Adidas-Reebok Merger
photo by Kivus.
OVERVIEW
Footwear is no longer viewed as a commodity that just offers protection for feet. What was hitherto considered a Want’ is today a basic Need’. Today, the footwear trade is a vast and dynamic operation involving huge economies of scale. The low-cost countries are gaining foothold in international markets leading developed countries to import and outsource so as to meet their requirements. The athletic shoe segment is highly competitive in nature with the major players such as Nike, Adidas, Reebok and New Balance striving to retain their market share and the smaller players such as Puma trying to gain market share. Important features of this competitive segment are heavy advertising, celebrity endorsements, brand awareness programs etc. Until the 1970s, Adidas, the German sports company, was the market leader in the US due to its product innovation. In the 1970s and 1980s, Nike & Reebok grabbed their share by redefining the product offering and aggressive marketing. Adidas failed to retaliate. Their market was undergoing several crises due to changes in leadership. In the 1990s, though Adidas was revived by a turn-around specialist, it was not a challenge to Nike. Adidas expected its takeover of Reebok to give increased clout with dealers’ leverage of endorsement deals and sponsorships and access to wider consumer base. The Adidas-Reebok merger vaulted the combined entity into the second place in the American athletics shoe market behind Nike. The takeover of Reebok doubled the German group’s North America sales. The Adidas Group’s purchase of Reebok North America showed an obvious attitude to ensuring that the Corporation’s overall objectives will be achieved. With the acquisition, a focus on increasing the band’s apparel offerings and sharpening the brand’s image has been set. This will allow for an expansion of global position and gaining a broader presence in key markets. To emphasize this fact, Adidas has now replaced Reebok as the official apparel supplier to the American National Basketball Association for the next 10 years. With the two company’s combined strengths, an aim to widen the organisation’s overall profile and global dominance is now more than ever possible
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