Competitive Strategies

The battle between Nike and Reebok lasted over three decades and created celebrity culture as we know today. Initially the two could not have been more different: Phil Knight, a former University of Oregon track star and a Stanford MBA, tossed his accounting career and formed a company to import running shoes to the U. S (Akhtar, 2011). He named it Nike after the Greek goddess of victory. Paul Fireman dropped out of Boston University to take over his family’s sporting-goods business (Akthar, 2011). He acquired the North American rights to British-made sneakers. Reebok, a line of white-leather women’s aerobic shoes named after an antelope, took off as jogging became a national craze. Fireman bought out the parent company in 1984 and took Reebok public the following year. Benefits Nike, which had risen to prominence by aggressively courting male customers and fostering a jock-laden management culture, missed the market for women’s sneakers. Reebok overtook Nike in 1987as the latter struggled to catch up. Eventually Nike regained momentum by signing the man who would become the most iconic athlete of all time: Michael Jordan. Nike gained not just a hero athlete but also a spokesperson who connected with audiences. On the back of Jordan and the massive popularity of his Air Jordan brand, Nike surged ahead. Air Jordan sales eventually surpassed $1 billion annually (Akhtar, 2011). Reebok responded by signing Shaquille O’Neal, who once showed up to a meeting with Nike wearing a jacket emblazoned with a huge Reebok logo—much to the dismay of Nike executives (Akthar, 2011). At the 1992 Olympics, Jordan controversially draped a U. S. flag to hide the logo on the Reebok-sponsored tracksuits worn by the U. S. s winning Dream Team. The move delighted Knight, who baited Reebok further by contributing $25,000 to figure Tonya Harding’s defense fund after she was accused of orchestrating a vicious attack on Nancy Kerrigan, a Reebok athlete (Akthar, 2011). Nike continued to snap up the most popular athletes, including Andre Agassi, Pete Sampras, and later Tiger Woods, making Reebok seem lame by comp arison. In 2005, Adidas bought Reebok, but the new, combined company is still a distant second to the Nike juggernaut. Changes As the world is getting smaller now, many sport events are broadcasted globally. This leads to a more effective and efficient way of advertising internationally. Nike’s logos on athletes’ uniforms, signs, stadiums and television have attacked consumers at their subliminal conscious. The â€Å"swoosh† then comes to consumers’ minds quickly when they are in a process of shopping for athletic goods. The market size of Chinese plus other Asians is tremendous and these people are affected by these internationally advertisement by Nike. Athlete footwear market in Asia has not been saturated and fully developed yet, compared to those in America and Europe (Prathet, 2008). Most of Nike’s productions are based in Asian countries; therefore, there will be less cost in transportation, which creates an opportunity for a more flexible and competitive pricing method. The leading cause of Reebok’s recent tumbles stemmed from problems relating to poor marketing. Reebok’s shortcoming in the area of marketing is their key weakness. While other athletic shoe companies bombard the airwaves with commercials pushing their product lines, Reebok remains out of sight and out of mind. While Reebok’s competitors are known for familiar slogans like Nike’s â€Å"Just Do It,† Reebok’s, â€Å"Are You Feeling It,† does not equate to their brand name in the eyes of most consumers (Jenkins, 2009). Reebok, in terms of their products, is not entirely different from Nike. Reebok is involved in the design and marketing of both athletic and non-athletic footwear apparel, as well as various fitness projects (Jenkins, 2009). Reebok’s financial position has been gradually slipping for a number of years. This is evident in their declining stock price, which has fallen by over 80 percent in the last four years (Jenkins, 2009). The downfall of Reebok led to Adidas buying the company and adding its brand to their rising franchise. Nike ranked as the 25th top brand in 2011, according to Josh Sternberg, and the brand is working to bring the equity into the social sphere. On Facebook, it has 8. 96 million likes with 95,000 people talking about the company (Sternberg, 2012). Reebok has always been a step behind Nike in the sneaker wars, but it is trying to catch up using social media. On Facebook, Reebok has a little less than Nike’s 8. 6 million likes, clicking in at just a hair under 1 million, with 17,000 taking about Reebok (Sternberg, 2012). Fireman is keen on finding a place in minor sports overseas. The idea is to identify the sport that has an emotional hold on a particular country (Labich, 2010). Knight frets that the operating formula that has so enriched his enterprise could falter before long. Product development, manufacturing, and distribution seem to be rock solid, but the market power of sports celebrity is no longer a secret (Labich, 2010). Jocks are selling everything from pizzas to Cadillacs these days. Many advertisers are trotting out sports heroes and playing on the emotions of the athletic field.