Reeboks Covert Marketing Strategies - Essay Example

?An Evaluation: Reebok vs. Nike in India: Reebok’s Covert Marketing Strategies Word Count: 3252 Introduction In the 1990’s Reebok and Nike entered into a race to set the standard for American sportswear in India. While Nike has been the worldwide front runner in the sportswear industry, Reebok managed to create a marketing strategy that propelled them ahead of the powerful Nike company. While Nike focused on globally recognizable athletic stars to promote their products, Reebok picked up endorsements form Indian national cricket players who were far more identifiable with the people of the culture of India. Through these associations, Reebok was able to capture a much larger market share and outdistance Nike in India. In the race to capture the lead in India for the most popular sportswear, Reebok has created the strongest showing in the market using their popularity to create new avenues of profit. Critically evaluate the strategic role of a sportswear manufacturer marketing function in achieving competitive advantage for the organisation. Support your answer with examples from the Reebok vs Nike case study. Nike and Reebok have entered into the sportswear manufacturing market through creating strong, identifiable brands that promote more than just the goods that they sell. Through powerful branding and globalization of their brand, they have made a mark on the industry as representative of lifestyles that include health and athletics. While both brands are distinctive, the Nike name and the iconic swoosh has outdistanced its competitors in recognizability. Through branding that creates attractive lifestyles, both brands have made their mark in the sportswear manufacturing industry. Nike’s most powerful advertising weapon is its brand. The Nike swoosh is a powerful pop culture icon. Slaughter and Rhodes suggest that “the effect of contemporary branding strategies is to push the ’host’ or sponsored culture into the background so that the brand emerges as the ’star’ (Slaughter and Rhoades, 2004, p. 261). In order to support the brand, the swoosh is on every piece of product that is put out into the market. The founder of Nike, Phil Knight, suggested that it wasn’t the mission of Nike to sell shoes, but to make peoples lives better through sports and fitness. The image became so powerful that by the decade of the 90‘s the name of the company was no longer needed in order to create recognition (Slaughter and Rhoades, 2004, p. 261). Nike has had some problems with proven claims of human rights violations in the factories that are subcontracted to produce their product. At the height of this, the Nike company decided to get rid of the swoosh in order to allay the associations that the public was making to their problems in social responsibility issues. However, as Le Pla (2002) suggests “Changing an image in response to criticism makes sense. Dropping or reducing the visibility of a highly successful association does not” (p. 49). The brand icon has such a high recognition rate that it is foolish to abandon the brand icon, but to repair the image of the brand so that the associations are sanitized. In conjunction with their high visibility in branding, phrases have been associated with Nike in promoting their belief that every person is an athlete, therefore every person has the potential to be a consumer of their goods. A simple, yet powerful message was erected within the Nike mythology when the “Just Do It” campaign created a concept of the power of the athlete within everyone. The phrase suggested that no excuses would be allowed, that all goals should be achieved. The statement had the power of a command, bringing an association of power to the athletic wear. The advertising premise, according to Nike, was “ If you have a body, you are an athlete” (Nikeid 2011). The target audience for the Nike marketing concept is everyone without regard to age, health level, body shape, or sex. The original market was geared towards young athletes, but in this age the marketing has been geared towards the widest possible audience: every person in the world. While Nike took the stance of being a brand that was for all people, Reebok was attempting to localize its strategy by becoming the premier brand of shoe for runners (McDonald, Mark A., and George R. Milne 1999, p. 87). In the early 1990’s, Reebok had lost some credibility as a serious sports shoe, but the attempt to regain its position from Nike was in the form of appealing to the serious runner and to the specialty store. In this case, it was the image that Reebok wanted in conflict with the image that it needed that held it back from being the top manufacturer of sportswear. Nike had used top athlete endorsement combined with an appeal to every person that they needed to perform at their best. Reebok did not have the global approach that Nike had created, but in the Indian market, this became an advantage. Despite Nike’s dominance, it failed when entering into the India market with its sportswear when it went up against Reebok. Nike used international sports celebrities in order to create endorsements that it thought the Indian people would identify with in order to create a positive association that would lead to sales. The idea was to create a globally recognized association rather than an internal culture sense of recognition. Reebok, on the other hand, associated itself with popular cricket stars who were from India, thus identifying itself with the specific culture rather than a global environment (Tantia and Krishnan 2009). In this case, it was important to get there first as Reebok did in pulling in the cricket players and teams to promote their products. Through the use of popular athletes from within the culture, Reebok created associations that were far more powerful than globally known athletes. Nike eventually got on board with the concept, but it was actually too late. Reebok dominates the market in India because they were the most visible in the early period when both manufacturers were entering the Indian market. Using a structured approach and the information in the case study as well as other sources, undertake an analysis of the sportswear market in India. What are your overall conclusions? The sportswear market in India is a relatively new market and is primarily comprised of Reebok, Nike, Adidas, and four local competitors. One of those local competitors is Footwear (lndia) Limited. Footwear Limited held a market share of 20% with Nike, Reebok, and Adidas having captured 30% of the market very quickly from the time they entered into the country as a competitors. The balance of the market was held by Footwear India with 40%, Liberty with 6%, and Paragon 4%. In order to compete, the stores began to sell the American brands on their shelves (Havaldar and Cavale 2007, p. C-6). The introduction of Nike, Reebok, and Adidas into the sportswear markets of India made a profound impact on the success of the local manufacturers. Through sophisticated marketing techniques, the American companies were able to breach a market that had existing national brands and create an emotional connection to a country with a very different culture. While Westernization and consumerism have been on a slow, but steady rise as the culture has been infiltrated with Westernized values through corporate cultures that have come into the country to set up businesses, the Indian philosophies are still widely different than those of the Western world. Marketing in India is somewhat complex as the average consumer is still not fully acculturated to a consumerist society. Consumerism has yet to fully attain a broad social purpose. Because of the cost of living, the prices must be much lower thus in order to get basic products to a million consumers, they price point must be at a comparable rate. Sengupta (2005) that there must be an approach of an ‘intermediate consumption of goods’, as the cultural rise into the global community is still in its evolutionary stages (p. 104). Covert marketing practices are designed to gather information that will define the response of the consuming public, then utilize that information in such a way that it is not obvious that they are being manipulated into creating demand. According to Milne, Bahl, and Rohm (2008), covert marketing involves “learning about consumer preferences by gathering information and then configuring a marketing mix, which includes communications and promotions to meet consumer needs”. In terms of Reebok and Nike, the firms went into India with the intention of creating a marketing strategy that would affect the emotional connection that the Indian people had to athletic events, but Reebok was able to more effectively use the information to come out ahead of the competitive game. In addition, their strategy was to attract consumers based upon a value-priced basis which was attractive to the people of India, while in the Westernized world athletic apparel can be considered status clothing and a lowered price is not always an attractive marketing practice. Nike created a marketing strategy based on the concept of a global community, disregarding the close attachment that the nation had to their own athletes. Marketing strategies need to be determined by the nature of the consuming culture in which products will be introduced. While it is often the nature of branding to change the perceived needs of a culture, the emotional connection that is made within that culture must be made upon their own terms. Just as McDonald’s did when they made the Teriyaki Burger for Japan and the Salmon Burger for Norway, a brand must take something of the host culture into its marketing plan in order to make a connection. The problems in India are highlighted by the wide gap between the extremities of poverty and the financially secure elite who wish to distance themselves from those who are still in poverty. Therefore, the philosophies of the culture, those concepts of acceptance and enlightenment without materialism, in contrast to that of the elite who have a sense of well-being that is derived from the consumerist culture is creating a gap in the congruity of the sociological perspectives within the culture (Dittmar and Halliwell 2008, p. 219). Therefore, creating a campaign that encompasses the needs of all of the consumers can be very difficult. However, just as Slaughter and Rhoades (2004), it is the strategy of most brands to push the culture to the background, bringing their own mythology to the foreground and change the perceived demands of the consumers to be attracted to the product through an acquired need. Compare and contrast Reebok’s positioning as a sports and fitness brand with Nike as a lifestyle brand. What do you conclude? Nike and Reebok are two very different brands that have created diverse concepts of how to approach their marketing. Reebok has created a specialized concept for their products, attempting to be a leader in running shoes with all other aspects of their branding shedding from that central point. Reebok has two important aspects of marketing in which they have designed their product. The first is through the concept of value, while the second is the aforementioned association with the premier shoe for runners. In trying to create this mythology of the runner in association to their product, the shoe is intended to make anyone who puts on the shoe into a runner. The Nike approach is through creating a mythology of life that encompasses everyone. In their world, the individual is in a race to achieve and they associate their brand with that sense of achievement, whatever that achievement may include. Nike takes their brand from the strict sense of what is involved in their product line into a more blatantly philosophical level that is well beyond the power of their products. In the Nike universe, achievement of any kind is a matter of athleticism, parallel’s with running the course towards a goal and in finding the inner power appearing throughout their advertisement. The simple quality of ‘Just Do It’ is a powerful message that crosses boundaries into all walks of life. Reebok has a clear position as a brand geared towards the athlete. Active marketing has been done in order to create this type of association. Furthermore, as shown in the case of Nike and Reebok in India, the company is focused on creating associations with cultural icons that are specific to athletic achievement. Through value and high performance claims with marketing that promotes these aspects, Reebok is clearly attempting to create their image through an association with high performance athleticism. However, this was not the aspect of the branding that created the success that outdistanced Nike in India. While the branding was based upon performance, the association with athletic stars from the game of cricket created the advantage that pushed Reebok passed Nike within that nation. The unfortunate set of circumstances are that this is an anomaly as Reebok made one very right decision against all the right decisions that Nike has made. Reebok does not have the level of success on a global level than does Nike, yet this one right decision made all the difference within the Indian market. Nike has created a lifestyle around their brand, intending it for all walks of life. The efforts towards this type of mystic can be equated with soft drink advertisement that suggests that ’Coke adds life’ or ’the Pepsi generation’, as the purpose of the product is secondary to a created lifestyle that is associated with anyone who participates in consuming the product. Using a Nike shoe puts one in the same category as any other high performance achievement, even if that achievement is associated with successfully taking care of the children. High end achievement fulfills the need for self-actualization on Maslow’s Hierarchy of needs, the highest level of need fulfillment, thus the association with this type of lifestyle is a different type of advertising than is seen through Reebok (Smoke 2005, p. 123). The concept of the lifestyle brand is a powerful idea that can create a deep mythology around a product that can create a demand that might not otherwise exist. As in the example of Nike, the ‘need’ for the athletic shoe is often superseded by the need for a transforming event that pushes a person to succeed. In wearing the Nike brand, the individual is associated with success and is empowered to do those things that people who wear Nike apparel are able to accomplish. In owning Nike, one becomes a part of that culture, a member of a group that is socially responsible, healthy and active, and aware of the world on a global level. The lifestyle of Nike can be interpreted through a variety of associations that have developed in the mythology of the brand. Based on the evidence in the case study, critically evaluate Reebok’s segmentation and targeting strategy for women and for kids wear. How might Reebok assess the viability of a potential new segment? In order to expand into new segments of product lines, marketing must be done in order to provide a gateway to the consumer. The brand provides the initial recognition that will allow for diversification, but new streams of conceptual marketing must be done to extend the associations of the original brand. According to Wedel and Kamakura (2000), “New operations of brand loyalty are based on event history analysis” (p. 10). In expanding a brand to cover a new segmentation, certain adjustments must be made in order to efficiently reach the consumer base and make the appropriate impression. The core of creating successful segmentations is the identification of the existing and potential customer base. Identification of the segments as they are needed by the consumer must be made in order to develop goods and services that will meet the evolving needs of the customer. The positioning of the product is the final step in creating a marketing strategy which requires resource allocation, processes and decisions in regard to diversifying interests and how best to design a strategy for extending into multiple segments of consumer interest (Baker and Hart 2008, p. 223). In creating product lines for women and children, Reebok entered into new avenues of revenue streams created through diversification of their products. In response to the needs of women and children, new products were created in order to expand their share of the market. In order to introduce these products into India, extensions of their existing marketing plan were put into place that reflected their choice to use stars of the sport of cricket. In order to successfully bring these product lines into the country, the positive associations that had been made to their marketing and branding strategies had to be utilized to further their recognition and emotional context in which the brand had come to have meaning within the culture. In order to assess the viability of a new product line, Reebok must first assess the image of its brand and determine how best to transfer the equity of the brand to the new product line. Since their primary branding device was that of the high performance shoe specifically geared for runners, the brand needed to be altered to include some elements of the lifestyle brand strategy. In associating with high performance athletics, the casual uses for their apparel had to be brought to the forefront. India has seen an emergence of fashion value retailing with outlet malls opening in which name brands can be purchased at lowered prices. Reebok has been a prominent brand in these outlet malls allowing for the advancement of their new lines of product diversification (Ray 2000, p. 331).Reebok has over 500 stores in India and has contributed toward the education of women on fitness through the Reebok University Programme. Through concept such as the university that are aimed at bringing women forward into the world of health and fitness, the brand has increased its customer base and expanded to children and women’s wear. Conclusion While Nike eventually picked up on the mistake that they made in marketing, the overall consequences of that mistake has cost them millions in revenue that has gone to Reebok. Reebok, on the other hand, has profited greatly from some wise decisions that have been made regarding how best to represent their products to the people of India. Nike was able to make endorsement deals with the cricket teams, but the presence that Reebok had established was too strong to allow for the intrusion of Nike into the market through similar means. While both hold a viable presence, the decisions made by Reebok in marketing strategy made all the difference. Nike has created a lifestyle brand in its name. The power of the Nike icon has created worldwide recognition that has sustained their leadership in the world market for athletic apparel. While Reebok does not do the level of business that Nike has, they also have not created as strong a mystic for their brand name and they have limited their customer base by creating the image of shoes and apparel for those who are actively involved in athletics. In comparison to the strategy that Nike has in that all people are potential consumers, thus all people have the need to exercise, Reebok has defined them to a certain portion of the population. Using the results of this profitable marketing strategy has allowed for Reebok to have over 500 stores throughout India. This has also allowed for the opportunity to create diverse product lines to expand the profitability of the company. This opportunity gave Reebok a hold in the global market, the strength of their presence in India allowing for a number of socially relevant changes. India now has casual Friday as a part of many of their corporations, the promotion of this day a result of the availability of sportswear and the desire of employees to be able to dress more casually at work when appropriate. The impact on all the ways in which the introduction of sportswear into the cultural traditions of India has been extraordinary. While Nike still holds the global front running position, Reebok has taken the country of India and made great strides in their efforts to succeed. References Baker, Michael John, and Susan J. Hart. 2008. The marketing book. Oxford: Butterworth-Heinemann. 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