Reebok Realflex| By The Breezers: Mannan Wu Abbey Barnes Chase Carraro Mohammed Baamer Deborah Dani Dylan By The Breezers: Mannan Wu Abbey Barnes Chase Carraro Mohammed Baamer Deborah Dani Dylan Final Marketing Plan| Professor Quinlan-Wilder November 16, 2011 Marketing 2800 Professor Quinlan-Wilder November 16, 2011 Marketing 2800 | | Executive Summary Reebok prides itself on creating products to enhance athletic ability. Upon formation of the company, Reebok has been dedicated to making athletes faster. Since then, Reebok has evolved into the world’s second largest maker of athletic apparel and is a leader in the shoe industry.
Now Reebok will pave the way with its answer to the latest craze in fitness and in running. The Reebok Realflex will dominate the competition through altering some aspects of the marketing mix and introducing the Realflex shoe as a healthy shoe meant to better consumer fitness. Taking into consideration the SWOT analysis, which pinpoints Reeboks can improve and the things Reebok are already doing well, the target markets can be better identified and the marketing mix can be better modified. When looking at target markets, Reebok has narrowed its markets to college aged adults interested in maintaining fitness, and individuals between 40-65.
To the younger target market, Reebok needs to convey enhancing the athletic performance. To the aging population, Reebok needs to establish that using their product will enhance health. By modifying its current marketing mix Reebok can meet the needs of consumers. Price will be at the median range of shoe costs as that makes the most sense for our target markets. Reebok wants to provide an affordable shoe that does not cost as much as other barefoot running shoes, but offers all the health benefits of natural running. However, too low of a price lowers the value of the product in the minds of buyers and will be detrimental to business.
While price plays an important role in marketing the Reebok Realflex, placement of the product will be where Reeboks competition is located. The shoes will be placed in major chains, like Dick’s Sporting Goods, Sports Authority, and Reebok stores themselves. In addition, Reebok will plan to give pairs of shoes to major gym chains, like 24 Hour Fitness, and let the trainers try the product as a way to recommend it to the desired target markets. When the shoes are in displays, the Realflex must be “front and center” to grab consumer attention from the moment they enter the store.
Aside from price, promotion of the product will be one of the most vital keys to the Realflex success. Reebok will reposition themselves in the mind of their desired consumers. Though Reebok often uses testimonials and vibrant color to catch attention, the new promotional strategy will also focus on the concern that Reebok has for the health of consumers and for enhancing their performance. In many ways the new promotional strategy relies on correcting previous errors of the company (Easytone) and in a discrete way build trust among consumers who use Reebok products and shape them into loyal repeat customers.
The most important component of the marketing mix is the product. Reebok has created a product for the sheer purpose to better the health and improve the athletic ability of consumers. It is clear that Reebok believes in the product it has created. There is science to confirm the fact that natural running has numerous health benefits and does enhance athletic performance. Reebok has made a product where science meets style, and satisfies the needs of consumers. It is imperative that Reebok convey this genuine message to consumers.
Doing so will build Reebok into a better business, increasing its market share, overall growth and profit. Table of Contents Introduction3 Situational Analysis4 The Company4 Current Marketing Mix4 Features and Benefits5 Current Product Life Cycle5 The Industry5 Environmental Forces7 Competition8 SWOT Analysis11 Critical Issues and Marketing Objectives13 Segmenting, Targeting, and Positioning14 Segmenting14 Targeting14 Positioning17 Positioning Statements18 MarketTrak Tool26 Conclusion28 Appendices29 Appendix A – Competition Table29 Appendix B – SWOT Analysis30 Appendix C – Positioning Map 1: College Students31
Appendix D – Positioning Map 2: Baby Boomers32 Appendix E – RealFlex Packaging34 Appendix F – Magazine Advertisement35 Appendix G – Billboard Advertisement36 Appendix H – Pro-nation Advertisement37 Appendix I – Billboard Advertisement38 Appendix K – Glossary of Terms45 Bibliography46 Introduction The footwear industry is a competitive market. Two important components in this industry are the quality and marketing of the products. Reebok is a company with a long history in the footwear market and a marketing mix makeover for RealFlex could very well put the company back on top.
By increasing the focus on the health benefits for older generations and aesthetically pleasing innovation for younger generations, Reebok will be able to cover wider demographics, thus increasing sales. This is a product which needs to be on the feet of consumers, because once that happens; the footwear will speak for itself. The remainder of this marketing plan is organized as follows: First, it will examine the company of Reebok and its background in the athletic shoe industry. Then, this plan will discuss Reebok’s major competitors and fully describe its SWOT analysis.
Next, this plan will look at the first part of the proposed marketing strategy, to include the proposed ideas for segmenting, targeting, and positioning of the RealFlex shoes. Finally, the plan will be concluded with ideas for the proposed marketing mix plan of this product and then a re-emphasis of why this plan will help RealFlex become Reebok’s number one shoe. Situational Analysis The Company The Mission at Reebok is to be on the cutting-edge of sport and lifestyle products built upon a strong heritage in sports (Reebok, 2011).
Reebok strives to challenge convention and lead through creativity and have been doing so for over 100 years (Reebok, 2011). The company was founded on one important value in the 1890’s, helping athletes run faster (Reebok, 2011). Since then the main vision has been to help athletes fulfill their potential (Reebok, 2011). Reebok is an American- inspired global brand, which celebrates individuality of the athlete while also helping the athlete to obtain goals they once thought unattainable (Reebok, 2011). Reebok is a subsidiary of Adidas Sportswear. Current Marketing Mix
Product and Pricing: RealFlex Footwear is a Reebok innovation designed to give the foot a barefoot feel through natural movement while providing the comfort of a high-quality running shoe (Businessweek, 20011). RealFlex features 76 independent “sensors” on the bottom of the shoe which are designed to naturally conform to the motion of the foot (Businessweek, 2011). This technology allows the foot to be 20% lower to the ground, which helps to re-create the feeling of bare feet (Tuttle, 2011). The RealFlex is priced at retail for $89.. 99, which Reebok feels is an affordable and fair price for this first-of-its-kind shoe (Businessweek, 2011).
Promotion and Placement: Advertising for this shoe has been centered on the 76 “running buddies” or tread sensors, which make for natural movement of the foot (Reebok, 2011). RealFlex is also advertised to make the customers running style more pure through the barefoot feel. These shoes have been advertised through a commercial ad campaign which digitally animates the 76 running buddies as trail-running enthusiasts (Reebok, 2011). These shoes can be purchased online at Reebok. com as well as through various large-chain department stores such as Dillard’s, Nordstrom and Macy’s.
Features and Benefits The RealFlex offers customers many different features. The top feature of the footwear lies in the sole of the shoe where there are 76 individual tread sensors. Other features include lightweight materials, breathability, and the ability for customers to customize their own pair of shoes. The benefits, or how the shoe actually helps the customer, are primarily based around the fact that RealFlex is a minimalist shoe. The barefoot technology featured in this footwear has been proven to strengthen legs so that runners can run faster for longer.
Since this is a barefoot shoe, runners get all the benefits of running barefoot without extra damage to their feet. Current Product Life Cycle Realflex has only been on the market for about seven months and Reebok is still attempting to win over the customer’s preference through current advertising, promotions, and word of mouth (Reebok, 2011). Although RealFlex technology is a new idea in the world of “barefoot-style” running shoes, this product is no longer in the growth stage. Athletic running shoes, including Realflex, are considered to be in the maturity stage.
The Industry The United States footwear industry consists of makers of “non-cleated” rubber and plastic footwear that are meant for fitness and athletic purposes. The companies that are competing in this industry are dedicated to creating performance footwear so that they can give the customer more value and utility. Each company then segments its product lines to better satisfy the many different customer needs (Tufts University, 2006). However, there is significant overlap in the types of shoes that the athletic footwear industry sells.
The athletic footwear industry is dominated by more than 230 manufacturers that make up over 50% of the market share (Hoovers Inc, 2006). However, there are only 19 companies that are actually competing in the athletic shoes industry. Reebok dominated the athletic footwear market until the late 1980’s when Nike made its sudden rise to power (Tufts University, 2006). Considering to market share, Nike leads the pack and is projected to continue growing as it expands more into China and India (Woolsey, 2007). However, in 2005, Adidas merged with Reebok in an attempt to raise the stakes in the competition with Nike (Howard, 2005).
Price is one of the four categories in the marketing mix. A good pricing strategy is vital to every company. There are many different elements that can influence pricing such as unique technological product features, prominent brand names, celebrity endorsements and higher quality materials (Walker, 2005). There are some brands of shoes that sell for more than $200, such as the Nike Michael Jordan 2011 shoes, and there are brands that sell for less than $50 (Nike, 2011). However, it is more common for shoes to sell for $85 – $110 (Nike, 2011). Each company’s promotional tactics bear differences and similarities.
While Reebok started with the primary goal of improving athletic performance with its hi-tech running shoes, Nike began by specializing in running shoes and has since formed its own “running culture” by sponsoring major running events like the Chicago Marathon (Reebok, 2011). In fact, athletic shoe companies sponsoring races ranging from small track meets to nationally elite races, such as the Boston Marathon, are quite common in this industry (B. A. A. , 2011). A company will attend one of these events in order to promote its product as well as to help give back to the community (B. A. A. , 2011).
These events provide very good advertising for the company and increase product visibility. Environmental Forces There are two types of environmental forces, macro and micro. Here, the macro environmental forces that affect Reebok are examined. These forces consist of social, economic, technical, regulatory, and competitive. These forces are external and usually uncontrollable. Social: Whether it is a change in diet or an adoption of a fitness regimen, Americans are trying to improve their health. Sources say that Americans are exercising more, especially when compared to 2001(CNN Health, 2007).
Health is becoming an American priority especially for younger generations (Saxena, 2010). Since fitness is becoming more of a lifestyle, running can be considered a growing trend. Fitness junkies and avid runners are starting to wear more and more “natural running” inspired shoes (Johnston, 2011) The Reebok RealFlex is the response to this growing trend (Runners World, 2011). Economic: With the economy taking a major downturn, fewer Americans can afford expensive gym memberships or personal trainers but still feel the need to be fit.
Since the economy has been slow, Americans are turning to more affordable ways of exercising (Wilkes, 2011). One of the most affordable ways to get fit is to go running. There has been a spike in the sale of athletic shoes since the U. S. has begun to struggle more with the economy. In fact, there was a 3% increase in the sale of athletic footwear in 2010 alone (Lets Run, 2010). Technological: Keeping up with the technology involved in running is a constant concern for innovative companies since the type of shoe a person wears can affect their performance.
The weight of a shoe can affect the stride and development of the muscle (Runners World, 2011). The weights of shoes are also believed to affect races times and can mean the difference between a win and a loss (Lovett, 2010). It is imperative that athletic shoe companies are innovative in providing products that really do improve athletic performance without compromising the health of the consumer. Regulatory: Two regulatory entities that should be considered are the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC). The actions taken by the FTC and SEC are meant to protect consumers.
Reebok recently settled a dispute with the FTC regarding false advertising of its Easytone shoes (Forden, 2011). This dispute was because Reebok claimed that its Easytone shoes were proven to actually strengthen buttock muscles by 28% and build calf muscles by 11% (Forden, 2011). The finalization of the dispute ended up costing Reebok $25 million (Forden, 2011). Competitive: In terms of competition there are significant barriers to entry, especially with light-weight performance shoes. Many companies are focusing on making light weight shoes a core competency.
However, the question of which company has greater competitive advantage in the market is yet to be determined. Vibrams, the creator of the original natural running shoe, set up its web site to highlight the scientifically proven health benefits of natural running (Pain from Running, 2011). Additionally, Nike dominates the athletic apparel industry and pioneered the way for performance shoes when Bill Bowerman used his wife’s waffle iron to make the first prototype of his own light weight shoe (Vann, 2011). Competition Reebok faces fierce competition from all sides.
The athletic shoe industry is quite large and very competitive. Reebok receives most of its competition from Nike. In addition to Nike, Reebok goes up against Asics and New balance for direct competition, as these companies all sell shoes similar to Reebok’s Realflex. Deckers Outdoor Corporation is considered indirect competition as it sells non-athletic footwear. Nike: Nike is the number one producer of athletic shoes in the world. One of Nike’s greatest strengths is brand recognition and branding. Nike’s slogan, “Just do it,” along with the famous “swoosh,” are known worldwide (Marketing Teacher LTD, 2011).
Nike is continuously changing and updating its products and advertising. The company uses many different marketing strategies which are geared for several different target markets (Nike, Inc, 2010). Nike, like Reebok, does not manufacture the shoes it sells. Instead Nike hires subcontractors in other countries who manufacture the shoes. These manufacturers then ship the shoes to other companies to sell. This can be both a weakness and a strength for Nike. It is a weakness because of the dependency on the overseas manufacturer. However, it is also a strength because Nike’s money can now be sed for expanding its product line or on a new advertising campaign instead of on the purchase and upkeep of buildings (Marketing Teacher LTD, 2011). Asics: In 2009 Asics celebrated the grand opening of its first stand-alone U. S. store located in New York (Asics, 2009). This store also featured the revolutionizing 3-D Foot ID to help the wearer become matched to the perfect shoe for them. The expansion of Asics in New York has allowed greater influence of the brand name across the U. S. , which has helped to increase sales revenues (Just-Style, 2009).
Asics just launched an all-out advertising campaign in 2011 that included TV, radio, Internet, print as well as being a co-sponsor in the ING New York Marathon (Fashion United, 2011). One of the weaknesses of this campaign is the disproportionate focus on the overseas market compared to the U. S. market (Fashion United, 2011). Asics’ cash flow and net income had been falling slowly for several years and it needed to do something to improve profits. This campaign was extremely expensive but already Asics is seeing a return from investment and an increase in its net income (Larmann, 2011).
New Balance: New Balance’s top strength would be the technology and innovation of its new products (New Balance, 2011). Every year New Balance creates a new and updated product with all the latest in technology. In addition, The New Balance Foundation has given back more than $40 million to the community and non-profit organizations (New Balance, 2011). More than 50% of consumers want to purchase a product if they know that a portion of the profits will go to charity (Strahilevitz & Myers, 1997). New Balance relies on promotion through the sponsorship of races and fitness activities instead of using celebrity endorsements (Johnson, 1998).
The strength of not using celebrities is that the price of the shoe will be less for the consumer since New Balance does not pay for the endorsements. However, the downside to this is that the younger generation is attracted to shoes that have been associated with top celebrities (Johnson, 1998). Deckers Outdoor Corporation: Deckers is an indirect competitor for Reebok because they do not specialize in athletic footwear but instead are focused mainly on high-quality sheepskin boots and sandals (Wikipedia, 2011). Deckers’ biggest strength is its quality. The company is focused on roducing very high-quality products while lowering the impact to the environment (Deckers, 2011). Deckers helps to lower the impact to the environment by using a lot of recycled materials for the creation of its products (Deckers, 2011). More than 30% of consumers want to purchase environmentally friendly products (American Express, 2010). One of Deckers weaknesses is that it has focused about 75% of its efforts in advertising to the U. S. This strategy has resulted in a higher market share for the US but a lower share across the nations (Deckers, 2011).
Deckers is now working harder than ever to increase the sales of products in its overseas locations (Deckers, 2011). (See Appendix A – Competition Table) SWOT Analysis A SWOT analysis is a critical portion of every marketing plan. It outlines the company’s Strengths and Weaknesses, and the market’s Opportunities and Threats that pertain to the product (Wikipedia, 2011). The SWOT analysis is an important step in planning as it outlines whether the information will assist the company in completing its objectives or if there will be an obstacle that must be moved first.
Strengths: The Reebok Realflex barefoot shoes have several strengths integral to the products current and future success. The Realflex is scientifically proven to reduce the risk of foot injury since it is made of strong materials that resist distortion by weather and sharp objects (Sturtz, 2011). The Realflex has 76 independent sensors on the bottom of the shoe that adapt to all training surfaces and promote natural movement (India Infoline Ltd, 2011). Reebok also produces outfits to match the colors of shoes and color customization on new Realflex purchases to meet customers’ needs (Healthhabits, 2011).
Reebok is one of the top athletic shoe companies in the U. S. with a market share around 20% and it has become more efficient through good corporate operation strategies aimed at restructuring and improving quality in the manufacturing process (Landrum & Boje, 2001). Reebok also prices its shoes to be around the average market price which helps to increase market share. Weaknesses: One of the weaknesses of the company is that Reebok has no factories and depends on overseas manufacturers for production of its products, consequently posing a risk since the contracted industries could steal
Reebok’s designs (Dunlap, 1925). Reebok owns few stores of its own but depends mostly on retail stores to order and deliver the products, which at times can be slow. This strategy causes retailers who sell the products to wait long periods of time before the products arrive, at which time they may not have the same popularity among customers (Hoovers, 2011). There are very few sponsors associated with Reebok which does not help to make it well known (Mercer, 1996). In addition, the company suffers from the previous release the Reebok Easytone, which claimed to tone legs and burn more calories while walking.
This was actually revealed to be untrue by the American Council of fitness (Waehner, 2010). Essentially misleading consumers can cause them to be cautious of the Reebok label and they may instead choose to shop elsewhere (Nickson, 2010). Opportunities: There are several opportunities for Reebok, including expanding and reaching new markets with its new product. Reebok has the opportunity to appeal to baby boomers creating a new market for its type of shoe. They are a generation interested in staying active as they age.
There is also the opportunity to market to active college students; it all depends on how the product will be presented. There is also the opportunity for product development since Reebok has released a new product into the current markets. Threats: There are many competitors offering a similar barefoot shoe product which is a threat to Reebok since competing companies, like Nike, are already established and globally recognized (Silva, 2011). In addition, technology is always changing and new products are continuously coming out into the market.
The fast change in technology goes hand in hand with how society is constantly changing its mind, which poses a great threat due to the company’s low rate of technological advancement compared to the prevailing leaders (Kagz, 2001). Competing companies may introduce cheaper substitutes which the customers may opt to buy. Economic crises also pose another threat due to the weak purchasing power of the customers. As barefoot shoes are a want and not a need, the economic crisis may have people think twice before buying. See Appendix B – SWOT Analysis) Critical Issues and Marketing Objectives Critical Issue #1: Leverage Point: Healthy shoe (S) + New Market: Baby Boomers (O) Natural Running shoes offer health benefits and by advertising to a new market like baby boomers and the older generation (ages 40-65), Reebok has the chance to create a leverage point. Related Marketing Objective #1: Increase sales by 10% over the next year. Strategically place the product in areas whose demographics reflect a baby boomer population. Have the product easily accessible to the target market.
Critical Issue #2: Constraint: Previous Faulty Products (W) + Expanding the Market (O) Reeboks previous innovation in fitness, the Easytone, was proven to have no additional benefit to working out as they claimed. When Reebok does try to sell its product to a new market that may be more aware of Reebok’s previous mistake they may have no interest in purchasing the new technological innovation the RealFlex. Marketing Objective #2: Focus on the health benefits of RealFlex over regular shoes. Show consumers that Realflex can help improve strength in leg muscles. Increase shoe health awareness by 15% within one year.
Critical Issue #3: Vulnerability: Healthful Shoes (S) + Changing shoe Technology (T) Reebok RealFelx shoes face vulnerability in the sense that while it may be producing shoes with health benefits, the competition could be offering shoes with even greater benefits, such as Virbram Five Fingers. Marketing Objective #3: Demonstrate to consumers how much Reebok invests in its consumers best interests. Focus shoe marketing not only on the health benefits but how Reebok was able to pioneer the light weight shoe industry with its “sensors” on the bottom of the shoes.
Segmenting, Targeting, and Positioning Segmenting Some of the possible ways of target segmentation for the Reebok Realflex shoes are geographic, demographic, psychographic, and behavioral. The geographical segmentation would focus on those consumers in the urban and suburban locations due to the high influence of social media. The demographic segmentation could target consumers with a yearly household income of greater than $35,000 as well as specific age groups, such as ages 18 – 44, as many purchasers of running shoes are ages 18 – 44 (Marginy Research Group, 2000).
Reebok could also focus on the psychographic segmentation portion and gear it toward consumers who enjoy adventure and outdoors activities. Reebok decided to segment the markets into two separate groups. The first target market will focus on geographic and demographic segmentation. This market will include college students between the ages of 18-24 who are adventurous. The second target market will focus on demographic and behavioral segmentation. This market will include those consumers who are in the older generation, like baby boomers. The older generations want to stay healthy and get into shape.
The Realflex is perfect for this need, as the barefoot qualities of the Realflex strengthen legs and keep runners healthy. Targeting Target Market 1: The target market is for adventure seeking and active college students between the ages 18 and 24. These targeted college students usually reside in urban and suburban areas. The focus on these geographical locations is due to the idea that consumers in highly populated areas, such as a city, are more driven by the social media that surrounds them (Thompson, 2009). The targeted psychographic market segments are geared toward those consumers interested in competition and adventure.
Reebok wants consumers who want the shoes they wear to be able to handle anything during their fitness routine. “Americans who have adopted the lifestyle of Fit Consumers are risk-takers with an adventurous outlook on life. Fit Consumers retain a taste for adventure as they age” (Packaged Facts, 2007). The Realflex is a high-quality running shoe that is able to satisfy the needs of competitive, driven college student runners. The Realflex weighs only 8. 8 ounces for males and 7. 2 ounces for females (Jhung, 2011). This reduction in weight helps shave off seconds on a runner’s time.
This gives the runner a competitive advantage over those runners who are not using lightweight shoes (Jhung, 2011). These students are always looking for the next best thing to own, especially when it comes to shoes (Trend Watching, 2011). They want high-quality, lightweight shoes for a great price. Students also want to know that the product they buy and wear is something that will help improve their standing in society (Trend Watching, 2011). Reebok can give that customer value, and more, to this target market. The college student target market is 18. 6 million, which is a 22% increase over the last 8 years alone (Davis & Bauman, 2011).
With a larger target market there will be a higher cost to reach the audience. However, with a slight increase in advertising geared toward this growing market, Reebok will be able to reach this group and increase sales by 10% within 1 year. (See Appendix C – Positioning Map 1: College Students) Target Market 2: Aside from the younger generations, baby boomers and the aging population (40-65) are looking to preserve as well as better their health. Reebok wants to attract the consumers who will find its product integral to the way they want to look and feel as these consumers will “place a high priority on their health” (Packaged Facts, 2007).
They consider running part of a healthy and active lifestyle. Studies suggest that baby boomers and aging populations are much more active than they used to be. In 2005, baby boomers comprised one fourth of the health club memberships (msnbc, 2005). However, these consumers may not all be high users. Some of them may only visit the gym a couple of times a month or only run a few miles a week. Baby boomers are redefining what it means to retire and enjoy old age, they are not anticipated to flock to an “age segregated community” and many will likely continue working in some capacity (Brandon, 2010).
However not all Boomers have a high disposable income in fact, they are considered a sandwich generation were they are assisting their own parents while financing their children’s educations. With Boomers still maintaining busy schedule it is also important to consider the usage rate that would justify the purchase of Reebok Realflex shoes. They may seem themselves needing a “healthy shoe” meant for their variations in fitness regimen. This same need can be applied to the aging portions of the population. The trend of healthy living is catching on and the market for healthful products, like quality running shoes will continue to grow.
In consideration to Critical Issue #1 of advertising to the market of baby boomers, the Realflex shoe has a considerable leverage point given that it is a scientific fact that natural running shoes offer health benefits. It is also a fact that light weight running shoes are built to endure fewer miles because they offer less cushioning however they offer health benefits like a “natural running sensation”(Run/Split, 2011). It is the use and health benefits that are more likely to draw Boomers to the product. In regard to the marketing objective of increasing sales by 10% over the next year,
Reebok plans to place its product in gyms by giving a pair to local trainers to act as opinion leaders and encourage boomers to purchase them. Reebok also plans to place the product in convenient places for purchases, such as mall outlets to increase product visibility as well as specialty stores. (See Appendix D – Positioning Map 2: Baby Boomers) Positioning Beginning in 2009, Reebok started executing strategies in order to position its running shoes in a more technologically advanced, higher quality and flexible category which helps to differentiate the shoes from other athletic brands and place it toward the high-end footwear brands.
Reebok’s mission is to become an outstanding sport and lifestyle brand and offer many primary sports products (Adidas, 2011). In regards to the younger generation, there needs to be an emphasis on the fact that Reebok is a fashionable shoe to wear while either getting fit or just out taking a stroll. Reebok can position this product as being both quality and healthful by occupying the front window of athletic stores. While doing so may increase the cost of promotion, it sends a message to the younger generation that the product is popular, and at a minimum increases visibility making the product more widely known.
There will not need to be repositioning for this target market. In consideration to the second target market, baby boomers and aging populations, there will be some repositioning that needs to take place. As previously noted Reebok made the mistake of producing a product that did not have all the health benefits the company claimed. In fact, the Reebok Easytone has been rumored to have done more harm to customers than good. It is the older populations who are more likely to be aware of this mistake which means that Reebok would need to reposition this product in the mind of older consumers.
Both of these methods will increase consumer spending on Reeboks product and assist in attaining the goal of a 10% increase in sales within one year. In regards to the second marketing objective, placing the product in gyms and actively seeking feedback from users shows the interest that Reebok has taken in demonstrating that its products are of high quality. Similar is the third marketing objective, concerned with the proving that Reebok is an innovator in the shoe industry, this is accomplished not only through placing the product in gyms and giving trials to first time buyers but also through actively seeking feedback from users.
The feedback Reebok receives form users will help in creating lighter, even higher quality products to better satisfy consumer needs and enhance their athletic performance. Positioning Statements Positioning Statement 1: For college students who typically maintain an active lifestyle and like access to new products, Realflex footwear is the latest model of Reebok running shoes with advanced technologies to improve athletic results as well as allow consumers to customize the color of the shoes.
Positioning Statement 2: For baby boomers that pursue a healthy lifestyle, Reebok Realflex footwear is the natural running shoe with high tech soles and light-weight materials that is designed to provide the health benefits of natural running. Proposed Marketing Strategy Product Reebok would not be doing any product modification to the RealFlex shoes. Instead, Reebok would be focusing on enhancing the RealFlex image while on store shelves. Reebok would make the shoes as appealing to the consumer as possible. An efficient way to appeal to consumers is to offer a more classic look in stores while also offering the benefits of RealFlex.
Reebok would offer basic colored shoes in stores such as navy, gray, black, and white, along with accent colors such as blue, red, and green. The more eccentric colors, like orange and yellow, would be available online when customizing the shoes. This will be an effective strategy for the RealFlex because it would attract more customers who are looking for a dual-purpose shoe to fit their everyday lifestyle. This strategy is designed to attract customers who are not looking for flamboyant aesthetics in their shoe choice.
This is based on the belief that classic colors will cover a larger demographic, while still having more specific needs accessible online. These shoes will be packaged in a simply designed box that features bare feet and the Reebok RealFlex logo. Shoe packaging tends to be generally more functional than appealing to the consumer as the shoes can sell themselves (Packaged Facts, 1998). However, consumers enjoy showing off their latest purchases, and this newly designed box has the perfect accent to combine with the Realfex shoes. (See appendix E – RealFlex Packaging) Pricing
Pricing is an important factor that affects the marketing of a product and consumers’ attitudes toward that product. Consumers tend to shop for lower-priced commodities so long as quality is not compromised (Daly, 2002). In order to arrive at a fair price for the RealFlex shoes, Reebok considered several different pricing strategies and evaluated the effectiveness of each strategy in line with its marketing plan objectives. The best price strategy for the RealFlex shoes is the At-Market Pricing Strategy. Reebok set the base price at $89. 99, with the customization options ranging from $5-$15 extra.
The price is comparable to the market price and to what the competitors are offering. Reebok’s largest competitor, Nike, is offering similar shoes at the same price (Nike, 2011). However, New Balance sells its similar shoes for $95 while Asics sells its shoes for only $85 (New Balance, 2011). This pricing strategy allows Reebok to make a profit while still encouraging for a larger market share. Reebok wants to attract active college students and baby boomers to purchase the product because of its high quality and average price among rivals.
There is a large portion of the target market, college students in particular, that are unemployed due to full-time school or retirement. Reebok’s pricing strategy is designed to enable the company to achieve a large and dominant market in line with the marketing objectives. The At-Market Pricing Strategy achieves objectives and enhances profits. Placement Reebok will market the Realflex primarily through retail channels. This is done because in-store shopping is one of the most important portions of the customer decision-making process when purchasing a product.
A few of these retail channels will include Foot Locker, Athlete’s Foot, and Champs Sports. Reebok will concentrate more heavily on placement in states where residents are more likely to engage in a healthy and active lifestyle, such as Colorado, Oregon, and Minnesota (Nash, 2010). Through the use of these channels and placement, Reebok can raise its brand awareness and increase customer loyalty. Reebok wants the retail environment to highlight its brand value as “inspirational, athletic, fun, and interactive” (Adidas, 2011).
One of the target markets, baby boomers and the older generations, want to purchase high quality products in order to maintain their health (Health Goji, 2010). They enjoy going to the retail chains so that they can try on the shoes and make sure that they feel good while walking. They are also able to go online if they do not find the color that they like and they can purchase from the Reebok website. The other target market, college students between the ages of 18-24, wants to purchase shoes that go with their physical appearance (Makgosa ; Mohube, 2007).
They enjoy going to the retail chains so that they can try on the shoes and make sure that they look good while walking or running. This market can also go online if they would like to customize their shoes to have a little more color. Promotional Plan Health and enhancing athletic performance will be at the forefront of the Reebok Realflex promotional campaign. The shoe itself is meant to provide the sensation of natural running while still protecting the consumer’s feet. This will allow the consumer to be able to run the extra mile that complete barefoot shoes will not allow.
There is a big difference as to how far athletes can run in barefoot shoes opposed to actual running shoes. Reebok wants to convey to consumers that it is concerned with their health and it is dedicated to improving their athletic abilities through the use of the Realflex shoe. It is evident that consumers in both target markets, college students as well as the older generations, are concerned with their health. However, there will be a greater emphasis on the health benefits to the older generation, as this is a major appeal. It is common practice in athletic apparel to feature fit models using the product in beautiful locations.
Reebok would follow suit. Reebok needs to communicate that “no matter where you are, you can take health with you with the Realflex shoe” This message could be particularly effective when considering older generations. They are more likely to travel and are redefining “retirement. ” By positioning the product as healthy and useful there is a direct appeal to the needs of Reeboks’ aging consumers. (See Appendix F – Magazine Advertisement and Appendix G – Billboard Advertisement). With regards to younger consumers, like college students, there will be an emphasis on the message that the Realflex is meant for their active lifestyle.
It is designed to enhance athletic performance because as a natural running shoe it alters the pronation in the foot as it strikes the ground increasing the amount of work the muscles do when the shoes are being used. It enhances the workout for these younger generations, especially those who are aware of the benefits of natural running (Appendix H – Advertisement). It is imperative that both target markets are able to view the product as both healthful and athletic. The key issue that must be avoided is that the style of the shoe is not exclusive to either target market.
This issue can be resolved through the use of blending the concepts of health and athletic performance in advertisements. Reebok intends to do this primarily through advertisements featuring outdoor settings and races. (See Appendix I – Billboard Advertising) Television commercials could prove more useful as a mode of advertisement. With the Reebok Easytone shoe, Reebok spent $64 million on advertisements of the Easytone shoe. Sales of that particular shoe increased until it was discovered that Reebok used faulty advertising as a means to sell the shoe ( (Morran, 2011).
The campaign for the Easytone shoe was one of Reeboks largest in a decade. For the Easytone shoe television ads were highly effective in reaching target markets and increased sales. Reebok is hoping for a similar effect when it comes to the Realflex shoes. Many other companies also use television as a means to advertise because it can reach millions of consumers for only pennies on the dollar. A smaller athletic company, Asics debuted a new national advertising campaign and the ING New York City Marathon, some of which includes television ads. In correlation with their new campaign they have also seen increases in profit (Asics, 2011).
Aside from television, another mode to advertise to consumers is through magazines like that are specific to fitness and popular culture. Magazines that Reebok wants to place its full page ads in would be Runners World, Women’s and Men’s Health magazines, Shape, GQ and Cosmopolitan. These are the magazines which are better suited to reach both target markets. The anticipated cost for full page ads in these magazines range from $20,000-$25,000, however, these prices can fluctuate depending on the magazine and how much of a region it covers (Becket, 2009)..
Magazines like Runners World and Running Times are the most vital to communicate how viable the Reebok Realflex is as a running shoe. In a lot of ways it is the way to get a seal of approval as a product. The more runners Reebok can get to buy the shoe, the greater the visibility and the more likely others are to follow suit and purchase their own pair of Realflex shoes. While television and magazines are useful, one of the best ways to gain attention in the world of fitness is to be present at major running events like races and expoe’s.
Brooks Running shoes sponsor some Rock and Roll Race events; one of their biggest is the Denver Rock and Roll Marathon. They have nearly half of the floor to showcase their products and their benefits. Not to mention that they are able to make those last minute sales to participants. Participation in major races like, half marathons, full marathons, national race teams, Reebok again increases visibility and is able to position their product as a product for fitness. Costs of sponsoring races vary depending on the size of the race.
However, Reebok could take a different approach and rather than advertise and sponsor at a major races like Chicago, NYC and Boston Marathons, sponsor multiple races in the Rock and Roll Marathon series which features over twelve races in the United States and three in Europe. Through these modes of advertising Reebok is able to reach both target markets and convey the healthfulness and the athletic performance benefits that come with the use of the Realflex shoes. In regards to sales promotions, Reebok will utilize both retailers and consumers to increase product visibility.
However, Reebok will focus on going primarily after the consumer, through consumer sales promotions. Methods Reebok intends to use would be product samples and prizes. We would let the consumer try one Reebok product in the store and test it out for a day and if they do not like it, tell Reebok why to refund the purchase. Another tactic to take advantage of and redeem Reebok from the Easytone bad press would be when consumers bring in a pair of Easytone shoes Receive half off of the purchase of Realflex shoes. This specific method, allows Reebok to do damage control through public relations of sorts.
Reebok can pick specific locations where previous buyers of the Easytone shoes can return their purchase for half price pair of Realflex shoes. It is imperative that to successfully launch and market a product that Reebok fix their previous indiscretions in regard to the Easytone shoes. As discussed earlier, advertising will play a major role in positioning the Realflex as both healthful and performance enhancing. It will be what the consumer sees in their magazines, on their televisions and in their gyms. However, the personal selling aspect will also define how the customer views the product when they come into a store to purchase them.
While Reebok has its products in major athletic stores like Dicks Sporting Goods and Sports Authority, it’s important to make sure the retailers are well informed about the product, and provide the opportunity to test out the shoe on treadmills before purchase. In regards to the actual Reebok stores, retailers there need to take interest in creating a unique purchasing experience for the consumer. This can be done through acute attention to consumer needs and demonstrations of the products use, and the ability to test out the products in the store.
When it comes to selling, Reebok Retailers need to sit one on one with consumers and be attentive to their needs. While this method may be expensive it will provide that unique customer experience and encourage repeat business. Sales promotions will also be done through visibility at expos and major races. Asics provides supplies for the New York City Marathon and Brooks provides supplies for the Rock and Roll Marathon series which allows them to dominate pre and post-race expos to encourage buying. It also increases visibility among consumers who are likely to buy the product.
This method allows Reebok to go to the consumers rather than trying to get them to come to a store. While the fees can be expensive, there is probability that consumers will see the product and the company as one with their best interests at heart. Similar to being present at expos would be an adaptation of contests, ask small local races where participation is below three thousand and give a free pair to each race winner or each division. This is a means to also build good will among potential consumers and entice potential runners into competing.
The least used promotional element will be direct marketing, as the cost of communication through mail and telephone. The one way Reebok would consider using mail as a means to communicate with consumers would be to send notices regarding the shoe with an explanation of the healthy benefits. The mail would also only go to previous customers to encourage business or members of a loyalty program as they may be more likely to want to purchase the product, if they have been satisfied with their previous purchases.
With all of the factors of the promotional mix in mind the most effective strategy for Promote the Realflex shoe would be the Push strategy where personal selling is directed to intermediaries. It’s is easier to utilize a pull strategy because it allows greater accessibility to the product by already placing the shoe in malls and specialty stores. What is important to recognize is that each piece of the promotional mix fits together to convey a single coherent message to consumers, Reebok is a company committed to producing quality products to enhance health and athletic performance.
The variation in the promotional mix will be used as a means to communicate this message to target markets. The variety in methods will ensure that since Reebok is seeking older generations (40-65) as well as those aged 18-24 who are active, they are destined to come into contact with some type of positive promotion of the product. MarketTrak Tool Reebok uses a MarketTrak spreadsheet to show the projected cost of achieving its objectives for one year. This spreadsheet shows each of the three marketing objectives and breaks them down into several different tasks that can be completed within one year.
Through the use of billboards, television commercials, sponsorship promotions, and website advertisements, Reebok hopes to achieve its marketing objectives. The first marketing objective on the MarketTrak spreadsheet is to increase sales by 10% within the first year. Reebok will achieve this goal with the use of billboards, magazine ads and special promotions. First, Reebok will design a billboard geared toward the older generations, aged 40-65, and strategically place them in areas that are largely populated by the older generations, like Tampa, FL, Austin, TX, and Phoenix, AR (Coach, 2011).
Second, Reebok will place advertisements in special sports magazines, like Runner’s World and Sport’s Illustrated. Then, Reebok will offer several pairs of shoes for free to retail stores such as Dick’s Sporting Goods and Sports Authority. These shoes can be tried on the treadmills at these stores so that consumers can see that the shoes are comfortable. Finally, Reebok will offer a discount price for 1 month on the shoes followed by 1 month of free shoe bags with purchase. The second marketing objective is to increase the awareness of the healthy nature of the Realflex shoe by 15%.
This will be achieved by giving 500 free pairs of shoes to trainers in gyms that are located in ten of the healthiest cities across the United States, like Boston, MA, Portland, OR, and Denver, CO (Haiken, 2011). These shoes will be used by opinion leaders who are in a position to show just how comfortable and healthy these shoes are. In addition, Reebok will give two extra free pairs to each trainer so that they can use them to give away to a couple of lucky gym members. Finally, Reebok will create a television advertisement geared toward the specific health benefits of the shoes.
The third and final marketing objective is to increase the awareness of Reebok’s investment in the consumer’s best interest. This will be done several different ways. To start, Reebok will create an online advertisement showing the overview of the lightweight shoe design and how the design helps with healthier running. Then, Reebok will add a new section onto its website explaining how much time and effort Reebok has gone to in order to create a shoe that really is better for your muscles and legs. Then, Reebok will design a moving billboard advertisement to be placed onto city buses that operate in large college cities, like Denver.
This advertisement will show the wonders of the Realflex sensors. And finally Reebok will design a different television advertisement that shows all of these investments in our consumers. In order to ensure the success of each of these marketing strategies and tactics, Reebok’s marketing managers will have a meeting at the end of each month to go over each of the objectives to see how well they are working. These meetings will allow for each of the managers to learn what is going on, see if the objectives are being met, and improve anything that needs to be upgraded.
This is done so that everything moves along smoothly and nothing is forgotten in the process. (See Appendix J – MarketTrak) Conclusion Reebok is positioning to be a high-end athletic footwear brand and a leader in its industry. In the next three years, the market development and product repositioning will allow Reebok to achieve its marketing objective which increases sales by 10%. College students and baby boomers alike can wear Realflex while performing a multitude of exercises. Its smart and stylish appearance allows it to be worn daily. With the previous issuance of a faulty product, Easytone, Reebok created a weakness in the company.
However, with Realflex, Reebok can improve the past weaknesses by marketing its new “76 sensors” technology and wonderful health benefits. This technology can efficiently support the runner’s weight and flexibility. This product, along with focused advertising, will increase consumer awareness of the health benefits that come with the Realflex shoes. Furthermore, the target market will enjoy the convenience of shopping in more Reebok retail locations. This will help Reebok to increase advertising concerning the high quality performance and the health benefits within Realflex.
With Realflex becoming more widely known, the product demand will increase. As a result, customer value will also increase. The final marketing objective is to increase awareness of how much Reebok has invested in its consumers best interests. Realflex implements the idea of “natural running movement”, emphasizes on lightweight materials, which its users can experience the barefoot feel. It shows to its target markets top quality running shoes with not only the health benefits, but also with the pioneer and innovation of its sensors to improve performance.
Through the catering of style with the young generation and the health concern of baby boomers, the team believes that Reebok will reach its marketing objectives and spur the success of this product. Appendices Appendix A – Competition Table Competitor| Year Founded| Years in Business| Locations Served| FY 2010 Sales| Offered Products| Direct orIndirect Competition| Nike| 1964| 47| World2| $19 Billion3| Athletic shoes, apparel, sports equipment, and accessories2| Direct| Asics| 19494| 62| World4| $2. 4 Billion5| Athletic shoes, apparel, and sports equipment4| Direct| New Balance| 19066| 105| World6| $1. Billion6| Performance footwear, apparel and accessories6| Direct| Deckers Outdoor Corp| 19737| 37| World7| $1 Billion8| Sheepskin boots, casual wear, slippers, and sandals7| Indirect| Appendix B – SWOT Analysis | Favorable| Unfavorable| Internal| Strengths(1) Brand Equity(2) Reebok-Adidas merger. (3) Reebok is one of the top athletic shoe companies in U. S. in terms of market share. (4) Barefoot shoes are scientifically healthier than any other kind of shoes. (5) 76 independent sensors on the bottom of Reebok Realflex barefoot shoes promote natural movement, flexibility, and comfort. (6) The price is the average of main competitors. 7) Customizing the shoes with the styles and colors customers prefer. | Weaknesses(1) Reebok owns few official stores and relies more on retailers. (2) Reebok doesn’t own factories and they depend on producing industries in their production. (3) Previous reputation of releasing faulty products. (4) Few sponsors associated with Reebok. | External| Opportunities(1) Expanding current market and reach current markets with their new products. (2) Marketing towards several age groups to increase profits. (3) Product development opportunity. (4) Expanding to market for the product on social media websites. 5) Creating new channels of communication on social media websites. | Threats(1) Many companies produce barefoot shoes and this leads to a strong competition. (2) Changing trends in footwear technology. (3) As barefoot shoe is a want and not a need, some people may think twice before purchasing. (4) Poor economy| Appendix C – Positioning Map 1: College Students Appendix D – Positioning Map 2: Baby Boomers 5 Appendix E – RealFlex Packaging Appendix F – Magazine Advertisement Appendix G – Billboard Advertisement Appendix H – Pro-nation Advertisement Appendix I – Billboard Advertisement Appendix J – MarketTrak
Appendix K – Glossary of Terms At-Market Pricing Strategy Attributes Barriers to entry Beliefs Brand Awareness Brand Value Branding Channels Competitions Competitive Advantage Competitors Consumer Consumer’s attitudes Consumer Spending Core Competency Cost Current market Customer Loyalty Customer Value Differentiation positioning Direct marketing Discretionary Spending Disposable Income Good Will Growing Market Growth Stage Indirect Competition Leaders Market Market price Market share Marketing Mix Marketing Plan Objectives Maturity Stage Need Opinion Leaders Opportunities Packaging Personal Selling Placement Positioning Power
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