to obtain a sustainable competitive advantage for Nike, the situation must be examined from several different points. These include industry, customer and analysis competition and the strategies for marketing and different marketing trends.

Adidas Basic Skills

– Technology

Customer Focus –

– Brand recognition

– The supply chain

– In competitive collaboration

 

Reebok Core Competencies

– Identification of trends

– Ability to market in a niche segment

– Women's shoe design

– Experience in the design

– Celebrity Relations

 

The combination of basic skills

• Combine

– Technology with a design Reebok Adidas

– Market women sports Adidas Reebok

– Adidas shoes with Reebok apparel

– Adidas Reebok and the provision of U.S. forces

Execution

 

• Mix the two cultures successfully (Learning to work together)
• Forces protecting the acquired company (continued development of two separate organizations)
• Keep two brands (keeping the established market share)
• By exploiting economies of scale in the supply chain (suppliers, manufacturing, distribution channels)
• The power of partnership between technology and design (market share by combining the areas of leadership)

 

sustainable competitive advantage

 

Branded sportswear and footwear industry is more concentrated than any other competitive advantage. Using advertising, Visa, promotions and licensing agreements, the best companies in this sector have focused much of its resources for brand recognition and loyalty. Adidas acquired Reebok develop greater opportunities for achieving a competitive advantage through brand. In addition, extended licensing agreements and contracts will allow Adidas to keep that edge.

advantage sustainable competitive can be achieved without the successful merger of Adidas and Reebok. The key to this success is the way they are identified. There is a very real danger of cannibalism occurred between the two separate brands when the brand off-base consumption of others. However, president and CEO of Adidas, Herbert Hainer, said "it is important that each of these brands must retain their own identity. "

Hainer said the strategy focused on the participation of Reebok youth through sport music and technology. Reebok said it is a lifestyle brand. Moreover, the approach of Adidas in technology and superior performance, combined with strong international presence. As Hainer said, "Adidas has placed part of its range of products in the segment so life, but society is based on market performance. Style successful life of a true partnership is a bonus. "

Adidas will benefit from wider distribution in North America, Reebok has a significant presence. The addition of Reebok not only improve its position among major U.S. retailers such as Foot Locker and Dick, but to Adidas-Reebok more power over promotions and store displays. Expand your presence is the key to a sustainable competitive advantage due to the increasing presence of other engrams Profit most important brand in this sector.

The acceleration of the two marks is caused by the increase in operating cash flows. With capital work has increased, other synergies such as economies of the operation is performed. Making of Nike's marketing budget is a huge challenge, but the operating costs associated with increased synergies will help promote greater brand recognition by marketing.

Reebok has a wide range of men and women clothes. The new company can combine clothing with Adidas Reebok adding new "stylist Stella McCartney, who has created a clothing line that incorporates both sport and style. This innovative approach demonstrates that Adidas has continued the search for new opportunities and markets to achieve competitive advantage.

In the past, Adidas has not been able to extend because he had trouble moving the products to the United States. It takes about 14 days to send their factories in the Far East while Reebok can be sent overnight. In the future, Adidas will be able to take advantage of Reebok's distribution infrastructure in place in the United States, while Reebok eligibility for Adidas distribution infrastructure in Europe.

The Reebok brand also gain a competitive advantage development through brand awareness has increased. In general, Reebok will benefit greatly from the distribution of Adidas in the world. Along with cost savings and increased cash flow the Reebok marketing resources may increase.

Combined R & D helps to accelerate the development of advanced technologies, an important feature industry increasingly agitated. accelerated research to develop a greater demand for innovation in all brands, putting pressure on the capabilities of R & D Nike.

 

Companies II-on business strategy

 

 

Porter's Five Forces

Barriers to entry – Netherlands

Adidas and Reebok combined are able to effectively control costs, gives them an advantage over its competitors in the emerging industry. Their websites are well prepared and updated promotions to attract buyers. There are many differences between the products of this nature in this sector, which gives the brand identity of an immediate competitive advantage. The Adidas and Reebok brand is well known worldwide and plays an important role in making consumer decisions. Selling shoes is very competitive, but the barriers to entry in this industry are very low. Accordingly, the footwear industry is vast, with hundreds of retailers. Switching costs are low for consumers, and can occur frequently, depending on the preferences consumer and other factors that influence purchasing decisions of consumers.

 

Bargaining power Buyer – Top

There are a number of buyers in relation to the number of companies in this sector. Therefore, companies such as Adidas, Reebok and should continue to market their products and differentiate their brands against competitors to increase sales and market share. Use online tools helped improve the accessibility between users. The brand identity plays a crucial role in buying behavior identity strong desire to give consumers the confidence and loyalty.

Negotiation The power of suppliers – Netherlands

  There are many suppliers of this industry. In essence, there is very little differentiation between providers who did the bargaining power of existing suppliers. Leather, rubber and cotton are commodity items and are available in abundance on the market. Conglomerates such as Adidas and Reebok has a clear advantage and power over their suppliers. These suppliers have become dependent on these companies and their survival forms. In addition, Adidas, Reebok and have standardized the procedures for entry of materials used, their labor, supplies, services and logistics. Companies are able to switch suppliers quickly and cheaply, due to the globalization of economic networks in different continents.

 

Threat of Substitutes – Low

buyers' propensity to substitute is low. substitutes for consumer products are low sneakers because there are few alternatives for change, some shoes Alternates for the athletes could be boots, sandals, dress shoes or bear feet. Consumers can not be replaced by specifying product performance. For example, a basketball player not to wear shoes to play basketball. Therefore, no real substitute for tennis.

The rivalry among existing competitors – Top

The rivalry among existing competitors in the footwear sector is very high. Large companies Nike, Adidas and Reebok have increased dramatically over two decades. Its global reach has expanded in all continents, it is clear the use of Internet and electronic commerce. Online sales expanded the scope of these enterprises by allowing them to increase sales and minimize operating costs. Almost all large companies have a site web site, and most of these sites contain online stores that offer convenience for consumers. Most people in North America have access High-speed Internet and online shopping has become the new trend for the XXI century.

 

 

Threat of substitute products or services

(Poor)

↓

 

Power Supplier

(Poor)

 

 

→

 

The rivalry among existing competitors

(High)

←

Buyer Power

(High)

 

 

 

↑

 

 

 

(Poor)

Threat of new competitors

 

 

 

 

 

 

Reebok is on the top left of the card, which identifies it as the use of a cost leadership strategy. He is willing to provide shoes to reach a very large market.

Adidas is in the top right of the graph, the ID as the use of a differentiation strategy. This company is constantly developing new technologies and innovation in the industry. Adidas appointment as new chips has been developed to mechanically adjust damping the shoe.

 

SWOT Analysis

 

Adidas-Salomon SWOT analysis (before merger)

 

Adidas-Salomon has played a leading role in sports in the manufacturing industry. The company had registered a strong growth of its sales revenue in recent years, mainly due to its strong brand image. The company has market-leading products and strong brands such as Adidas, Salomon, TaylorMade and others who have been reinforced by its strong commitment to product innovations. In addition, the commitment of the side chain logistics company to reduce delays in the manufacture of footwear has enabled the company to avoid storage products.

 

Strengths

 

leader in the sports industry

The company was one of the best players in the sports industry because of their strong brands, products market leaders and commitment to sport for consumer expectations. The global market for sportswear (Euro 45 million) has been dominated by Adidas-Salomon and Nike, and a certain distance, Reebok, Puma and New Balance. brands include Adidas-Salomon Adidas, Salomon TaylorMade and others who had very strong reputation in the markets served. The products of the company has served numerous markets and include footwear, equipment, clothing, snowboards, golf related products and others.

 

Progression income support

Adidas-Salomon's sales revenues have increased performance as demonstrated by the last five years " ending in 2002. From R5.1 billion in turnover in 1998 to E6.5 million in 2002, performance has improved at a CAGR of 7%. Although sales declined 3.9% in 2003 compared to 2002, was mainly due to currency conversion. The company has been able to achieve this growth in sales due to its strong brand, continued commitment to innovation of products is aimed at consumers. The sustained growth of the company's revenue performance has contributed to maintaining a very good company image and improve confidence of investors. In addition, the company achieved exceptional operational performance and financial conditions in the first half of fiscal 2004. This dynamics has emphasized the company, with fourth quarter improvement, sales of all brands, and a record gross margin and earnings growth almost 40%, marking the highest performance in the first half of the company's history.

The success of new innovations products

The company has always run new products and this has allowed it to expand its portfolio and has also improved its competitive position. Each A company's brand specific market and introduced new products according to their needs. This helped the company achieve greater success. In 2002-2003, ClimaCool and the company launched its A3 shoes ongoing class, which were great successes. The company sold more than 500,000 couples and more than A3 ClimaCool one million. In addition, the division of basketball shoes, T-MAC and T-MAC were best seller in the U.S. market in 2002 that led to the release of T-MAC at least Shoes Lace April 2004. the company's continued commitment to innovation of new products not only increase revenue but also helped to strengthen their relationships with their customers and attract new customers. In May 2004, the company launched what the company describes as the first intelligent shoe – call cushion footwear, always intelligently adjust automatically and continuously.

Turnaround time improvements

The company has increased significantly improved the time required for the manufacture of shoes through the principles of lean manufacturing. In early 2000, the company has used take 120 days to produce shoes for the year 2003 this figure had fallen to about 60 days. This reduction has been possible due to the effective implementation of the principles of the association of lean manufacturing, which leads to the elimination non-value added processes and activities, improved labeling, special handling and activities of other measures taken to reduce these delays. These process improvements have helped the company avoid the storage of its footwear products.

Marketing strength

The company had planned and implemented major advertising campaigns in 2004. the large size of the company and a strong position of the opportunity to carry out global advertising campaigns focused on TV, print and outdoor advertising and point of sales activities and relationships public. The campaign "Impossible is" Nothing, not even the best athletes from various disciplines such Muhammad Ali and his daughter (the brand, boxing and lifestyle), Haile Gebrselassie (image, running), David Beckham (brand, football) and Tracy McGrady (make, Basketball).

Weaknesses

 

Fuzzy Strategy

The strategy has failed Adidas-Salomon to the discussion. Due it has a broad product portfolio, including high-performance products sporting goods sports athlete, basketball, golf, tennis, Nordic disciplines, cycling-oriented fashion. His rival Puma has shown that stress can lead to high profitability.

In the segment dependence Adidas

While the purchase of Salomon, the French manufacturer of ski equipment and golf, has guided the company into the arena team, the company generated 79% ($ 4.9 billion) of its total turnover marks E6.3 billion segment of Adidas in 2003, while two others have contributed to the scale. Despite a strong brand image and Solomon TaylorMade, representing about 21% of total revenues. in society from dependence on the segment of the brand Adidas which primarily serves the needs of athletes as the premier company sensitive to global business conditions in this market segment.

High level of long-term loans and long

Although the company reduced its debt by E181 million compared with 2002, the debt level remains high. At the end of 2003 the long-term debt of the company as a percentage of capital was very high at about 146%, which is E1, 574 million dollars. These high levels of debt affected investor confidence in the company and provides financing plans low cost growth difficult. End of first half year fiscal 2004 cash flow has allowed further progress in debt reduction was (net debt at June 30, 2004 were E967 million, a decrease of 39% or E616 million from E1, 583 million in the previous year), but due to the debt remains high.

Order cancellations

2003, revenue growth has been considerably below the first impression of the company since late 2002, backlog, which experienced a strong 14%. In 2003, revenue growth was only 5%, the cancellation of large orders during the first half of 2003 are evident. The company businesses achieved sales of E6, 267 million (7570.4 million), down 3.9% compared to revenues in previous years, which amounted to E6, $ 523 million.

 

Opportunities

 

Acquisitions and strategic partnerships

The company has made some strategic acquisitions in 2004. In September and Stella McCartney Adidas announced a long term partnership in New York, presenting the collection of adidas by Stella McCartney athletic performance. For the first time a creator of high-end fashion has created a range of functional performance sports for women. The first collection is available in stores across the U.S., Japan and Europe in spring / summer 2005. It offers products for racing, sports and training and swimming, as well as concealment. The Adidas by Stella McCartney range demonstrates the willingness of the company to innovate in the market for casual clothing for women. Adidas-Salomon has acquired Valley Business Clothes Cedar Rapids, Iowa, in June 2004, a producer and distributor of clothing and accessories from the University of the professional league. He has served the small and medium-sized retail businesses, such as sporting goods stores, department stores, shops and college bookstores fan. He has a reputation for producing and delivering large quantities of clothing and accessories brand in the early hours of the victory of a equipment. In early 2003, the Company acquired the Maxfli brand accessories and other products related to Dunlop Slazenger Group golf through its division TaylorMade-adidas. This acquisition has enabled the company to provide market leading products in all categories of golf and has improved its global market share of 16% less than 1% before the acquisition. The company has also signed a strategic agreement in June 2003 INTERSPORT International Corporation (IIC), a retailer multi-sport, to strengthen sales and distribution network. Specifically, the agreement of four years – in time – to improve athletic performance of the company, by chance, Salomon and sales of other products.

The supply chain and manufacturing initiatives

The company's success in reducing manufacturing time shoes should be continued in future also. The company plans to further reduce production time, which helped the company achieve faster delivery of their products to retailers, thereby reducing inventory costs. On the supply chain, the industry faces a problem because more time on the market. The total length is about 15-18 months, of which 12 months are devoted to product creation, while the rest of time in the organism of raw materials, production and delivery to retail stores. The company also plans to implement a new supply chain model, which significantly reducing the delays and improve profitability, etc. This initiative has helped the company to offer its customers more quickly, thereby gaining a competitive advantage over their peers.  

Sponsoring Sports Events

Corporate sponsorship of sports events important a great recognition for their products. Adidas has supplied more than 1.4 million products to federations, volunteers, officials and others during the Games 2004 Olympic. After a successful marketing campaign Tournament soccer tournament Euro 2004 in Portugal, the company reiterated its plans to reach sales record in football in 2004. In 2002, the company has sponsored the World Cup Championship in Korea and Japan and has been hailed as the most visible brands announced during the event and was seen by 44 billion cumulative viewers during the event. Furthermore, in the Winter Olympic Games 2002, the company sponsored more than 50% of the athletes won 200 medals. Adidas has signed an agreement with the lifetime of Kevin Garnett (MVP of the NBA 2003/2004). He also signed six-year collaboration with China Cup in June 2003. The company sponsored the 2006 World Cup held in Germany. Sponsorship of these events allows the company to build its sporting heritage, and Sport Style divisions of this type. For example, the Sport Heritage division has become a business of 900 million euros and has doubled its turnover in 2001-2003.

 

 

Own Retailers

In 2003, Adidas has generated 9% of group turnover in their own outlets. A significant number of new stores have no impact positive about the benefits because the cost of new stores (the sales staff recruitment and training costs, etc) have exceeded revenues in the beginning. Watch begin to stabilize in the future and the company will continue to open its own retail stores. Management has explained recently that even the retail sell through has been positive for the United States in 2003, contrary to external customers. The company is therefore the intention to open 15 new stores in the United States in the coming two years and 40 in the world. The administration hopes the sporting heritage to grow again from 2004 directed by cleaner stores and more points out of court sales.

 

Threats

Competition

Adidas operated in a highly competitive market that covers many cases in other markets such as sportswear retailers increasingly compete with retailers of fashion. competitors traditional society as Reebok, Nike and Puma is intensely competitive levels, but the addition of athletic footwear and apparel manufacturers like Tommy Hilfiger, by adding design of an edge in the market, increasing competitive levels. The companies had been under increasing pressure in recent times from products designed for value-conscious consumers. Adidas have long been one of the best brands in sports and have charged accordingly, this strategy is to come under more pressure that cheaper substitutes are purchased by consumers add to problems in terms of customer loyalty.

fluctuations Foreign

manufacturing activities of the company were mainly concentrated in China and other countries in Southeast Asia. As most of these countries the U.S. transactions dollar, the company incurred approximately 70% to 80% of spending on outsourcing in U.S. dollars, while generating revenue from the company in U.S. dollars and other currencies than the euro is relatively lower. Therefore, changes adverse exchange rate between U.S. dollar and the euro had a negative impact on their overall turnover.

Weak global economy

The European countries' GDP grew by an insignificant and can improve in the near future. Similarly, American markets America such as Argentina and Brazil continue to attend aa weak economic conditions, while the Southeast and parts of the Middle East continue the drums in the political turmoil. Thus, the income of the company have been significantly affected by these adverse economic conditions.

Impact of scandals in the U.S. and Germany

Accounting scandals in the industry in Germany and the United States have had an impact on stock performance of the company. The poor performance of many companies sporting goods industry damage investor confidence in the industry. Therefore, external factors can have a negative impact on company performance and stock prices in turn could affect the value of your brand.

Reebok SWOT analysis (before merger)

 

Reebok International is a major player in sports and fitness market products, with special emphasis on the shoes. Its strengths lie in its size and strong reputation. Although the shoe is clearly its main product, have been raised for their relative lack of interest in the market for sportswear partner, which is more than twice the size of the footwear market.

 

Strengths

 

The growth in turnover

As part of a strategy of growth in market share as the company continues to invest in three key products and marketing platforms: Performance, RBK and Classic. Reebok International has been the second largest footwear manufacturer in the U.S., behind Nike. The Reebok brand has continued to boost sales by pushing closer its main competitors, Nike and Adidas. Reebok became the number two or number three brand in most markets overseas. It is about 10% of the market worldwide, compared with 34% Nike and Adidas' 15%. The company was able to increase revenues and improve operating margins, despite the difficult conditions retail in many key markets around the world in 2004.

Excellent marketing strategy

Company uses a strategy to reinvent their brands to gain market share. To strengthen its brand Reebok, the company introduced a new collection inspired products Street, RBK, in 2002, followed by an effective marketing strategy that made in 2003 and 2004. In 2003/2004, the product offers Reebok generated with the healthy sales performance of retail sales. Also to reinvent the brand, the company has launched new marketing campaigns for their promotion. To support the product RBK Reebok has created a marketing campaign so-called "Reebok" Sounds and Rhythm of Sport ", which blends music and entertainment, with sports and performance. The combination of the products in question and a new marketing campaign improved the performance of the Reebok brand in the specialty channel distribution athletics. Reebok has made positive market share comparisons in critical specialty sports and sporting goods channels of distribution (since October 2004).

Celebrity associate sponsorship

The company expanded its product as well as lifestyle and performance categories, the introduction of new product segments for both NBA and NFL, NBA and shoes, including NFL apparel conventional lifestyle and performance of the team off the screen activities. Reebok sponsored many elite athletes tennis, Andy Roddick and Venus Williams and music stars Jay-Z, Pharrell Williams and 50 Cent. ZING Yao impact on the Asian market is very important for Reebok. Registration is world-famous celebrities as a company more name among the different groups of customers.

Strong women in the industry

Another highlight of the Reebok has been its success in the field of women. The market for athletic shoes for women than men, representing about 46% and 40% of the sector, respectively. In volume terms, the women's sector is even more important, 46% of 35%. Reebok's market share of sneakers women was about 35%, and was encouraged by his "marketing campaign is a Women's World."

Weaknesses

 

"Classic" under fire

The company was attacked by rivals in the department of classics. In the past, this category has controlled Reebok shoes, without much competition, but companies like Nike and Adidas have come with their "classic shoes. Reebok still market leaders in this area, but the gap kept shrinking.

Low market share in clothing

Reebok controlled only 1.4% of the apparel market. This posed a problem when faced with fierce competitor, Nike. The growth of the footwear market has slowed. Sportswear, there is room for wider and more diverse product, stay in the rapidly changing marketplace. The apparel market was 2.4 times the footwear market. Nike has taken over there, with their innovative designs, and contracts with sports teams and organizations around the world.

Danger storage products for retailers

In the end, or ordered in advance sales, representing approximately 60-70% of Reebok cases. This was valuable for Reebok in the past, but five of the brands now account for about 60% global market share could cause future problems. growth after five brands was approximately 9.5% on a dollar-weighted basis. This rapid growth has been alarming. Reebok had to be careful that retailers can order more than they can sell. This could result in a sudden reduction in the discount, leaving the company with large inventories and lower sales.

Opportunities

 

Increase the average price of shoes

price half of Reebok shoes in athletic footwear stores, which represent about 15% of the market has been significantly below average. Its average price per shoe is $ 45, compared with an average production close to $ 60. society than the average price of shoes is due in part to the high percentage of products sold, which in turn is in part to its traditional position of women sector. This abundance of space left for the company to muscle in higher selling prices, products and research efforts for improvement. While knowledge of the brand, Reebok sponsorship deals helped the company increase its average selling price.

 

Draw attention to new technological developments

Reebok began its product to make it more modern and has invested heavily added technology to improve their shoes. Reebok has much to gain from continued investment in improved technology, high-end products. In 2003, the company presented new fashion products and high technology related to new integrated marketing programs. The logo shows improved vector and forward brings us back to professional athletes using the product in the field. The brand has created a true point of difference in the performance of their products and should help stimulate the interest of consumers in retail outlets. These retail products are backed with a marketing campaign for the implementation of new athletes, using the logo and the vector new and creative ways. The campaign includes television, print and marketing packages in stores.

Promote a strong brand momentum in Europe

Company plans to strengthen the European market, the recruitment of new talent management and implement an aggressive regionalize this business program by using a consistent brand image across Europe. Unified executed Reebok products, marketing and sales strategies across all borders in Europe, This is the Reebok brand in a more relevant and coherent.

Exploit of the lack of sponsors Nike High level

Nike's first global brand of sport's most successful and footwear producers struggled to fill the void vacated by Michael Jordan. It was the first time in years Nike did not have prominent sports stars to run your marketing campaign. This left an opening for the likes of Reebok to operate, especially in the area basketball. The company has the feel of Nike China, Yao Ming, with the hope of increasing market share of 10% to 30% in 2006.

Threats

 

Depending on sales of footwear

Reebok was the largest division and the company is quite heavily in the footwear market. It is a highly competitive field knows much slower growth than in previous years and like most producers, said that Reebok should do more to increase sales. Reebok also be aware that the most expensive footwear market slowed down. These prices could ultimately lower court, this trend should continue over a significant period of time. With the company depends on the shoes, it is likely that the losses, while other competitors such as Nike can use its clothing division.

Diverted from traditional markets

Reebok success is due to women's original aerobic market in the 1980s. It seems that the company has shied away from its roots. Reebok women represent only products 25% of its volume of sportswear. The garment industry of women is actually about 40% of industry sales, suggesting that Reebok has risked losing key market for them in a global society.

Potentially expensive marketing of new products

Until Reebok has not been a one or the other men or women's clothing market for several years. Before you can configure a significant sales in this area must have inspired confidence among consumers in return for good to produce something more than "traditional shoes. This process could have proved to be lengthy and costly.

 

Adidas-Reebok SWOT analysis (after the merger)

 

Strengths

• More products for different customers
• Wider range of products
• Market share Cuesta
• Now both markets and higher average prices are covered.
• Shared R & D, patents, technology and innovation

Weaknesses

• Different values between managers
• The complexity of the union of two cultures
• Both companies belong to different countries

Opportunities

• Cost reduction
• The decrease Competition
• Cross-promotions sponsored athletes
• Rewrite / Market Sectors

Threats

• Nike.
• Nike Puma possible acquisition.
• The risk of cannibalization between the two separate brands.

 

 

Post merger performance

• March 7, 2007, Adidas Group's motto is "Impossible is Nothing." But since 2 Sporting goods maker announced in August 2005, which would match its rival Reebok for $ 3,800,000,000 for a base stronger for the U.S. and challenge the market leader Nike (target = "_parent"> NKE), the company has yet to demonstrate that the combined work.
• True to its motto, however, Adidas says it is running hard to make its merger with Reebok a winner. The company has closed plants in Indonesia and repositioning Reebok brand to broaden its appeal. "Our goal this year will be back on a growth track Reebok, Adidas Herbert Hainer, CEO, said in a statement." It will take time, but we are moving in the right direction. "
• Under this move, the company is intensifying its sales and marketing efforts. This means reducing the use of low traffic, shopping centers based capture and place the clothing and footwear Reebok in luxury department stores and sporting goods companies. Adidas has also appealed star NFL quarterback and Super Bowl MVP Peyton Manning, actress Scarlett Johansson and other famous faces to help launch a series of new products specified in the second quarter.
• The company says it expects these efforts to increase sales of the Reebok brand this year in the "under one digit "range. Adidas expects its gross margin in 2007 to between 45% and 47%, thanks to" improvements in all three brand segments. To group, the company expects 2007 sales to grow in the "mid-single digit" range.

 

 

III. Creating customer value, satisfaction

 

An annual report by Interbrand (2006) in collaboration with BusinessWeek, ranking the top 100 global brands shows that Adidas was ranked 71st and 31st Nike. The ranking is based on brand value, which is defined as "the value of a brand, calculated as the net present value or present value of income of the mark must generate in the future." Because the two marks are companies as Shell, Porsche, and fashion brands such as Armani, Burberry and Levis, it means that the strength of both brands. In fact, Adidas and Nike are sportswear companies in the top 100 brands global. The positions of the two companies over the past five years has been relatively stable, with Adidas ranked 70th, 68th, 67th, 69th, and 71 between 2001 and 2005 respectively, and Nike ranked in 34th, 35th, 33rd, 31st and 30th in the same period.

 

Customer loyalty has been an important element of strategic marketing planning and provides an important basis for developing a sustainable competitive advantage – an advantage can be achieved through marketing efforts. It is reported that academic research on loyalty has focused on measurement issues and factors related to loyalty consumer segmentation context.

Many studies have been done on brand loyalty. However, in these studies of any brand loyalty (Eg repeat purchase) was measured from the behavioral aspect without considering the cognitive aspects. However, brand loyalty is not a simple one-dimensional concept, but a very complex and multidimensional concept. However, do not specify the intensity of brand loyalty, because it excludes the possibility that a consumer's attitude may be disadvantageous even if he / she made repeat purchases. In such cases, the brand loyalty by consumers would be simplistic and superficial – with roots.

After consider the reports of non-durable consumer attention (based on the analysis of the ASQ Quality and customer satisfaction nondurable goods manufacturing) expect that the acquisition of Reebok by Adidas and the challenge for Adidas / Reebok, a combination of many different cultures, companies could maintain quality as it tries to face to face with the leader, with sales of Nike. Acquisition was completed in late January 2006 without any problem in that the perceived quality of Reebok. 2.4% gain in this quarter by Reebok, with a similar drop from Nike, Adidas-Reebok is the perceived quality firmly before Nike.  

Nike stumbles Adidas-Reebok compared in terms of value. Consumers are much more likely to believe they have value for the money spent compared Adidas-Reebok with Nike. Adidas-Reebok Good catch a score significantly higher customer loyalty to Nike, both companies are vulnerable to this point – Nike ad with the child and Adidas-Reebok loyalty second lowest in the manufacture of non-durable brand.

Unlike the food processing sector, where strategies manufacturing are the core competencies of the company, sneakers basic skills segment are the creation, marketing and distribution of marks global. The manufacturing is done almost entirely by sub-contractors who operate mainly in countries where labor costs are low.

In this business environment, in addition to usual difficulties of managing the supply chain (Adidas and Reebok, that both Excel), there is an additional complication to treat social responsibility issues as fair labor practices and safe working conditions in very different cultures of the United States. company performance in the field of social responsibility can also affect how consumers perceive the quality of company products, because these issues are of increasing concern for many consumers. Although both companies have made progress in this area, which were the target of constant criticism, and the high visibility of these issues can contribute to fact that the footwear has the lowest score of perceived quality among all non-durable goods manufacturing.

Nike, the market leader, in contrast, has launched programs to monitor labor rights and human conditions, as well as suppliers of quality management for the production of its subcontractors. Originally the use of third party monitors, manages Nike However, these functions internally. The Company evaluates the overall performance with a balanced scorecard including compliance measures, in addition to cost, schedule, and quality measures. The company became an advocate of establishing a better match between codes of conduct and compliance with the various organizations monitoring.

For companies the size of Adidas and Reebok, control may be a large company. Adidas-Reebok contracts new company with 41 factories that produce shoes, and another 543 garment factories. Adidas-Reebok footwear program was the first to be accredited by the Fair Labor Association.

The footwear industry was reduced to 76 percent, driven mainly by the performance of Nike. Reebok and Nike have been related to the measure last year, but they moved in opposite directions in the same amount this year. Reebok rose 4 percent to 78, while Nike fell to 72. The six-point lead on Reebok has its closest competitor is unusually high in any industry, second only to Google in the search engines eBay auctions over the Internet and Wachovia banks.

the acquisition of Reebok by Adidas may have contributed to increase the satisfaction of Reebok. The combined brands led to a near doubling of U.S. sales to compete with Nike in market share. Price increases eroded satisfaction in the industry last year, but this years, Reebok has a big advantage in value for money received by their customers.

 

Adidas-Reebok Customer Relationship Management (CRM)

Adidas-Reebok is the engine of success in the future further encourage consumers with unique products, interactive and rewarding at the point of sale. Adidas and Reebok brands must be competitive in this environment where consumers make their final purchasing decisions based on the availability, comfort and space offer product.

There are examples such as Adidas, Reebok has done:

• Excellence in product performance

Adidas Group's website offers the possibility of your potential customer to bring the product and for full details, but its technology. Consumers can also choose the color and size easily, the site also offers products preferred by consumer behavior.

• Price Performance Excellence

Adidas-Reebok has offered discounts on certain products or promoting your website.

• operations excellence

The purchase process is very simple and easily understood by the client. Adidas-Reebok will also provide their web sites with tracking and account management products, so the boxes easily track customers and their orders or search your car.

• excellent relations

In managing its relations with consumers, Adidas-Reebok gives them the services they subscribe to the newsletter news. The client can communicate with the Adidas-Reebok steps and you are not satisfied with product, can return and restore the procedure is explained on its website.

To manage its relationship with small businesses, Reebok, Adidas offer "Affiliate Program" giving them the procedure for Commission sales.

The adidas Group, with its wide range of product lines, faces a growing individualization of demand. There a trend towards design direction experience, and above all, a new awareness of the quality and functionality that you require durable and reliable products and related buyer's exact needs. increasing consumer purchasing more and more power to try to express their personality through a choice of individual products. By So Adidas has been forced to create programs for products with an increasing number of variants. This evolution makes predictions and planning for more Adidas difficult than ever. The result? Alta Moda, a more likely, a huge amount of chain of complexity and the need to offer big discounts to get rid often unwanted products. Adidas realized that the application on-demand manufacturing, instead of alternative actions on the production, could become a promising alternative for managing costs, and the explosion of the product assortment wide variation. Adidas Management Council decided to move towards personalization mass (CM). The development program began in the mid-1990s, culminating in the range of Adidas km mass customization. It was released in the markets test in 2001 and implemented on a large scale in 2002. The program offers consumers the ability to create unique footwear to their exact specifications in terms of adequacy, the function and design stores or at events. The shoes are available in some markets MC can be considered from Adidas seen as an approach to both improve its operating performance and its competitive position by delivering greater value to customers. market research and customer surveys, we know that consumers love the system, and make an appointment even to buy shoes. Adidas Other benefits are described in the table below. However, these benefits come at a cost, as MC also provides a number of challenges. This process is called the trigger a mass customization system. The provider must interact with the client for specific information to identify and translate customer needs and their needs in a specification of concrete products. However, instead of listening to the customer, in many cases, customers are This application design (configuration) activity by themselves on a tool provided by the manufacturer. The sales process becomes a process of co-design.

IV. Purchase Behavior Analysis

 

The market sportswear can be divided into two distinct markets sportswear and sports shoes. The mass market for the sport began to develop in the 1980s with growth the market for training shoes. It was first approved by a caprice. However, during the 1980s and 1990s, the sports apparel market has grown rapidly. In early 1990, the sportswear market has exceeded sneakers, and since the 2000s has been a constant ratio of sales of clothing by 70% to 30% shoes in the sports market in general. Between 2000 and 2004, all sport market grew by 16.2%. However, during this period, sales of sports clothing has increased from 18.9% to Unlike shoes, which grew by 10.4%. One reason is that the price deflation of 13% between 2000 and 2004, which encouraged the consumers to increase the number of clothing and pairs of shoes they buy each year.

 

The sportswear consumers in the United States and their demographic profiles, socio

The report on the Keynote Clothing and footwear (2006) showed that an important feature of the sport of consumers is biased in favor of men, unlike most clothing and footwear market where women spend more and buy more often. A survey conducted by NEMS studies market study on behalf of the Keynote (2006: 93) found that the exit used for the purchase of sports, recreational sports clothes or shoes is a sports store, with 55% of consumers stating this. The survey also found that sports shops are used by 72% of young people aged 16-19 years, 49% of 20-24 years and 72% of 25-34 years.

More information on the demographic profiles buyers comes in the following table:

 

Nike

Adidas

Reebok

All

39

36

31

By gender

Male

39

36

31

Female

39

36

32

Age

16-24

59

49

46

25-34

53

48

40

35-44

44

45

38

45-54

44

37

35

55-64

23

22

21

65 +

14

13

10

On the social quality

AB

38

35

27

C1

40

36

31

C2

48

43

40

D

33

32

35

E

32

29

25

 

 

 

 

 

 

 

 

 

 

 

Buying behavior

A survey on consumer attitudes toward the sport has been carried out by BMRB Access to the Keynote, in June 2007. Based on a representative sample of 1,016 adults, major findings were:

• 36% of respondents believe that sports brands like Nike and Adidas offer better quality than most clothing and footwear;

• 58% of respondents in the 25-34 years, found that sports brands like Nike and Adidas offer better quality than most clothing and footwear;

• In 2006, when asked who had purchased consumer brands in the past year, 36% had bought Adidas, Nike had bought 39% and 31% had Reebok bought;

• In 2004, when asked consumers who had bought the brand in the past year, 40% bought Adidas, Nike had bought 44% and 36% had purchased Reebok;

• In 1998, when asked consumers who had bought the brand last year, 48% had bought Adidas, Nike bought the 37% and 35% had purchased Reebok.

There is also a new trend in consumer behavior and women are achieving greater influence in all purchasing decisions and more and more companies are realizing this and refocus their advertising toward women. This, together with his growing interest in sport, women are an obvious target for Adidas-Reebok and advertising. Women are responsible for approximately 80% of individual consumption expenditure and may continue to be ignored by the size of the Adidas-Reebok brand. If Adidas wants to attract women to buy their products, they must ensure that your brand is attractive to women.

An existing brand may be more difficult to write because the consumer may have preconceived ideas ideas. Therefore, the customer must be satisfied and learn to connect with certain values of the brand and even change the values already established. Communications and publicity have the power to create associations with the brand and make the brand more attractive to the consumer. Women are more susceptible to advertising than men are what makes a great publicity tool when trying to change the brand values. As women want and have a great interest in recent decades changed. To reach women and succeed, Adidas, Reebok has to understand these changes and to monitor market developments so that their communication can be adapted to "modern" woman.

The brands and the values they bring to consumers have become increasingly important for businesses and consumers. We believe that the line created primarily Adidas Stella McCartney does not sell clothes, but to build your brand. The values of this line will not only affect the collections of other women, but the brand as a whole.

By opting for Stella McCartney as a collaborator, Adidas to take a shortcut in the consciousness of women. They are able to take the brand associations that are related to Stella McCartney and combines them with their own associations to the brand. Not is unusual for companies to do and we think it will be very effective. Both Adidas and Stella McCartney brands include values are very strong.

Adidas is known for its high-tech functional clothing and perceived quality is high. Stella McCartney is a pioneer and famous for his drawings, the combination of both brands and their associations to brand is very interesting and sure to attract attention. Adidas called their new position, "a perfect fusion of performance and style." Customers who feel Stella McCartney loyalty is likely to transfer allegiance to the new line, increasing tolerance and positivism Adidas.

To analyze further whether the acquisition of Reebok by Adidas result in sustainable competitive advantage in today's industry-leading and rival, Nike, customer analysis to do. One way in which the merger is supposed to lead to a sustainable competitive advantage is to increase the amount of exposure of both brands in the world. This increased exposure occurred through a large retail chain created from the combined resources of both companies.

Adidas-Reebok strategy in the purchasing behavior of consumers

In an effort to distinguish themselves from the competition each company has developed relationships only organizations and individuals very recognizable. Reebok had exclusive rights to market their products NBA, NHL, NFL and WNBA. Similarly, Adidas had secured professional contracts with European football clubs like Chelsea, Bayern Munich, Real Madrid and AC Milan. On the other hand, without a superstar in place, the visa the lack of influence of Nike who have occupied with people like Michael Jordan. "Today, virtually no current wear Nike NBA stars. For me, This is why Nike was willing to spend an outrageous sum of money for a 18-year-old, "says Adidas CEO Herbert Hainer.

While there are many possible ways to exploit in terms of opportunities for these companies, the market is highly segmented, so it is important for three marketing activities specific. For example, in the athletic footwear market, a company can offer a cross trainer shoes from use or performance of shoes and a basketball shoe. Although cross-training shoe is an attractive option for all consumers who do not meet the needs of consumers in particular. On the contrary, the shoe Race and individuals basketball shoe combination to satisfy a particular market segment, but have a modest appeal to another segment. This is where the factories must decide individually whether to pursue a niche market or a complete online strategy. To make this decision, companies should evaluate the cost provide an additional product and income generated by it.

Based on the scheme Porter generic strategies (discussed above), methods used by Adidas-Reebok to compete for customers in the industry to be evident. While both Nike and Adidas make use of a differentiation strategy to attract customers by focusing Reebok its efforts on a comprehensive economic strategy. The differentiation strategy of both companies, Nike and Adidas, can be seen in action by examining the different productions of these two companies.

Nike Shox technology currently leads in most sports shoes it produces. All Nike Shox shoes last had the same basic platform: a four-column Shox unit in the heel for cushioning and a mesh / synthetic upper. In addition to the Shox technology, Nike has innovated with online shopping allows customers to customize their own shoes NIKEiD.com. These methods can be considered as an attempt Nike from the competition

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