Business / Reebok Swot Analysis
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Autor: anton 16 May 2011
Words: 1255 | Pages: 6
Reebok experienced a period of strong growth and success in the 80â€™s and 90â€™s, though new developments in the sports market are challenging Reebok and are changing its competitive situation. The following analysis gives an overview of were Reebok is standing at the moment and what their challenges for the future are. On the basis of this analysis Reebok can set out their strategy for the future and anticipate on the opportunities and threats they are facing.
Size & strong brand awareness and perception.
For decades Reebok has been one of the leaders in the sportswear market and has had a large market share and market presence in especially the American market. Due to this large market presence and the performance of the company in especially the 80â€™s and 90â€™s the brand has gained momentum and has a great awareness with the typical customer. This awareness and the strong perception help marketing the Reebok brand and overcoming future challenges.
Wide range of celebrity associated sponsorship
Affiliating itself to globally renowned celebrities Reebok enhances the company name among many different customer groups and reaches a large base of their target customers. The wide range of celebrity individuals and celebrity teams & associations they have under their umbrella help in marketing the Reebok brand and in increasing the appeal with the Reebok brand, something which has become increasingly important in the 90â€™s.
Itâ€™s strong position in the womenâ€™s sector
Reebok in the past has anticipated perfectly to the new and upcoming womenâ€™s sector in the sports markets, whereas other companies are relatively late to react in this market. With a large market share and a growing popularity in this sector, the womenâ€™s sector is one of the main strengths and sources of revenue for Reebok. As women are very sensitive to trend and are on average spending more on sportâ€™s clothing and shoes than men do, this market has already proven its value and has a still large potential for the future. Since Reebok has established itself so firmly in this market they are likely to reap the benefits for the decades to come.
True product innovation
Reebok has a strong record of technological innovations and improvements for its footwear and after some difficult years they are again managing to be in the top league of product innovations and being able to launch several new product lines.
Maturing US markets, flat revenues and declining income
Recent numbers show that Reebokâ€™s US combined footwear and apparel revenues dropped 3.5% and its footwear market share dropped 11.8% (1994-1996 period). As this indicates, Reebokâ€™s revenues are flattening out and its income is declining. This trend in Reebokâ€™s result is partly due to the fact that the US market seams to be nearing maturity and that they have lost market share to main competitors in crucial market segments. Reebok will have to find new sources of revenue and will have to reposition itself to improve their financial situation and to guarantee growth for the future.
Shift in core consumer groups
Reebokâ€™s traditional core consumer base no longer is the sweet spot in terms of athletic footwear and apparel purchase volume and frequency. The recent trend is a shift of importance in buying segments from the 25-39 and 40-59 segments to the 12-17 and 18-24 year old consumer segments. Reebokâ€™s core consumer base for decades has been mainly composed of the older consumer segments and therefore Reebok is suffering from this recent trend and will have to reposition and refocus to win customers in the younger consumer segments. Recent figures donâ€™t look to good though as Reebokâ€™s market share in the 12-17 consumer segment, which is becoming more and more vital for company success, is declining.
Mixed marketing message
Reebok has been experiencing problems with choosing the right marketing campaign and in reaching their target customer with a consistent marketing message. This unclear and constantly changing marketing message may in turn lead to a mixed and unclear consumer and retail perception of what the Reebok brand stands for and contribute to the declining sales they are experiencing
Increase average shoe selling prices
Reebok is still selling at lower prices compared to the competition, especially the direct competitors Nike and Fila are charging prices of on average 10$ more than Reebok does. This gives them some space to increase their prices and to introduce higher-end product lines competing more directly in the upcoming market and generating higher revenues.
As Reebok is mainly focused on the US market (biggest in size) there still is a lot of potential to expand their position in Europe and establish themselves in the upcoming Asian markets. Especially the early entry into booming Asian markets, such as Korea, Japan and China could give them enormous new market opportunities.
Increasing technology expertise and development
With its brand new Development Center Reebok has gained control over its technology development and has therefore secured the source of a wide range of new technology developments and new products for the future. Nonetheless the establishment of a Development Center is only the beginning, and they will have to keep developing and improving their operational performance to profit from new innovations.
The competition: Nike
Nike has been increasing its power in the market by gaining a higher share of the market and by anticipating very quickly to new developing trends and movements in the market. By introducing new trendy brands such as Air Jordan they are anticipating on the changing market demands and are gaining increasing market share in the growing 12-17 and 18-24 segments. Nike is and will remain the biggest competitor for Reebok and they will have to respond with sound strategies and investments in the right places to stay competitive.
Increasing marketing costs
Marketing costs are constantly increasing with skyrocketing sponsorship fees demanded by celebrity athletes in sponsorship deals. The sports marketing arena has turned into an increasingly costly game to participate in and therefore the marketing costs that are necessary to remain competitive demand Reebok to invest heavily and to increase their marketing budget. This rising tendency might develop even further into the future and could pose a serious threat to the company.
Over reliance on footwear sales
Reebok has a main focus on the athletic footwear market and a very low presence in the apparels market whilst the footwear market is maturing and the apparels market already twice the size is a still fast moving and growing market. This lack of revenue spread makes them vulnerable for sudden hits in the footwear market and also means they are neglecting the largest and fastest growing market in sports wear.
Besides the above mentioned opportunities and threats that Reebok faces there are certain developments in the market that can be seen as either threats or opportunities. First there is a trend towards segmented product offerings based upon more specialized consumer needs (new technologies). In this fast changing and demanding market Reebok has to join the game not to loose its business. Secondly there is an increased fashion element in athletic footwear purchases nowadays, which widens the potential customer base, but also adds complexity and scope to the marketing of these products. The shoe has to do more than meet its goal it has to trigger an emotional or culture-based attachment that places it above the myriad of other footwear available.
These developments and changes in market demand are altering the business landscape. The future will have to show if Reebok is able to deal with these changes and integrate them into their business model or if they will seriously threaten their business.
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