![Reebok Launches EasyTone<br />Greatest Success in Years<br />Marketing Plan<br />March 9, 2010<br />Alexis Kushner<br />Eileen McInerney<br />Alecia Muth<br />Table of Contents<br />Executive Summary3<br />Situational Analysis4 <br />SWOT Analysis12 <br />Marketing Strategy13 <br />Performance Plan19 <br />Conclusion21 <br />Works Cited22 <br />Appendices24 <br />Part One: Executive Summary<br />In the highly competitive global sporting shoes and apparel market, companies must identify regional consumer behavior and the practicality of their marketing strategies for attracting these customers. Reebok International, Ltd., a large athletic shoe and apparel manufacturer, is no exception to this trend. In a strong effort to attract new customers, especially those of Generation X CITATION Tar09 1033 (Parker-Pope), Reebok launched EasyTone, a women’s walking shoe that claims to tone gluteus and leg muscles more effectively than your average walking shoe CITATION Adi09 1033 (Adidas Group). EasyTone’s sexy, provocative, and very cutting edge marketing campaign seeks to grab the attention of the Generation X female demographic within the United States and the international community CITATION Joh07 1033 (Zerio). This target demographic is the first generation to grow up completely surrounded by the internet and communication technologies, changing the dynamic of the workplace. Efficiency is a necessity for this generation and Reebok has begun to capitalize on this requirement through EasyTone. EasyTone offers busy, multi-tasking individuals an efficient, multi-tasking shoe that offers promises of sculpted lower bodies. <br />The athletic shoe industry in the US is a very mature market comprised of fierce competitors and a variety of segments including walking, running, basketball, tennis and cross training. Reebok identified a niche product opportunity by specifically targeting women and walking. This niche category of athletic shoes is called the “fit shoe” market and includes products from Skechers, MBT, Fit Flops, RYN Sports, Earth Footwear, and Xsensibles. In order to compete in this growing market, Reebok launched a savvy and aggressive marketing plan.Part Two: Situational Analysis<br />Current Performance<br />The footwear industry achieved $25 billion in retail revenues in 2009 (First Research i). Within the footwear industry, athletic shoes hold 30% market share with 2009 global sales of $88.26 billion (First Research 29). Sales are projected to have fallen 2.2% in 2009, demonstrating that the athletic shoe market is not immune to the recession (First Research 27). Athletic shoes are shoes that are designed for sporting activities, such as running, basketball, soccer, football, and walking. A relatively new entrant into the athletic shoe industry is the “fit shoe,” which combines the usefulness of a walking shoe with the idea that creating a shoe that is naturally off-balance will engage more muscles while walking. Because the fit shoe market is relatively new, we will assume that it represents a 0.5% market share of the athletic shoe category, which translates to approximately 18 million units sold and $1.78 million in retail sales in 2009 (First Research 29). <br />Reebok was purchased by Adidas Group in 2006 and in 2008 constituted 20% of Adidas’s total sales at $2.94 billion (Adidas Group 45). In the same year, Reebok held a 3.6% market share in the US of the athletics shoe industry. By 2009, Reebok’s market share had fallen to 1.9% (Abelson). Although the athletic shoe industry as a whole saw a fall in sales through the recession of 2008-2009, sales are expected to return to positive growth at 7.1% in the 2009-2012 period (First Research 36). Outside of the United States, American athletic shoe brands remain very popular. International markets therefore represent an opportunity for growth beyond the US market, which is very mature by global standards (First Research 36). <br />In July, 2009, Reebok launched the EasyTone, its first entrant into the fit shoe market. Priced in the $100-$110 range, this new shoe’s “technology involves two balance pods under the heel and forefront of the shoes that create natural instability with every step, forcing the muscles to adapt and develop tone” (Adidas Group 53). Marketed as a walking shoe, EasyTone allows women to “take the gym with them” (Adidas Group 138). Seen as an innovative product in the athletic shoe industry, Reebok’s EasyTone has entered the market as a competitor to existing fit shoes: Skechers’ Shape Ups, Fit Flops, the MBT, and other small label brands. Since its launch, EasyTone has proved to be Reebok’s most successful new product in five years (Parker-Pope). EasyTone’s primary non-internet retail channels saw an overwhelming purchasing response of the shoe, which remains on backorder for many retailers today. Many Nordstrom stores have not had any EasyTone shoes in-stock since late 2009, which the store attributes to the design aesthetics of EasyTone over its competitors.<br />Market Demand<br />Since EasyTone launched in 2009, Reebok is now expected to hold 6% of the fit shoe market. Given this market share, EasyTone reached retail sales of 1.08 million units in 2009, valued at $106 million. In 2009, EasyTone represented 4.5% of Reebok global brand sales. Additionally, 2% of Reebok’s entire marketing budget was spent on EasyTone in 2009, totaling $17 million. Based on this analysis, EasyTone represented $3 million in net marketing contribution in 2009. Please see figure 1 below for further marketing performance information. <br />FIGURE 1 – Marketing Performance<br />EasyTone Performance (millions)2009Market Demand (units) 1.08 Market Demand (retail sales)$106.59Sales Revenues$106 Percent Margin37%Gross Profit$39 Marketing, Sales & Admin$17 Net Marketing Contribution$3 Marketing ROS21%Marketing ROI133%<br />The fit shoe market is expected to continue to grow as Reebok and its competitors raise brand awareness and new shoes from New Balance and Avia enter the market. Not only are existing brands expected to grow by volume, but the entire fit shoe market is expected to grow 35% for the period of 2009-2012. EasyTone is currently only available for female customers but is expected to expand into men’s sizes and styles in the near future. EasyTone is expected to grow 49% from 2009-2012. With shoe prices remaining constant, Reebok could anticipate that its current EasyTone sales will double from $106 million in 2009 to $207 million in 2012 (Appendix 4).<br />Competition and Industry Attractiveness<br />The Fit Shoe is a new segment of the athletic shoe industry that evolved from a walking shoe. Given that women’s lifestyles have become increasingly busy, Reebok EasyTone and competitors created a shoe that provides the benefits of going to the gym in a specially designed walking shoe. Currently, a handful of companies have designed and are selling fit shoes. Below is the analysis and position of highlighted competitors (Appendix 1).<br />,[object Object]](https://image.slidesharecdn.com/easytonemarketingplan-100607135912-phpapp02/85/easy-tone-marketing-plan-1-320.jpg)
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Reebok EasyTone Marketing Success
- 2. MBT: The price of the MBT shoe is much higher than Reebok EasyTone and tops other competitors at $270 per pair (New York Times). These shoes are designed for both men and women and MBT refers to their product as the “anti-shoe”. These shoes are bulky, weighing around three pounds (New York Times), and have a large rocking sole to create an unstable walking experience. These shoes improve posture, decrease joint stress and increases body tone. There are multiple studies proving this technology (MBT).
- 3. Fit Flops: These flip flops are priced around $55 per pair (Macys). These shoes are designed for men, women and girls. These shoes have a flat sole and utilize a gradient change in sole density to improve posture, tone muscles, reduce joint stress and reduce foot pressure. These sole have a patent pending and are backed by research (Fitflop Footwear)
- 5. Barriers to Exit-8: Weak competitors can easily leave the market by selling off shoes at a discount or at an outlet store. Especially if a company is outsourcing production, then the only major asset for liquidation is inventory.
- 6. Customer Buying Power-6: Currently customers do not have many choices when it comes to purchasing fit shoes. There are around ten competitors and many do not have strong brand recognition. Reebok beats these competitors with brand, style and price. However, a major issue is that competitors can easily enter this market and put EasyTone in competition with a very similar shoe. For instance, New Balance is designing a shoe and with their brand and design could give customers a new and attractive option and thereby increasing buyer power.
- 7. Supplier Selling Power-9: Suppliers are plentiful and many cheaper outsourcing options exist. Especially for larger companies, they can easily find new suppliers and negotiate attractive terms.
- 8. Product Substitutes-7: The two main substitutes for the EasyTone are athletic shoes and walking shoes. These shoes do not offer the added benefit of muscle fatigue from just wearing them. Instead, a woman has to wear the shoes and exercise in them in order to get added benefits. Because of this, substitution is weak because the products are inferior.