Competition & Consumer Behavior: Reebok-Adidas Merger

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Executive Summary
Introduction
Discussion
Recommendations
Conclusion
Work Cited

Executive Summary

The case concerning Reebok and its merger with Adidas is well informed and augments the understanding of the impact that technology has on client behavior in marketing. The paper delves into the details presented by the case, which include competition and consumer behavior. Competition is a detail faced by Reebok from dominant companies like Nike. Moreover, the frequent shifts in client behavior lead to complexities, especially whenever the shifts occur unexpectedly. The paper also analyzes the case and provides theoretical implications supported by Ansoff Matrix, which is in resonance with the contents of the case study. The four components outlined by the matrix resonate with the performance of Reebok and its merger with Adidas. Some of the key issues that emerged from the case include innovation and technology. It became evident from the case that innovation has the power to change the company’s performance. Besides innovation, it also emerged from the case that technology has become a dominant player, which dictates the operations in almost every aspect of modern marketing. Notably, the paper clarified that failure to align a firm with the trends posed by technology is a downturn that can initiate a premature exit from the market.

Introduction

The increasing competition in the market and the trendy changes demonstrated by technology are some of the major issues evident in the case concerning Rebook and Adidas. It is evident from the case that the current situation of Rebook and Adidas has progressed especially in the face of the rising competition from rivals. Notably, Reebok’s merger with Adidas is one of the positive steps that improved its position and market share. From the case, the growth of Reebok, Nike, and Adidas largely hinges on the innovative strategies that addressed client requirements, market trends, and effective use of technology in communication and product development. The case study is important because it helps companies and scholars to understand the issues that dictate the marketing environment and make timely changes that improve their revenues. The case study is also important as it helps the subject companies, which are Reebok and Adidas, to review their position and performance and make amends with the view of propelling their revenues and market share. It is within this backdrop that the case reviews the performance of Reebok, its merger with Adidas, and its probable future.

Discussion

Details of the Case

Competition and Changes in Client Behavior

An assessment of the case study brings details that include competition and the changing consumer behavior to the fore. All through the case, competition is a detail that determines the success rate of Reebok and Adidas. Before the merger of Adidas and Reebok, the main competitor was Nike. It is clear from the case that Nike went ahead to surpass the market share enjoyed by Reebok after introducing several innovative strategies. To coin the innovative nature of Nike, which is Reebok’s major competitor, Post explains that in 1990, Nike was enjoying a higher market share as compared to Reebok (5). The explanation substantiates the importance of competition and the role it plays in shaping the company’s performance. It is important to note that competition continued to increase because some start-ups are also introducing new products to the market that appeal to potential clients in terms of price and quality.

Another important detail that is evident from the case is changing client behavior. Since the formation of the company to the present time, consumer behavior has shifted significantly. Presently, clients look at a product from the perspective of quality and the price. The shift in client trends witnessed in the 20th and 21st centuries is highly attributed to the numerous advances in technology. Moreover, online reviews from past users comprise some of the major factors that dictate the product selection process. Post notes that in 1982 when there was a rise in demand for aerobic shoes, Reebok enjoyed a high market share and revenues (1). The high revenues witnessed when aerobic shoes entered the market relate to consumer dynamics and facilitated Reebok’s growth. However, the decline initiated by the change in behavior greatly affected the sales of Reebok shoes. As such, client behavior is one of the details that stem from the case concerning Reebok and Adidas.

Analysis of the Case

The contents of the case study revolve around Reebok’s entry into the market, its progress, the challenges it has experienced, as well as its probable future. In the case study, there is a systematic analysis of how Reebok gained its market share, the various strategies it utilized, and how it eventually merged with Adidas. The analysis provided by the case concerning Reebok amplifies the understanding that individuals have concerning the company and its competitors. A scrutiny of the case proves that since it entered the market, Reebok has faced serious competition from companies like New Balance Inc. and Nike. These competing firms have similar products and use strategies such as celebrity endorsement to attract potential customers. Moreover, it appears that the companies understand the relevance of the right positioning, a factor that helps them make informed adjustments, which improve their reputation before the target clients. A good example took effect when sales representatives from Nike attended meetings with laptops when their counterparts from Reebok came in with bags of shoes.

Therefore, while Nike representatives displayed images of designer shoes using their laptops to the executives in these meetings, those from Reebok were busy removing shoes from their bags. The overall implication of the scenario is a reduced appeal to investors and potential clients. In effect, poor adoption of well-designed strategies led to its merger with Adidas. It is clear from the case that after the merger, the company began to improve in terms of sales and revenues (Post 10). Right timing, employment of well-designed strategies, and implementation of timely redress measures about client feedback are some of the ingredients that Adidas introduced to Reebok’s products to trigger its come back. The contents of the case provide a well-structured discussion of Reebok, Adidas, and the competition it faces from companies like Nike. The case discusses the strengths of Reebok, its merger with Adidas, and its future expectations.

Theoretical Implications

Ansoff Matrix and Its Relevance in the Case

From Reebok and Adidas’s case, the role and implication of the Ansoff Matrix become practical. The matrix highlights various issues such as competition and consumer behavior, which resonate well with the contents of the case. The four components of the matrix that espouse market penetration, product development, market development, and diversification are all visible in the case study. In the early stages when Reebok entered the market, the main concern of the company was to penetrate the market and win the hearts of potential clients. Thereafter, the company focused on developing products that matched with the demands of the clients. The stage of product development is evident as early as 1982 when the company introduced shoes intended to serve aerobic dances.

The introduction of these aerobic designed shoes increased the company’s market share and made it one of the leaders in the industry. Post elucidates that between 1983 and 1995, the revenues earned by Reebok grew from $50 million to $3 billion, a phenomenon that enabled the company to penetrate the market successfully (1). After a successful entry into the market, the company in line with the provisions of the matrix focused on issues like diversification of the market and products. The company started venturing into regions like Asia, North America, and Europe. The expansion is evident when the company experienced invoicing challenges between the United States and Canada (Post 3). Moreover, the contract between Reebok and Yao Ming, a Chinese shoe company, so that it sells its shoes in China is an indication of the diversification (Post 8). The contract resonates well with the diversification, which is one of the stages outlined by Ansoff Matrix. Fundamentally, market and product diversification stages outlined by Ansoff Matrix will help Reebok in the future even after its merger with Adidas.

It is important to state that the role that Ansoff Matrix plays in the stages of Reebok and its progress in the industry affirms its relevance. The resonance witnessed between the contents of the matrix and the progress of Reebok makes it crucial for the case. Moreover, an analysis of the matrix not only helps the company assess its past performance but also enables it to move forward and minimize challenges that can affect its profitability. By using the matrix, which has positive implications, the company can understand its position and the steps to take as it graduates into another stage of the matrix.

The change in the market that affected the growth rate of Reebok was its inability to switch at the right time as per the provisions of the matrix. Post explains that when the sales executives from Nike walked into offices with laptops, those from Reebok walked in with bags of shoes (2). If the company had followed the provisions envisioned in the matrix it would have realized that the times had changed and required the adoption of the right accessories that facilitate efficiency in place of bags of shoes. By using the right measures, competing firms like Nike won deals and improved the scale of their revenues.

Key Issues

Continued Innovation and Impact of Technology

Innovation and technology are among the key issues unearthed from Reebok and Adidas case study. The shifts and trends evidenced in the market are outcomes of technological advancements and innovation. For instance, on the first page, Reebok became innovative and introduced shoes targeting women who loved aerobics, a strategy that was productive (Post 1). Later on, in the case, companies like Reebok, Nike, as well as Adidas used celebrities to endorse their shoe lines. Celebrity endorsement and the introduction of new types of shoes demonstrate continued innovation among the companies highlighted and discussed in the case study. Post asserts that celebrities like LeBron James, Jay-Z, Michael Jordan, and 50 Cent played a role in improving the revenues of Reebok, Adidas, and Nike(9). The endorsement from these celebrities is a sign of creativity that the firms exercised to expand their market share and client base.

Another crucial issue presented by the case is the impact of technology. Notably, technology has played a role in dictating the revenues earned by Reebok, Adidas, and Nike. The late adoption of technological devices by Reebok led to a decline in its sales and introduced an eventual merger with Adidas. When Adidas merged with Reebok the first operations focused on improving the company’s information technology. Post notes that when customers purchasing predator soccer shoes complained that the colors faded quickly, Adidas responded swiftly and provided timely and positive feedback (10). The timely response also indicates the presence of superb platforms that facilitated effective communication between consumers and the company. Presently, several small and large companies experience losses triggered by a slow or delayed response to complaints raised by customers.

Recommendations

Fundamentally, the future of marketing continues to be dynamic and cutthroat. Companies like Reebok and Adidas are likely to experience increased competition especially from startups who capitalize on their high operating costs to introduce low-cost products that match client expectations. Notably, competition from startups will add up to that exerted by large enterprises, which include New Balance Inc. and Nike. As such, some of the recommendations that can help Reebok to improve its market share and profitability include engaging in continued research and the optimal utility of the technology. When Reebok employs these recommendations, the likelihood of improving its share of the market and increasing the scale of its revenues is high.

Due to the ever-changing client expectations and market dynamics, Reebok has to undertake continuous research with the intent of understanding the shifts in the market. Moreover, continuous research enables Reebok to identify areas that need rectifications on time. It is momentous to elucidate that timely amends is a cornerstone that differentiates smart companies from those that are underperforming. Therefore, by engaging in regular research, the company places itself strategically and notices any trends in the market on time. Another important recommendation that is useful in amplifying the reputation and position of Reebok, as well as Adidas, is the optimal use of technology. The impact of technology is practical in almost every aspect of marketing. Shoe companies like Reebok should rely on technology to execute efficient distribution systems, market their product lines, communicate with their clients, and develop high-end products. Therefore, when Reebok uses technology optimally, its shoes will not only match client expectations in terms of quality and quantity but the position of the company in comparison with its competitors improves.

Conclusion

Reebok is one of the leaders in the shoe industry alongside other companies like New Balance Inc. and Nike. Its merger with Adidas gave it a new image and improved its performance in the market. The merger enabled Reebok to challenge the dominance enjoyed by Nike and facilitated a new insight into the changing market forces. Although the company introduced some strategies that facilitated its success, the delay in responding to important ventures and adopting technology was a downturn that worked against its success. One of the examples is evident on page 5 of the case study when Foot Locker went to Nike after Reebok’s reluctance to take up the venture. Although Reebok tried to reestablish good relations with Foot Locker later, the returns were no longer practical. It is important to explain that the company should continue engaging in research to ascertain the market changes and diversify into new regions so that it can increase its profitability and spectrum of operation.

Work Cited

Post, Gerald. “Reebok and Adidas.” Management Information Systems Cases, pp. 1-15.

Click Here To Order Now!