Downfall of Reebok in India: A Marketing Case Study (2008-2014)

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A CRITICAL EVALUATION OF DOWNFALL
OF REEBOK BRAND IN INDIAN MARKET
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TABLE OF CONTENTS
1. INTRODUCTION..........................................................................................................................3
1.1 RESEARCH BACKGROUND....................................................................................................3
1.2 RESEARCH TITLE DESCRIPTION.............................................................................................4
1.3 RESEARCH QUESTIONS AND OBJECTIVES.............................................................................4
1.4 SCOPE...................................................................................................................................5
1.5 RESEARCH OUTLINE............................................................................................................. 5
2. LITERATURE REVIEW..................................................................................................................7
2.1 RISE OF REEBOK AS INTERNATIONAL SHOE BRAND.............................................................7
2.2 REEBOK AND INDIAN MARKET.............................................................................................8
2.3 DECLINE OF REEBOK............................................................................................................ 8
3. RESEARCH METHODOLOGY..................................................................................................... 10
3.1 RESEARCH PHILOSOPHY.....................................................................................................10
3.2 RESEARCH APPROACH....................................................................................................... 10
3.3 SAMPLING.......................................................................................................................... 10
3.4 DATA COLLECTION............................................................................................................. 10
3.5 DATA ANALYSIS..................................................................................................................11
4. ETHICAL CONSIDERATIONS......................................................................................................12
5. RESEARCH LIMITATIONS.......................................................................................................... 12
6. CONCLUSION........................................................................................................................... 12
7. REFERENCES.............................................................................................................................13
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1. INTRODUCTION
1.1 RESEARCH BACKGROUND
Reebok is a prominent brand in sportswear segment in the world market and comes 4 th after
Nike, Adidas and Puma. It has seen great heights in the world market and also in the Indian
market during the periods of 2008-2012. In that time Reebok had about 53% market shares in
Indian market which is a huge accomplishment considering the market status of India and the
competitors it left behind in the process (The Economics Times, 2012).
After the acquisition of reebok as a small competitive rival by Adidas in 2005 it started to leg the
market and became an underachieved in the wake of Adidas gaining its market on the
shoulders of Reebok. In India however, the situation was little different since Reebok enjoyed
its superior growth rates in the Indian market and gained huge market share which was much
higher than Adidas. According to the global head of Adidas Herbert Hainer, the commercial
irregularity in Reebok was the major cause of its downfall in Indian as well as the global market
(Business Standards, 2013). In that, Reebok lost almost $125 million of the market in India
because of those irregularities. The financial fraud done by the managing director and the CEO
of the company in 2012 was also among the major setbacks for the company.
the business strategies of shoe companies in that time were mainly focused in Sports shoe
segment and companies like Reebok has identified the right way to penetrate the market since
Indian people were using sports shoes for their common and every day needs not only for sport
purposes. The shoe market of India is expected to grow with the rates of 12.6% as of 2019-23
and at the time when Reebok was leading the industry, it was merely 5- 8% (Statista, 2019).
However the Indian shoe market has always been dominated by leather foot wares and still,
they have the largest requirements in the market. Sports shoes had comparatively small market
capture in India in the early days of Reebok's entre in the market and for almost 3 consecutive
years the growth in demand for sport shoes was nearly constant but what is not constant was
the growth rate of the company even in that small market of sports wears (The Economics
Times, 2012).
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This research study will be focused on the fall of reebok in footwear market of India, the
analysis and discussion will proceed strategically with the rise of reebok in footwear market of
the world, how it reached Indian market and gained major market share in sports shoe
segment.
1.2 RESEARCH TITLE DISCRIPTION
The research title for this project is “A CRITICAL EVALUATION OF DOWNFALL OF REEBOK
BRAND IN INDIAN MARKET”. Reebok has been one of the most famous sport shoe brands in
India and had a major market share in the timeline of 2008 to 2012. Then slowly it started to
decline in the market and with the rise of other popular brands such as Nike and Adidas, it went
under deep shadows and reached to the survival level in the market. The research study has
been designed to investigate under what circumstance did Reebok faced its decline.
1.3 RESEARCH QUESTIONS AND OBJECTIVES
The following questions will be answered in this research study:
 How Reebok established itself in the Indian market?
 How the downfall of Reebok started in the Indian market?
 What factors contributed to the fall of Reebok in the Indian market?
 What was the situation of the Indian market which supported its decline?
 What were the shortfalls in the business strategy of Reebok which contributed to its
downfall?
RESEARCH OBJECTIVES:
 The research objective will be to find out the reasons which cause the downfall of
Reebok in the Indian market.
 To understand the flaws in the business strategy of Reebok which caused its downfall.
 Critically evaluate the factors which encourage and discourage business in a foreign
market.
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1.4 SCOPE
The scope and importance of this research study can be understood in three stages and each
stage will provide a definite understanding of the situation and the business factors that were
responsible for that. This is to develop a strategic business insight among young entrepreneur
who is beginning their career in a similar industrial sector. The first stage will provide reasons
behind how Reebok dominated the market in its peak time and able to sustain and gain large
market share in the world sport shoe industry. This will in learning what business strategies and
factors were responsible for the progress of Reebok.
In the second stage it will discuss the establishment of Reebok in the Indian market and what
tactics did it use to gain market control in a foreign market with significant shares. This stage
will help people, student and companies who are planning for expansion in the Indian
subcontinent, in understanding how to penetrate Indian market and what elements should a
business strategy consider while approaching such foreign markets (Saha et al., 2010).
In the third stage, the discussion will move towards the downfall of the company in the Indian
market, however same effects have been noticing all over the world with Reebok but here the
focus will only be kept on the Indian market.
1.5 RESEARCH OUTLINE
The research will be conducted according to a pre-planned outline with a standard format. The
major elements of the structure will be,
INTRODUCTION: Here the introduction of the scenario and whole research study will be
conducted.
LITERATURE REVIEW: As a part of the secondary research method, an In-depth LR will be
conducted using credible data and resources duly cited in the referencing section.
RESEARCH METHODOLOGY: The research methodology will use a mixed research approach with
subsequent sampling, data collection and analysis within ethical considerations.
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RESULT: The result or outcomes from the study in the farm of facts, data and stats will be
discussed.
DISCUSSION AND CONCLUSION: A insightful conclusion will be drawn depicting the critically
evaluated the exact reasons for the downfall of Reebok in the Indian market.
REFERENCES: References in Harvard style.
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2. LITERATURE REVIEW
2.1 RISE OF REEBOK AS INTERNATIONAL SHOE BRAND
Reebok is a multinational UK based footwear and apparel brand currently subsidiary of Adidas,
a German brand. It was established in 1958 by JW Foster and sons in Bolton, England. Reebok
has been world's top most brands in footwear and while brands such as Nike and Puma were
struggling their ways to the top reebok was the most visible shoe brand in the world, featuring
itself in every sporting event.
The founder of Reebok JW Foster worked from his early childhood in making and selling shoes
specifically for sport purposes and designed some innovative and comfortable sports shoes
(Davis, 2014). He kept working ion new ideas and made a company with his sons in 1900 and
opened a small factory for shoe manufacturing called Olympic Works. The brand gained its
initial hype by the athletes who were extensively using its Running Pumps which were also
featured in the then famous book Golden Kicks. This changed the shoe market significantly and
featuring the Union Jack, the British flag as their logo, they became the part of every sporting
event in Britain. Harold Abrahams, an athlete who was the 1924 summer Olympic champion in
Paris played an important role in creating a distinct image of the shoe company in the market
(Merk, 2008).
In 1958, grandsons of JW Foster Joe and Jeff established a company with a new name called
Reebok, inspired by the winning of Joe Foster in a race in South Africa. The journey began,
when Paul Fireman, an American businessman noticed Reebok and the potential in it, as an
international brand. He is the one credited with the real success of Reebok in the international
market (Schmid et al., 2011).
In 1982 Reebok appeared with its Reebok freestyle shoes, which was the first ever sports shoe
designed for women and with that the scale of Reebok in the following year reached at the
level of $13million in the US alone. Reebok has debuted in the market with many remarkable
technologies which were appreciated by athletes all over the world, like Reebok Pump. Reebok
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signed its ambitious deal with Wimbledon and 2000 summer Olympics and in the following
month that year, it signed a 10 years licencing agreement with NFL (Malhan et al., 2010). In the
following years after 2000, Reebok appeared as featuring brand in many sports apparel and
shoes in the topmost sports events of the world including Indian where it sponsored famous IPL
matches of Cricket. In 2005 it saw a major shift when the German sport leader which was also
among the top sport bands in the world, Adidas acquired major shares of Reebok in $3.1 billion
and from there it started to get unstable and a reduction in its popularity was observed (Schmid
et al., 2011).
2.2 REEBOK AND INDIAN MARKET
In the Indian market, Reebok entered as a kit sponsor for budding football clubs like Mohun
Bagan. In the process to gain subsequent shares in Indian market Reebok, they moved to
sponsor kits for major tournaments and sports events in the country like IPL and major IPL
teams. These sponsorships helped the company gain initial hype in the market and people
started to recognize it a premium brand in the market. Since Adidas has owned Reebok as its
subsidiary in 2005, Reebok has gained much less attention in the market than its competitors
like Nike and Puma. It is the time of 2011 to 2014 where it saw its major decline in the market
(The Economics Times, 2012). Reebok in India has a great many tie-ups with sport persona and
some of the world's top athlete like the then captain of Indian cricket team Mahendra Singh
Dhoni. Reebok had a major market share in Indian market the beginning of the year 2008 and
was a tough competitor of world top most sports brands which were still struggling to make
stand in Indian market like Nike (Business Standards, 2013). The reason behind that Reebok
realized the market behaviour of the country and how the customer treats a pricey shoe tag on
a brand and their using values. Reebok launched many of its sport shoe variants in the country
which were fairly under the range of middle-class people of the country which helped it gain
the major market share since the middle class in the Indian market has the highest buying
power (Chaturvedi, 2015).
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2.3 DECLINE OF REEBOK
At the beginning of the year 2012, Reebok India suffered a heavy setback in the market and in
the event, it filed a criminal complaint against its former employees who caused a financial
fraud of US$233 million. This event severely impacted the brand image the activities done in
that scam was devastating to the business structure of Reebok India. In the year 2013 Reebok
lost 26% of its market share in a steep span of time and downfall of the brand in the Indian
market begun (The Economics Times, 2012). Adidas attributed largely in the fall of the sales in
Reebok shoes in the Indian market. The financial fraud done by managing director and CEO of
the Reebok India Subinder Singh Prem and Vishnu Bhagat created commercial disruption within
the company and company saw a sudden broke in the market. There was also structural
irregularity appeared between Adidas and Reebok in the event of the merger (Business
Standards, 2013).
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3. RESEARCH METHODOLOGY
3.1 RESEARCH PHILISOPHY
Research philosophy of this study will utilise the standard philosophical approach which will
govern how the information and data gathered for the research analysis will be used. The
philosophical approach will be based on the balance of epistemology and doxology. From the
four dimensions of research philosophy in a standard framework, which are positivism,
pragmatism, realism and interpretivism, this study will use a mixed philosophy of interpretivism
and positivism.
3.2 RESEARCH APPROACH
Research approach for the study will be mixed with qualitative and quantitative. In that, the
study will conduct an in-depth literature review focusing on all the critical factors which
contributed in the rise and fall of Reebok in Indian as well as world market and to gain the
quantitative insights a questionnaire survey will be conducted which will ask direct end
questions regarding what people and distributors of the country thinks are the reason behind
this downfall of Reebok.
3.3 SAMPLING
The sampling will be done from relevant and credible sources, for literature review along with
company’s financial reports and quarterly reports, research studies done on the business
analysis of Reebok will also be utilised to gain different perspectives regarding the topic. In the
qualitative research method, the sampling will be done from people who have been related to
the sports shoe industry as a customer, sports person, distributer, retailers and brand
enthusiasts etc. The sampling process will be highly focused and relevant to the study scenario.
3.4 DATA COLLECTION
Data in this research study will be collected in two modes, qualitative, in which facts and figure
will be accumulated from studies of scholars in relevant field and company’s financial records in
its years of downfall. The quantitative data collection will be conducted using questionnaires
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method which will be sent to 80 targeted people who will be from the fields as mentioned
above and from that amount only 40-50 relevant and highly scrutinized data will be considered
for analysis.
3.5 DATA ANALYSIS
Data analysis will be done using standard statistical tools and techniques which will include pie
charts and graphs to show the data relevant to the questions. The analysis will show the
percentage of wise viewpoints of people regarding the reasons and factors which caused the
fall of Reebok in the market.
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4. ETHICAL CONSIDERATIONS
The ethical aspects of this research study will be maintained at the highest of the standards
considering and citing all information which has been taken from somewhere else or from the
work done by others. All the information and data collected will be from credible and trusted
sources and highly relevant to the research topic.
5. RESEARCH LIMITATIONS
The research study will see a limitation in terms of analysed data and information which may
not be available for the study to provide a different and may be criticised perspective to the
views of the researcher. Also since the research study is focused on Indian market only, it may
not be able to provide the world status of the brand and the external factors which contributed
to its entry in the Indian market in the first place.
6. CONCLUSION
This topic is focused in its sense which is a positive aspect in a research study since it's able to
depict exactly where to look and what to look for. Reebok made an impactful entry in the
Indian market and its marketing strategies made it one of the top sports shoe brands in the
country to the level that in the year 2011, Reebok has more than half of the market shares in
the segment where other competitors were still struggling their way through the market. The
research study will provide knowledge under what circumstance Reebok did take this downfall
and what were the countermeasures it took afterwards to gain its position back.
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