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Executive Summary

Men’s basketball footwear brand Reebok, began in 1895 and is known for manufacturing

first-class footwear for customers throughout the world. But recently, the brand had a drastic 15.5%

decrease in share of market. The main issue(s) faced by Reebok and the purpose of our in-depth

research are to determine the reason for the decrease in share of market and to find a solution to

solve the problem.

We created a survey, sent it out to potential respondents, and collected the data to find out more

about consumers’ perception of Reebok and its main competitors like Nike and Converse. From

the results of our survey and information from our market analysis, we came up with a

recommendation: 1) A line extension product would be used to directly target the attractive

market segment comprised of 14-24 year olds. 2) The subsequent promotion will seek to

empower the young male adult to forge his own path and break from the normal. 3.) Competitive

price matching will be implemented to purvey the notion of quality, value, and exclusivity,

discounting and sales promotions will be used to stimulate sales and store traffic.

The implementation of our recommendation will cost Reebok approximately

$4,500,000.00 in production and research and development costs. We also anticipate that it will

cost roughly $4,500,000.00 to cover marketing research and advertising costs. In total, this

recommendation will initially cost Reebok approximately $9,000,000.00. After implementation,

Reebok will create more value in its products to its target consumers, encouraging them to

purchase their basketball shoes, and in turn increase sales and share of market.

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I. THE INDUSTRY, THE MARKET, AND THE BUYER

A. Industry Analysis

Competition Analysis

In the men’s basketball shoe market there are several direct competitors that rival Reebok in

terms of market share, marketing efforts directed towards a similar target market, revenue, and

number of products available to those target markets. The following paragraphs discuss those

competitors and their place within the basketball shoe industry.

Nike.  Nike is the industry leader and largest direct competitor of Reebok in the basketball shoe

market. Nike basketball shoes hold a 91% share of market of the men’s basketball shoe product

category (Lazich, R.S.) and show profits of $24,128,000  in 2012 and $20,862,000 in 2011

indicating sales growth (Thomson Financial, January 5, 2013). The target market that Nike

intends to capture are males 24-35 years in age who purchase one pair of new shoes every 12

months and pay at a price point between $50-$74 (Appendix A). Nike’s marketing strategy is to

offer a premium quality product to the market with high price points and promote these products

using highly visible and attractive endorsement deals with NBA players Kobe Bryant, Lebron

James, and Kevin Durant. Nike currently offers 35 different styles of products with 142 different

color options for the men’s basketball market (Nike.com).

And 1. The brand And1 holds a 0.0098% share of the men’s basketball market. And1 primarily

focuses its marketing strategies on a “streetball” brand image and sponsors many of those events.

Early advertising strategies, used to distinguish their products from others, included other

basketball slogans and trash talk such as "Pass. Save Yourself The Embarrassment" (Busbee, J.).

And1 currently offers 4 different styles of products with 9 color combinations (And1usa.com).

Converse. Converse holds 0.0078% of the market share and produced $ 1.1 billion dollars in

revenue in 2011 (Official corporate website, 2013). The brand Converse was a huge success in

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the 1920s when it developed the “Chuck Taylor All Stars”, however in more recent times the

Converse brand now primarily tries to capture the music and skateboarder markets while still

offering 6 men’s basketball shoe products with 31 different color combinations (Converse.com).

Budget Competition. There are several total budget competition product categories that take up a

share of Reebok’s marketing budget. Reebok also offers men’s training, running, walking, and

crossfit shoes. As well as womens training, dance, walking, running, and crossfit shoes. The

company also offers mens’, womens’, and kids’ apparel. These items use marketing dollars that

could otherwise be used to promote the mens’ basketball line (Reebok.com).

Driving Forces.

Fashion Trends: Multipurpose use of basketball shoes. In today’s athletic world, products have

extended beyond their intended use.  Athletic apparel has bridged the gap between everyday and

sport wear.  According to Robert Allen from Brand Strategy, “Sport has blended into the world

of celebrity....It has been infused with street style, as sports casual has become part of everyday

clothing” (Thomas, 2013).  This has driven sales in the basketball shoe market because of the

ability for products to be repurposed.  Nike, the industry leader, offers a vast selection of

basketball shoe products that include the most popular line Jordan, a customizable line NikeID,

and other highly endorsed shoes by basketball superstars such as Kobe Bryant and Lebron

James.  SoleLand reports that basketball shoes are being purchased primarily for fashion

purposes, “for this reason, many shoe manufacturing companies actually tailor their basketball

shoes toward today's modern fashion, rather than being the best possible basketball shoe.”  The

look and style of the shoe is becoming increasingly important both on the court and off the court.

For a competitor in this industry, there is a necessity to focus on creating a product for the

fashion savvy users while remembering the intended use (SoleLand, 2012).

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Basketball participation on the rise. US Bureau Statistics Participation in selected sport

activities in the year 2009 shows that there were 24,410 Basketball participants.  Being a

participant is defined as “an individual seven years of age or older who participates in a sport

more than once a year” (US Bureau Statistics, 2009).  In a short three year span, these numbers

grew to 4.1 million documented players in organized basketball leagues (Goalrilla, 2012).

According to Goalrilla, a quarter of those participants are female, leaving us with a participation

of approximately 3 million male players.  Due to the growth of the basketball market, the need

for basketball apparel has also grown.  According to the Wall Street Journal, basketball shoes

rose 14% in the U.S. from 2012 to 2013.  This is the fastest gain recorded in the past three years.

The trend has continued into the 2013 year with 11% growth seen in January and another 6%

growth in February (Cheng, 2013).

High Visibility of Celebrity Endorsers. NBA players make millions both on the court and off the

court.  These days, many players such as Kobe Bryant, Lamar Odom, and Derrick Rose make

more of their annual salaries in their endorsement deals than they do through their NBA contract.

These players are visible in all sorts of industries such as fast food, apparel, automobiles,

electronics and more, making them top of mind in consumer perceptions.  The more recognizable

your endorsers are, the more often your promotional efforts will be remembered (Jones, 2012).

Key Success Factors.

Perceived High Quality. The Foot and Ankle Center of Washington states that  “since, improved

traction, increased shock absorption, enhanced stability of the foot, and greater ankle support can

all help prevent foot and ankle injuries while playing basketball, a quality basketball shoe is

critical to enjoying the game while remaining injury free” (Foot and Ankle Center of

Washington, 2013).  As many consumers go through their purchase decision process, they look

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for the characteristics that will benefit them most.  Although injury prevention isn’t at the top of

the list, comfort, style, image and price are.  Many customers complain about shoes produced by

companies in this industry that are uncomfortable which makes them unappealing to purchase

(“Customer Reviews”, April 26, 2013).  As the industry leader, Nike continually releases

products that prove to be exceptional in all of these categories.  Their highest selling line, Jordan,

is an example of the higher priced products that signals to consumers the highest quality.  Within

this industry, competitors must evoke confidence in their quality for consumers to believe they

are getting the best value for their money.  Consumers who buy basketball shoes and repurpose

them for casual wear find quality to be an important benefit sought, which was labeled as

“durability” in our primary research survey (Appendix B). To these consumers, these products

are intended for everyday use rather than to improve performance and wear for sport use only.

This means quality needs to be high due to the increase in frequency of use.

Quality of endorsement. Nike, the industry leader, owns the rights of the biggest names in

basketball today as their endorsers.  Michael Jordan alone is considered one of the most iconic

basketball players in the history of the sport and because of his name being attached to the

Jordan basketball shoe line, it owns 71% of Nike’s 91% market share in this industry.  Other

established players Nike has brought into their shoe line include Lebron James, Kobe Bryant,

and Kevin Durant, three of the most decorated players in the league today.  Reebok attempted to

mirror Nike’s branding and endorsement strategy, however their attempts proved to be

unsuccessful. This can be largely attributed to the fact that John Wall, Reeboks primary endorser,

had not played a single NBA game when he signed a contract. He was also not in a very

publicized market playing for the Washington Wizards, while Jordan, James, Durant, and Bryant

have all been to NBA finals or earned the honors of Most Valuable Player.  This is a direct

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example of the halo effect, if it is good enough for the best players, it is good enough for “me”.

Since entering the NBA, Wall has moved from Reebok’s failing line to their parent brand

Adidas, becoming an endorser for their basketball lines.

Brand Loyalty. As said by David Grasso, global brand marketing VP of Nike, “Nike is on a

journey, a long-term journey for the brand...As we continue to grow in size, it’s important we

stay connected.  If you take away the toys and the noise, it’s about having a relationship” (Elliott,

2013).  This is shown in the current efforts at Nike to stray from bad publicity they have received

recently as a result of negative press related to their endorsers, ie: Lance Armstrong.  A survey

conducted by Brand Keys showed that in brand loyalty, Nike ranks “second with consumer age

45 to 65, third with consumers 25 to 44, and fifth with consumers 18 to 24”.  These declines in

brand loyal statistics exemplifies the need for building a brand that is appealing to consumers

and makes them want to be associated with their product. Providing a product to help you win is

not enough anymore, building a rapport and good image is essential in maintaining brand loyal

customers.   

Industry Attractiveness

Reebok is currently competing in the men’s basketball shoe industry. The Five Forces Model of

Environmental Threats is the tool of choice to gauge the level of any given industry’s

attractiveness. To gauge the level of threat in an industry and concurrently the level of industry

attractiveness, one must find the degree of threat afforded by possible entry, rivalry, suppliers,

buyers, and substitutes.

The Threat of Entry. The threat of entry by new firms into the men’s basketball shoe industry is

low because the industry is unattractive due to the high barriers to entry. The main barrier to

entry is product differentiation. This is defined as possessing brand identification and customer

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loyalty that potential entrants do not. (Barney 2011) The men’s basketball industry is dominated

by brand loyal customers. For example, Nike has 91% of market share, but 58% of that is the Air

Jordan brand alone. (Thomaselli 2010) Current incumbent firms in the market, much less new

entrants, must absorb the costs of overcoming such differentiation advantages. Another barrier to

entry into the men’s basketball shoe industry is the combined cost advantages independent of

scale. Proprietary technology is a cost advantage for incumbent firms. For example, patents that

Reebok and Nike have gotten over the years give them a cost advantage over possible new

entrants that must develop a substitute technology to compete. Another cost advantage for

incumbent firms in the men’s basketball industry is know-how. Knowledge, skills, and

information are built up over time and even decades in the case of Reebok. The cost of

developing this know-how acts as a barrier. The men’s basketball shoe industry is unattractive to

new entrants due to high barriers to entry.

The Threat of Rivalry. The threat of rivalry in the men’s basketball shoe industry is low and

therefore the industry is attractive. Attributes indicative of an industry with a high threat of

rivalry are a large number of competing firms, same size firms with same influence, slow

industry growth, and a lack of product differentiation. (Barney 2011) These attributes do not

describe the men’s basketball shoe industry at all. There are a medium number of competing

firms in the industry, these firms are not all the same size nor do they have the same influence

indicated by Nike’s 91% market share (Thomaselli 2010), the industry is growing, and there is

plenty of differentiation as indicated by the many shoes offered and patents held. The threat of

rivalry is low.

The Threat of Substitutes. The threat of substitutes in the men’s basketball shoe industry is low

and therefore attractive. Substitutes meet customer needs approximately the same as industry

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products but in a different way. A function of substitutes is to place a ceiling on the prices firms

can charge and connectedly how much they can earn. (Barney 2011) The basketball shoe market

has offerings at varying price points that serve the entire market. Basketball shoes are

specifically designed for the sport, and no substitute currently exists to negate the use or viability

of basketball shoes. Therefore the men’s basketball shoe industry has a low threat of substitutes.

(Nike Inc, SWOT Analysis 2013)

The Threat of Powerful Suppliers. The threat of powerful suppliers in the men’s basketball shoe

industry is low and therefore attractive. Indicators of threat of suppliers in an industry are that the

suppliers’ industry is dominated by only a few firms, suppliers have highly differentiated

products, suppliers are not threatened by substitutes, suppliers threaten forward vertical

integration, and firms are not important customers for suppliers. (Barney 2011) There are many

suppliers for the men’s basketball shoe industry and none of them have highly differentiated

products. Since there is a lack of supplier differentiation, the threat of substitutes is high for

suppliers. Due to the high barriers to entry, suppliers of the men’s basketball shoe industry are

not a high threat for forward vertical integration. Large companies like Nike, Reebok, and

Adidas are all very important customers for suppliers and could hurt suppliers if they went

elsewhere. Therefore, as a whole, the men’s basketball shoe industry has a low threat of

suppliers. (Nike Inc, SWOT Analysis 2013)

The Threat of Powerful Buyers. The threat of powerful buyers in the men’s basketball shoe

industry is low and therefore attractive. Indicators of the threat of buyers in an industry are that

the number of buyers is small, products are undifferentiated, products are a large percentage of a

buyer’s final costs, buyers are not earning economic profits, and buyers threaten backward

vertical integration. (Barney 2011) There are quite a large number of buyers in the men’s

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basketball shoe industry ranging from department stores to sports specialty stores. Basketball

shoes are highly differentiated in design, shape, color, function, and brand. Shoes are a final

product and are therefore not a cost factor in a different product. Stores that are buying

basketball shoes are enjoying economic profits because it is a growing industry, and due to the

high barriers to entry, buyers are not actively threatening to backward vertically integrate.

In conclusion, as a whole the level of threat in the men’s basketball industry is low, and it is an

attractive industry to be in. There is a low threat of entry, rivalry, suppliers, buyers, and

substitutes. Each of the five measuring instruments for gauging industry attractiveness were

positive, and therefore no weighting system was used to empower any specific measurement.

That being said, Nike has a 91% market share and very high brand loyalty and equity. All

incumbent firms in the industry vying for market share will be subject to the costs of overcoming

these disadvantages.  

B. Industry Buyer Analysis

Total Market Segmentation Analysis

Within the athletic shoe market, there exist a wide variety of people with a wide range of

attributes and characteristics.  In order for companies to reach potential consumers, it is

necessary for them to segment groups accordingly.  It is very important to segment these groups

by characteristics that have the potential to influence a buying decision.  Also, these segments

categorize people into groups with similar needs and behaviors.

Gender. A common segment trait to use is gender.  Among people that have bought basketball

shoes in the past twelve months, 70.5% of them were male and 29.5% were female (Appendix A,

figure 1).  This appears to point to a more male buyer driven market.  This segment demographic

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was chosen because there exists a distinct difference between purchases of basketball shoes

among men and women.

Price. Another segment base chosen for this market is price.  This segment category is a basic

insight into how much a buyer has spent on basketballs shoes within the past year.  The segments

are various price ranges and according to (Appendix A) the percentages of buyers per segment

vary as well.  These price ranges include: Under $50, $50-$74, $75-$149, and $150+.  The

majority of buyers for this segment exist in the $50-$74 range, but close behind is the $75-$149

range.  It’s fair to say that purchases of shoes over $150 is a minority of the segment.  The price

segment was chosen because more often than not price is a factor when purchasing not just

basketball shoes, but any material good.

Ethnicity. Ethnicity as a segment base was chosen as different races have different needs and

opinions when it comes to footwear as a whole.  The groups were segmented into white, African

American/black, and other.  Various other races were seen in the database, but the sampling was

so small that it could be disregarded, but noted.  From the data and the graph (Appendix A),

whites make up a little more than half of all buyers of basketball shoes.

Age. Along with past demographics, age was also chosen due to the accessibility of data.  Also,

age is an important factor to gain insight into the typical industry purchaser.  The segments were

each distinct, but also close to one another percentage-wise (Appendix A).  The data points to the

age range of 55-64 being in the minority of buyers of basketball shoes.  There doesn’t appear to

be a definitive age for purchasing basketball shoes, but there exists a  distinct age range, wherein

the typical buyer of basketball shoes can be segmented.  The typical age range for a buyer of

basketball shoes seems to exist within the mid to late twenties.

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Geographic. Geographic’s came up on the database and there existed some distinct differences

in percent of buyers.  This was chosen because there may exist a correlation with other popular

sports in different regions that might affect purchase of basketball shoes.  For example, the

Miami Heat in the South or hockey teams in the North.  The segments were North East, South,

Midwest, and West.  After analyzing the database and creating a graph (Appendix A), the South

seemed to be the majority region for purchasers of basketball shoes comprising of  36.4% of all

basketball shoe purchases.  The North East and West were not very distinctly different and the

Midwest was the closest to the South in terms of majority.

Household Income. The fourth category used to segment the basketball shoe industry buyer was

household income.  The database offered data for income ranging from less than $20,000 all the

way to greater than $150,000.  The largest segment was consumers who have a household

income of $75,000-$149,000 (Appendix A).  This segment is extremely influential over buying

decisions.  If a consumer does not have the funds available for purchases such as a specialized

basketball shoe, they will satisfy that need for shoes in some other alternative way.  However,

the data suggests to us that the consumers in the market for basketball shoes have disposable

income and the desire to spend it on this product.

Usage. The final category used to segments purchasers of basketball shoes was the number of

pairs bought within the past year.  It is recognized that purchases of shoes can at times be

repeated throughout the year.  This is due to collectors of shoes (i.e. “sneakerheads”) who make

repeat purchases.  Also,  multiple pairs may be purchased as gifts or for children.  This data was

segmented as 1 pair, 2 pairs, or 3+ pairs of shoes in a year.  This data was important to segment

due to the way shoe culture is in the world.  Many people buy multiple pairs of shoes to show off

or stay current.  From the database and (Appendix A), this fact was not altogether supported as

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the majority of basketball shoe buyers purchased 1 pair in a twelve month period and the

minority being 2 and 3+.  In fact, buying a single pair of shoes accounted for more than half of

the purchasers of basketball shoes.

Using these segments, the industry targets its consumers in various ways.  The selection of these

categories as segment bases was due to the availability of data as well as how impactful each

might be on a purchase of a pair of basketball shoes.  From this data, one can draw a conclusion

and form a concise picture of the typical buyer.

Benefits Sought. In our survey, we asked consumers what they find most important in a

basketball shoe.  After collecting a sizeable response, we analyzed the data and found there to be

three specific benefits that consumers look for when purchasing basketball shoes.  (Appendix A).

From this data, Comfort was the most important benefit sought with 56% of respondents ranking

it first in importance followed by Price at 32% and Style at 12%.  

Buyer Description

Determining the typical buyer for the basketball shoe industry is rather obvious after the market

has been appropriately segmented.  The typical buyer is derived by studying the data from the

segmentation analysis and choosing the most prevalent segments among those represented.  In

this case, the data points to a very distinctive typical basketball shoe consumer.  This typical

consumer is a white male, age ranging from 25-34, who lives in the South region of the United

States, has a household income of $75,000.00 - $149,000.00, purchases one pair of basketball

shoes per 12 months, and spends from $50.00-$74.00 (Appendix A).

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Quantification Statistics

According to MRI+, one of the nation’s leading databases, 9,782,000 of the 244,550,000 people

in the United States are estimated to have purchased basketball shoes in the past 12 months.  This

represents 4% of the adults in the United States who are in the market for basketball shoes.

II. Strategic Marketing Analysis

A. Major Problem Defined

Reebok brand basketball shoes have had a very rough couple of years since the glory days of the

1990’s. There are several reasons for the company’s downturn in performance of this product

category; however, in this section the focus will be on the marketing issues and problems that

Reebok is currently facing.

The major problem that hinders Reebok in the men’s basketball shoe market is product

positioning. According to primary data (market survey), respondents perceive Reebok product to

be less stylish, be of lesser quality, and less comfortable than the products offered by our

competition (Appendix D). Contributing factors to the less than desired perceptual state of

Reebok’s basketball shoes are the way the company has tried to brand itself over the past several

decades. Reebok has changed its slogan 14 times since 1987 and this tends to confuse consumers

as to where Reebok products stand in the market (Chahal, 1).

As a result of this confusion several issues or “symptoms” have arisen for Reebok in this product

category. Reebok has been losing share of market (SOM) consistently to Nike over past twenty

years dropping from an 18.9% SOM in 1993 to 3.4% SOM in 2012 (SBRnet.com). This constant

loss of market share for Reebok in the mens basketball shoe industry has recently forced the

company to once again try to rebrand itself and redirect its marketing efforts towards the

“fitness” market instead of the basketball shoe product category. This move gives even less

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marketing resources to direct further product positioning of the basketball shoe line (Baker, R.

2012, January 19).  

B. Current Marketing Strategies

Product

Physical Description. Reebok offers basketball shoes that are generally safe color schemes like

red, black, gray, blue, and white.  On each pair of shoes, there are generally just two colors

present, with one being the dominant color and the other playing a small part as an accent color.

Each shoe is rather conservative in its style and color (see Reebok.com).  Reebok offers shoes

ranging from classic styles to more modern designs and offers one shoe that is endorsed by NBA

player John Wall.

Target Market. It was determined by our industry segmentation that the typical buyer was a

white male, ranging from 25-34, who lives in the South region of the United States, has a

household income of $75,000.00 - $149,000.00, purchases one pair of basketball shoes per 12

months, and spends from $50.00-$74.00 (See Appendix A). It appears that Reebok has a very

broad target market. The shoes are a basic design without a lot of detailing and their color

schemes are generally conservative, thus appealing to the majority of consumers.  Overall,

Reebok appears to target the consumers in the men’s basketball market who are looking for a

basic shoe without a lot of fancy detailing or bright colors in a low price range.

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Product Positioning. Reebok is currently viewed as a cheaper, lesser quality product.  Customers

consider Reebok to generally always be in their price range, whether they want to spend $40 or

$140 on a pair of shoes.   According to our primary research, consumers view Reebok as being

ranked highest in the category of Within My Price Range, but lowest in Style, Durability,

Provides Support, and Improving Performance compared to its two main competitors, Nike and

Jordan (Appendix D).

Product Life Cycle. We estimate Reebok to be in the Maturity stage of the Product Life Cycle.

We substantiate this claim by determining its sales, analyzing its profits, and examining the

marketing expenses for the product.  Reebok’s sales have been declining slightly over the past 3

years (Financial Highlights, 1), which in turn causes a plateau and decline in their profits.  When

considering their current marketing expenditures, it is extremely difficult to find a Reebok

basketball shoe promotion aside from the John Wall shoe (which will be discontinued due to his

brand switching). (Appendix E)

Packaging/Branding . According to retail experts at Foot Locker, all of Reebok’s current styles

of basketball shoes come in the same, uniform blue cardboard box with the Reebok logo on the

outside.  

Their branding strategies have been in a constant state of change since 1987 with an astounding

14 different slogan changes, their current slogan is “Live with Fire” (Chahal, 1).

Perceptual Map. Two attributes, price and comfort, were determined to be the most influential

for customers in their purchase decision as determined by our primary research survey.  Three

brands are represented; they are the top 3 that customers purchase according to our survey, their

circle size is representative of their respective share of market.  The solid circle represents the

consumers’ ideal position. (Appendix D)

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Promotion

Advertising/Sales Promotion. Reebok is in the process of taking a step back and reforming the

whole Reebok Brand to launch a global marketing blitz focusing on fitness pursuits in the year

2013.  The campaign called “Live with Fire” enforces the position of Reebok promoting fitness

in the minds of its consumers with the release of products that allow fitness to be loved and

pursued like traditional sports are.  This idea is being stretched into every line extension at

Reebok, trying to increase consistency throughout the brand and their many different product

lines (Engvall, 2013).  

Reebok has also launched multiple social media tools within the past year including their Twitter

and Instagram, @ReebokHoops.  Both of these tools were developed in July of 2012 but have

not been updated since November 2012.  On their YouTube account, they have released a string

of short videos promoting John Wall and his basketball line with Reebok.  Each video is

approximately 12 seconds, just long enough for consumers to recognize the athlete as John Wall

and view him in a “practice makes perfect” kind of light.  Although Wall has recently moved

from being a Reebok spokesperson to their parent brand Adidas, Wall is still the strongest

campaign currently established within the Reebok basketball shoes lines.  As Reebok forges

ahead with their focus on fitness, they have left behind the social media campaigns they began

just last year, ReebokHoops.  

Advertising Budget. In 2011, Reebok spent $65 Million on ads in the U.S. and over $300 Million

globally (McClellan, 2013). We compare this to the Nike, the industry leader, who expends 2.4

billion globally on promotional campaigns (Cendrowski, 2012).  .  

Place

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Reebok is part of a vast global distribution network. When Reebok was acquired by Adidas in

2005, Reebok held an impressive range of distribution deals in the US while Adidas held similar

advantageous distribution deals abroad. (Barrand, 2006) In an effort to combine these strengths

across both companies, Adidas systematically bought out Reebok’s distributors and joint venture

partners worldwide where Adidas held a strong presence. These distribution consolidations

created economies of scale that produced a cost savings of approximately $212 million over four

years. (Conti & With, 2006) Even though such consolidation efforts took place, Reebok still

produces shoes in over 30 countries. (Berthiaume, 2006)

Supply Chain. The supply chain Reebok is a part of is global and multi-layered with many

different types of business partners. (Supply Chain Structure, 2013) Reebok’s suppliers fall

under five broad categories. Main suppliers have a direct contractual relationship with Reebok

for the supply of products for the market or export. Subcontractors are factories that have been

subcontracted by suppliers to do manufacturing operations that the main suppliers are not able to

do in their own facility. Material and other service providers simply supply goods and services to

main suppliers without even involving Reebok. Licensees are independent companies which

design, produce, and distribute specific products under licence to Reebok. In 2012, the adidas

Group including Reebok worked with 49 licensees whose suppliers sourced products from 275

factories in 44 countries.  (Supply Chain Structure, 2013) Lastly, agents are independent

companies that act as intermediaries to source product manufacturing, manage the manufacturing

processes, and sell finished products to the Adidas Group (Supply Chain Structure, 2013).

(Appendix F).

Distribution. Reebok follows an intensive distribution strategy in that it makes its products

available in the maximum number of outlets. Men’s basketball shoes are sold in places from

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online to department stores. Reebok’s sales stick closely to the industry averages and therefore

over half of their sales are made at sporting good stores and specialty athletic footwear stores.

(Exp. by Outlet Type, 2013) Foot Locker is Reebok’s largest customer, and in 2008 due to

extreme discounting by Foot Locker, delivery and consequently sales were halted temporarily by

the Adidas Group. (Ernst, 2008) Aside from hardnosed tactics, further efforts to divert negative

effects of powerful buyers should be implemented. Reebok is currently on par with industry

averages for online sales. A useful website for ordering is in place and easy to use (Exp. by

Outlet Type, 2013).  (Appendix F)

Price

Major Cost Factors. The production costs for making a pair of shoes for Reebok (as well as

various other companies) is relatively low when compared to how much they end up costing the

consumer.  Thus, the pricing strategy is less about covering cost and more about being

competitive and positioning the product in the marketplace (developing a brand image).  Also,

pricing is set to increase demand.

Historical Analysis. In an effort to reach its consumers, Reebok has both utilized retailers as an

online store with the popularity of online shopping.  The pricing at these locations is dependent

on retailer and location.  Reebok’s pricing has maintained a price structure of affordability for its

more price sensitive consumers as well as a pricing designed to attract those who associate price

with quality.  In the retail stores Reebok is found in, it is often around the middle of the price

range.(footlocker.com)

Competitive Comparisons. As was said, Reebok can be found around the middle to upper price

range.  Their price is competitive with the Converse or And1 brand shoes. They are marginally

less than that of Nike or Jordan.  Through this, Reebok has potential to gain market share from

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the more price sensitive consumers.  Unfortunately, Nike’s brand image and the perception

around it is of a shoe of style, quality, and durability.  For this reason, consumers are willing to

pay more for Nike as they are buying the popular, in style brand.  This causes consumers to

become more insensitive about price.  Jordan brand shoes by comparison are often found and

purchased for higher prices than Nike.  These shoes communicate the same quality as Nike as

well as exclusivity.

Pricing Strategy. In order to attain revenue and attract consumers, Reebok follows a fairly basic

pricing strategy. Their shoes are a comparatively lower price than their main competitor, Nike.

Through this fact, Reebok attempts to increase demand and appeal to a broader, more price

sensitive market.  Their shoes are also often at marked down prices.  Additionally, Reebok

utilizes price penetration as well as a high-low pricing strategy.  Under price penetration, Reebok

would price its shoes at a lower price on the market in order to increase demand, capture market

share, and gain market acceptance.  In a high-low pricing strategy, a shoe would be released at a

certain price (high) and later when the popularity goes down, the shoe would be

discounted/marked down in price (low).  Reebok shoes are also priced depending on location and

retailer, which comes from how the supply chain operates.  In short, Reebok pricing strategy is

designed to attract the price sensitive consumers that Nike cannot always attain.

III. THE MARKETING RECOMMENDATION

A.  Feasible Alternatives

Alternative One

One possible alternative to Reebok’s men’s basketball shoe positioning problem would be to

create and maintain a comprehensive advertising campaign in an attempt to reposition the brand

in the minds of consumers.  This would include an increase in advertising overall for the men’s

20

basketball shoe category by advertising for specific basketball shoe products. This could in turn

have a synergistic outcome for Reebok, as customers view each shoe as a quality product, they

will then have a more positive view of the brand itself.  Another crucial element of this

advertising campaign would be the creation of a slogan that will be designed to withstand the test

of time and lead consumers to associate the brand message every time they see the Reebok logo.

Pros. The pros of this advertising/branding campaign are numerous.  They would increase

awareness of not only the brand itself, but also for the individual basketball product lines that

Reebok offers.  Advertising campaigns can be fairly easy to implement and execute, especially if

an outside agency is used to leverage their expertise in the area.  Reebok also stands to increase

sales from this advertising push as the shoes are accentuated and presented in an appealing way

to consumers.  Currently Reebok suffers from poor perceptions concerning quality, but with this

advertising campaign, those perceptions could be corrected (Appendix D).

Cons. There are also several cons to creating and launching these advertising campaigns.  First,

advertising campaigns can be extremely expensive, especially is an outside agency is used.  If

the advertising does not appeal to the consumers that it is designed for, it could have an opposite

effect and compromise the brand image even further.  Additionally, coming up with the right

slogan for the best possible target market will also be challenging, and changing the current

brand position could drive away Reebok’s current customers.

Alternative 2

The second feasible alternative would be creating a product line extension.  This line extension

would capitalize on the features that consumers in the men’s basketball shoe industry are most

looking for:  comfort, price, style, and functional aspects.  This product would also be marketed

to a more specific target market in the men’s basketball shoe industry.  Reebok currently seeks a

21

target market of white males aged in the range of 25 to 34 years old.  In order to generate more

revenue, they should target the people who make the majority of industry purchases, this is the

segment of young men ages 14-24.  It would also be sold at a slightly higher price point,

signaling an elevated level of quality to consumers.

Pros. Reebok could expand its customer base by capitalizing on this young adult male market.

Research shows that 43% of consumer basketball shoe expenditures were made by 14-24 year

old young men in 2012 (Sports Business Research Network, 3).   Reebok can also further

improve product/brand perceptions through this new line extension and increase profits by

achieving a higher selling price (to signal higher quality to consumers).  Yet another benefit of a

successful line extension would be the increase in market share for Reebok, potentially stealing

share from Nike in the process.

Cons. New product development is extremely expensive, Reebok stands to suffer a major loss if

they are not successful in the line extension.  Further problems could be in store for Reebok if

the new product does not sell at the retail price, which would cause the shoes to be significantly

discounted, leading to a significant loss in margins for Reebok and its distributors.  The timetable

for this extension could also be a downside as research and development, the rest of the new

product development process, and distribution into the marketplace takes a considerable amount

of time.

B.  Our Recommendation

Define

A line extension product would be used to directly target the attractive market segment

comprised of 14-24 year olds. These young adults, although brand aware, do not have a life time

of purchasing experience to build a fierce loyalty and are therefore more palpable. Accompanied

22

by an advertising campaign directly targeting this segment, the line extension would build brand

equity and loyalty that would have multi-generational effects. Young adults emulate those that

appear stylish, cool, and that they respect. Our line extension and subsequent promotion will

seek to empower the young male adult to forge his own path and break from the normal. With

competitive price matching to purvey the notion of quality, value, and exclusivity, discounting

and sales promotions will be used to stimulate sales and store traffic.     

Recommended Strategic Marketing Objectives

Product. By definition, product as an element of the marketing mix is a need satisfier.  The

objective of this new product line is to offer customers a product that meets and exceeds the

needs and expectations that they have expressed to us in our primary research (conducted by an

online marketing survey). We propose achieving this by holding focus groups where various

design concepts will be shown.  From feedback we will be able to pinpoint possible product

styles that can be implemented into a product line.  This will include feedback on color schemes,

comfort levels, stylishness, and other product attributes that the focus groups identified to be

important. At that point a prototype can be produced and distributed to a test market that will

represent our eventual target market.  This target market test would give an indication of how

consumers react to the new product line, specifically their likes, dislikes, and feelings.  From

there, Reebok can move toward either modifying the product to amend the dislikes of the product

line or launching the product if it was well received.

Promotion. Once this product is developed, there must be an extensive marketing campaign

launched to raise awareness, generate interest and desire for the product, and ultimately inspire

consumers to purchase.  We will capitalize on our target by focusing our promotional efforts on

23

the 14-24 year old male. Individuality, self reliance, and forging your own path would be

emphasized for this segment.

This will be accomplished by signing one to two celebrity NBA “rookies” identifiable with the

target segment. A budget of 2 million dollars is set for these deals.  These endorsers will join

other Reebok endorsers to promote BOKS, a physical activity program for elementary school

kids.  This campaign will tie into Reebok’s overall brand strategy to reposition themselves in the

market as a global fitness brand (Sarro, 2013).  Reebok sponsorships of high school basketball

teams and college teams would further build brand equity and loyalty.  These teams will be

promoted in Reebok’s print advertisements including bulletin boards, sponsorship amount, print

advertisements, and other visibility promoters with a budget of $240,000.  Advertising

campaigns would feature themes such as “Greatness is mine for the taking” and “The new cool

isn’t plain old normal” which have been generated by our marketing efforts. Focus groups will

be held to identify further theme attributes and triggers with which the target segment identifies.

A budget of $760,000 is held for all media advertising.  This is enough to include two 30-second

prime time TV spots that will run 30 times over a course of 4 months. There will be a strong

enforcement of keeping all marketing activities integrated to promote a strong and consistent

front for this campaign.  The current social media campaigns will be brought up-to-date with

continuous flows of incoming information for consumers.

Place. Place as an element of the marketing mix is centered on possession utility for consumers,

in other words, how available and convenient a product is for them to obtain. Reebok has a vast

and well established distribution network in the US that is further complimented by the Adidas

distribution network. (Barrand, 2006) Excess demand will have to be absorbed and aptly

distributed within the current system. After a test market study is conducted and demand can be

24

somewhat gauged, further development and expansion of the distribution network to support the

excess demand will be considered and implemented. Considering the relative size and business

volume of the current system, the excess demand produced by the new product line extension

should be easily handled by supplying the new business to current supply channel members.

Reebok follows an intensive distribution strategy in that it makes its products available in the

maximum number of outlets. Men’s basketball shoes are sold in places from online to

department stores. No additional changes to this strategy would be necessary for the new product

line.

Price. Price as an element of the marketing mix is the basis for exchange, meaning that the price

for this product must appeal to our customers, while still communicating an element of quality.

From survey data, price was one of the three most important factors when determining what shoe

to purchase. It would be in Reebok’s best interest to cover the initial costs of its product

development through price skimming. The market leader Nike, a benchmark, has a high level of

brand equity that Reebok cannot currently rival. Through the initial implementation of price

skimming, Reebok will establish competitive price matching to establish this new product line as

high quality.  The price would be high enough to communicate quality and cover costs, but not

so high as to drive away the target market.

Cost Analysis.

Qualitative. Reebok will need to spend a significant amount of time on research and

development, production of the line extension product, and implementing the advertising

campaign.  Furthermore, cannibalization might occur between the line extension and the current

product line that Reebok offers as well as with the parent brand, Adidas.  

25

Quantitative. The costs associated with our recommendation for Reebok are difficult to pinpoint,

but we estimated them to the best of our ability according to available data. We will use the table

in (Appendix G) as the basis for our costs directly related to production of the new line.  These

costs will be lower, considering it is set for 400,000 units/year, which is the total of all Reebok

basketball shoes that were sold in 2012 (SBR, 9).  We will estimate costs at half of the total costs

represented in the chart, requiring ~$2.5 million for production costs. We will require an

additional $2 million for research and development of this new shoe.  This $1.5 million will

cover costs such as market research (focus groups, concept testing, and test marketing) and the

development of the shoe (technology and design-both aesthetic and structural).  Advertising will

be crucial to the success of this line extension.  We require $3 million for advertising.  This cost

is adjustable, pending the signing of endorsers and the type of advertising that is researched to be

most appealing to our target market, some will be more or less expensive than our current

budgeted amount. Costs, although significant, are a necessary expenditure.  If this product is not

researched and designed to the best of our ability, it will be perceived by consumers as another

sub-par Reebok product.

Benefits Analysis

Qualitative. Our recommendations will benefit Reebok with appealing to an attractive market

segment.  The young adult consumer base represents over half of basketball sales in the USA. By

introducing a new product line, Reebok creates the opportunity for their basketball shoe line to

gain entry into this profitable category.  Additionally, Reebok can develop a younger generation

for future brand loyalty.  

26

Quantitative. This line extension’s success will boost Reebok’s sales and profits, extending to an

increase in their share of market.  With the help of our advertising endeavors, we expect to sell

100,000 units in the first year.  With our price point of $125, that would be about $12.5 million

in sales.  This would cover our costs (~$9 million) and still achieve profit for Reebok.  To break

even, 72,000 pairs of shoes must be sold.  Additionally, an increase in 100,000 units in sales

(assuming cannibalization is not a huge issue because we are appealing to a new market

segment) will give Reebok about 520,000 units sold, which would increase their share of market

from 3.4% to 4.2%.  This is a tiny incremental increase, but as perceptions change, we expect an

increase in all basketball shoe purchases.  The effects of this would be seen over several years,

especially if the line extension is continued with even more new products.  Offering more

competitive products could boost Reebok’s market share exponentially.  If Reebok developed

three additional products that had the potential to sell 100,000 units/year each, they would almost

double their sales, and boost their share of market to 8%.  With that increase, Reebok would be

stealing market share from Jordan and Nike, and put themselves in a much more competitive,

profit-generating position in the men’s basketball shoe market.

Expected Consequences and Results

It is expected that brand loyalty will increase exponentially. With market share hovering at

around 3%, it is extremely likely that any increase in advertising will have a positive effect.  Our

particular strategy of targeting young adults will resonate among peer groups through word of

mouth advertising, and future generational support will be established if brand loyalty is firmly

established through our promotional efforts. The promotional efforts and events for the new

product will improve perception of the brand as a whole. A possible negative would be if the

27

recommendation does not produce the results we expect.  This would be a crucial waste of time

and money and could further detach consumers from the Reebok brand name.

Implementation Timetable

Reebok and Adidas have a large amount of know-how and proprietary knowledge. Using

established research and development procedures, it is estimated that the research and

development process along with test marketing will take approximately 18 months. If all raised

concerns produced my test markets are addressed in a timely manner, it is well within reason to

project an official product launch after the 18th month. (Appendix H)

Procedure for review and evaluation

We understand the time it might take for the line extension to be accepted in the marketplace and

to really take off.  In addition, it will be difficult to measure the effect of an increase on

advertising due to uncontrollable factors.  During the market testing phase, surveys will be

distributed and focus groups will be held among the consumers within the test market.  This will

be done to measure current perceptions and feelings toward the Reebok brand.  From there, the

various advertising campaigns will be used on the test market and the line extension will also be

introduced.  Surveys and focus groups will again be used both to measure the acceptance of the

line extension as well as the change in perceptions due to the ad campaign.  This will be done

periodically following the official launch among the entire market to determine the effects the ad

campaign is having on changing consumer perception of the Reebok brand.  This might also be

used to see how the target market is reacting to the line extension versus both competitors as well

as current Reebok basketball shoes.  Once the line extension and ad campaigns have been

launched, sales can be compared historically with previous sales figures.  This could also be

done with revenue.

28

References

AND1 STORE. (n.d.). AND1 STORE. Retrieved June 20, 2013, from http://www.and1usa.com/

Barrand, D. (2006, Sep 06). Reebok raises its voice. Marketing, , 24-25. Retrieved from http://search.proquest.com/docview/214952757?accountid=14665

Barney, J. B. (2011). Gaining and sustaining competitive advantage (4. ed., internat. ed.). UpperSaddle River, NJ [u.a.: Pearson.

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Cheng, A. (2013, March 26). Basketball sneakers see bigggest sales gain in three years: NPD – Behind the Storefront - MarketWatch. Stock Market Commentary - Economic Articles - Business Articles. Retrieved June 15, 2013, from http://blogs.marketwatch.com/behindthestorefront/2013/03/26/basketball-sneakers-see-bigggest-sales-gain-in-three-years-npd/

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Engvall, Nick. (2012, January 9). Interview: Clearing the Air, the Truth about Reebok Basketball’s Future Plans. Complex Sneakers. Retrieved July 1, 2013, from http://www.complex.com/sneakers/2013/01/interview-clearing-the-air-the-truth-about-reebok-basketballs-future-plans

Ernst, J. (2008). REEBOK'S TURNAROUND MAN. Footwear News : FN, 64(3), 16-n/a. Retrieved from http://search.proquest.com/docview/210425827?accountid=14665

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Footwear-Basketball: % of Consumer Exp. by Outlet Type. (2013, February 6). Sport Business Research Network. Retrieved July 1, 2013, from http://www.sbrnet.com.echo.louisville.edu/research.asp?subRID=157#fwbsk7

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NIKE, Inc. - Our Portfolio of Brands. (2013). NIKE, Inc. - The official corporate website for Nike and its affiliate brands. Retrieved June 20, 2013, from http://nikeinc.com/pages/our-portfolio-of-brands            

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Reebok. (n.d.) - Official Store for Reebok Shoes, Apparel, CrossFit, Classics, and More. (n.d.).Reebok - Official Store for Reebok Shoes, Apparel, CrossFit, Classics, and More . Retrieved June 20, 2013, from http://shop.reebok.com/us/

Soleland.com Blog - The Differences Between Basketball Shoes For Style Vs. Shoes For Play-soleland. (2012, November 9). soleland.com Authentic Air Jordan ~ Adidas Reebok and Nike Shoes -soleland. Retrieved June 20, 2013, from http://www.soleland.com/blog/the-differences-between-basketball-shoes-for-style-vs.-shoes-for-play/

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(January 5, 2013) Copyright 2013 Thomson Financial, All Rights Reserved. Retrieved fromhttp://www.lexisnexis.com/hottopics/lnacademic/   

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Appendix A

Segmentation Scheme

32

33

APPENDIX B

Survey

34

35

36

37

APPENDIX C

10 Randomly Selected Survey Responses

Survey Example #1

38

39

Survey Example #2

40

41

Survey Example #3

42

Survey Example #4

43

44

Survey Example #5

45

46

Survey Example #6

47

48

Survey Example #7

49

50

Survey Example #8

51

52

Survey Example #9

53

54

Survey Example #10

55

56

APPENDIX D

Perceptual Map

57

APPENDIX E

PRODUCT LIFE CYCLE CURVE ANALYSIS

Currently, Reebok’s men’s basketball shoes are in the maturity stage of the Product Life Cycle.

We say this because it is in this stage that sales growth slows down, profits may start to decline,

and the product is widely accepted in the market.  Reebok has definitely experienced a slowing

of its sales, which has negatively impacted its profits.  Reebok basketball shoes have been in the

market since the first product, the Pump, to the basketball market in 1989 (Bibey, 1).  The shoes

have been a hit with NBA players like Yao Ming, Allen Iverson, and Shaquille O’Neal and

gained widespread acceptance in the basketball shoe market over the years.  However, because

Reebok has struggled to keep up with the innovative, stylish basketball shoe industry

competition like Nike and Jordan, they have reached a stagnant maturity stage.  If no action is

taken and this problem continues to persist, they will enter the decline stage, possibly ending

Reebok men’s basketball shoes life cycle forever.

58

However, if our recommendations are followed, Reebok stands to improve their situation on the

Product Life Cycle curve.  Whereas currently, they are heading straight for decline and possibly

harvesting of the men’s basketball shoe product, with the implementation of our product line

extension, Reebok could turn their stagnant maturity slump into a new growth segment, as can be

seen in the image below:

59

APPENDIX F

Supply Chain/Distribution Illustration

http://www.adidas-group.com/en/sustainability/Suppliers/Supply_chain_structure/default.aspx

60

APPENDIX G

Production-Related Expense Chart

(http://www.unido.org/fileadmin/import/userfiles/timminsk/leatherpanel14schmelcosts.pdf, 6).

61

APPENDIX H

Flowchart/Implementation Table

62

Appendix I

TOP LINE REPORT OF MARKETING RESEARCHMethodOver the past month, we conducted a research study for Reebok concerning its men’s basketball

shoe line.  Over this period of time, we were able to analyze the data gathered from our primary

survey that would be very insightful in the search to determine the current perceptions, their

causation for these perceptions, and what consumers specifically want and need in a basketball

shoe.  Based on the information that we were able to generate in regards to Reebok men’s

basketball shoes, we designed a pilot study that would in return produce recommendations as to

how to approach Reebok’s major problem of product positioning.

We created a market survey that measured respondents’ current perceptions of our brand and

their top competitors, as well as how they compared to other competition.  It also quantified

consumers perception of each brand, what attributes they look for in a basketball shoe, and more

(full survey can be found in Appendix B).  The questionnaire was completed and released on

June 25, 2013 and distributed through Facebook, e-mail, and word of mouth to friends and

family.  With the survey ending on July 1, 2013, 101 completed surveys were received.  From

this number, we determined a usable sample size of 82 due to the answers provided on our

qualifier question.  This question asked respondents to choose an answer according to why they

purchase basketball shoes.  If the respondent chose “I do not purchase basketball shoes”, their

survey was deemed “unusable”.  All data collected was based off a convenience sample.  Due to

a time and budget constraints, the majority of respondents are associated with the University of

Louisville aged 18 to 24 years old.

Once we received answers to the survey’s questions, our next task was to analyze the data and

make information of it.  This portion of the pilot study was time consuming in that we first coded

all of the raw data into usable numbers, then manipulated it with the help of pivot tables in

63

Microsoft Excel and data descriptive testing tools in SPSS software.  These data tools enabled us

to present the information in a more proficient way and increase understanding when presenting

survey results.  From this point, we were able to confirm our problem diagnosis of poor

perception by consumers and begin to clearly identify areas with the opportunity to improve for

our recommendation.

General Findings

According to the data found in

our primary research, Reebok

has a mean purchase intent

rating of 2.54, just above

Converse at 2.34, and below

Jordan and Nike at 3.06 and

4.21 respectively.  

We asked respondents’ to determine their degree of brand loyalty when making a purchase

decision in the basketball shoe category.  This

showed that 52.5% of respondents’ were

“somewhat” brand loyal, while 26.3% were “not

at all” brand loyal and only 21.3% categorized

themselves as “extremely” brand loyal.  This is

a positive finding because that presents the

opportunity for the competitors other than the

market leaders to grab consumers’ attention and persuade them to purchase.

21.3%

52.5%

26.3%

How loyal are you to one brand when purchasing basketball

shoes?Extremely - I always purchase the same brand!Somewhat - I sometimes purchase the same brand, but it's not a pri-ority.Not At All - I purchase on a case by case basis, brand is not a considera-tion.

64

From survey ratings of basketball shoe attributes, we determined the benefits sought by these

respondents’.  About 58% of the respondents fell into our target market age group for the new

product line extension of 18 to 24 and

59% were male.  From the survey, we

found the most important benefits sought

were comfort, price, and then style.

The next question addressed price

sensitivity of our consumers.  The survey

helped us determine that nearly 50% of

respondents fall into the $75 to $149 price

range when purchasing basketball shoes.

T his helped us determine the price point of

our new product line extension to be

approximately $120, pending exact cost

figures.

We also found that approximately 75% of respondents’ were either “not at all” or “not very”

influenced in their purchase decision by athlete endorsers.  This shows another positive outcome

56%32%

12%

Benefits Sought

ComfortPriceStyle

6.3%

35.4%49.4%

8.9%

What is your price range when purchasing basketball shoes?

Under $50$50-$74$75-$149$150 and Up

65

for Reebok because of their lack of current celebrity endorsement deals.

3.8%

39.2%

36.7%

20.3%

How influential is professional athlete endorsement over what products you

buy?

1 - Extremely influential. I only buy products endorsed by athletes.2 - Somewhat influential. I see these products as higher quality, but do not always purchase them.3 - Not very influential. I am aware of athlete endorsements, but do not consider them when making pur-chases.4 - Not at all influential. I have no clue what professional athletes wear or endorse.

Additionally age was looked at as a factor that might affect purchase of basketball shoes.  The

survey divided ages into several ranges.  From the graph, the majority of respondents were 18-24

(58.2%) and the next biggest category was 25 to 34 with 21.5%.  This showed that the

information gathered from the rest of the survey is usable as the majority age range is near to the

age of both the typical purchaser of basketball shoes as well as the market we recommend

Reebok target.

66

Using SPSS we found whether there were significant differences in the perception of Reebok

compared to top competitors in many different product attributes.   First we ran a paired samples

t-test between the mean attributes people associate with Nike and the attributes associated with

Reebok.

From the information, we came up with a null hypothesis and an alternative hypothesis.  The null

hypothesis is that there is no significant difference between x-attribute between Nike and

Reebok.  The alternative is there is a significant difference between x-attribute between Nike and

Reebok.  To determine this, we looked at the sig (2-tailed) values to find the confidence level.

Using this, we determined that there is nearly a 100% confidence that there is a significant

difference in the style, comfort, support, durability, and improves performance.  There is no

significant difference between price.  We ran the same test to compare Reebok to Jordan and

Converse as well.

67

When comparing Jordan versus Reebok, we found there to be a significant difference (nearly

100% confidence) in style, price, and improves performance.  There is no significant difference

in comfort, durability, and support.  For Converse versus Reebok, it was determined that there is

a significant difference (nearly 100% confidence) in style, comfort, and support.  There is no

significant difference in durability, price, and improves performance.  A second series of paired

samples t-tests were run to determine if there is a significant difference in consumers likelihood

68

to purchase between Reebok and the three competitors we identified.

The null hypothesis is that there is no significant difference between Reebok and x-competitor in

the likelihood to purchase.  The alternative hypothesis is that there is a significant difference

between Reebok and x-competitor.  By looking at the sig (2-tailed) values, we could appropriate

a confidence level for the hypotheses.  It was determined that there is a significant difference

(nearly 100% confidence) between Nike and Reebok in consumer likelihood to purchase.  There

is also a significant difference (about 98% confidence) in consumer likelihood to purchase

between Jordan and Reebok.  Finally, there is no significant difference (just about 88%

confidence) between Converse and Reebok in likelihood to purchase.  

Implications

After looking through the survey data and analyzing in using SPSS, conclusions can be drawn

and implications can be formed.  One conclusion drawn is that perceptions of the attributes that

the Reebok brand has is different than perceptions of Nike.  So much so that 4 of the 5 attributes

were significantly different.  This is a concern area as Nike is both Reebok’s main competitor

and the dominant figure in the market.  The implication is that Reebok needs to alter perceptions

of its brand.  They are not perceived to be as stylish, as comfortable, or as durable.  This points

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so a product positioning problem as well as issues of perception.  From the benefits sought

analysis, style, comfort, and price were determined to be the most important factors respondents

to the survey consider when they purchase a pair of basketball shoes.  This shows that the

differences between people’s perceptions of Nike and Reebok in the areas of style, comfort, and

price are actually quite important.  Thus, our recommendation to create a line extension product

is justified in that the new product will be of better style, comfort, and will be priced to

communicate a higher sense of quality.  Due to the majority of the respondents being close to the

age range of the target market, the survey information is relevant and corresponds to beliefs and

perceptions that can be used towards our recommendation.  Based on our price range analysis,

the optimum price range respondents indicated was $74-$149.  Thus, we set our price point at

$125, which is within this price range.  This is high enough to communicate a higher quality

Reebok product line, but also low enough to not drive away the Reebok brand loyal or the price

sensitive.  Also from survey data, it was discovered that the majority of respondents feel that

professional athlete endorsements have some effect on purchase decisions, but it is not as

important as say style or price.  The implication of this is towards promotions.  The endorser

obviously isn’t as important as we originally thought and so our decision to instead focus on a

line extension rather than just increase advertising is more or less justifiable.  Lastly, our survey

asked respondents about brand loyalty.  We found the majority of respondents to be somewhat

brand loyal, but for the most part buying shoes on a case by case basis.  This gives our

recommendation an advantage as if we can attract members of the target market with a style,

comfort level, and price that appeals to them, we can draw them in as our consumer.

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Appendix J

Proposal for Project – MySpace

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Appendix K

Proposal – Reebok

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Appendix L

Industry Analysis

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