Perception Of Product Attribute Nike Reebok Addidas 6u4d3

Perception of product attribute in brand switching behavior LALA LAJPAT RAI COLLEGE OF COMMERCE AND ECONOMICS MAHALAXMI MUMBAI 400034 A PROJECT ON PERCEPTION OF PRODUCT ATTRIBUTE IN BRAND SWITICHING BEHAVIOUR: REEBOK, NIKE AND ADIDAS S.Y.B.M.S-A SEMESTER-4 SUBMITTED BY PROJECT GUIDE: PROF.VINAY PANDIT YEAR OF SUBMISSION 2010-2011

CERTIFICATE

THIS IS TO CERTIFY THAT SYNDICATE NO. CURRENTLY STUDYING IN S.Y.B.M.S-A (4TH SEMESTER) HAS COMPLETED THIS PROJECT ON PERCEPTION OF PRODUCT ATTRIBURE IN BRAND SWITCHING BEHAVIOUR: REEBOK, NIKE & ADIDAS IN THE ACADEMIC YEAR OF 2010-2011 THIS PROJECT SUBMITTED IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

_____________________________ SIGNATURE OF THE PROJECT GUIDE

1

Perception of product attribute in brand switching behavior (Prof. Vinay Pandit)

2

Perception of product attribute in brand switching behavior

DECLARATION We, the students of Lala Lajpat Rai College of Commerce & Economics currently studying in S.Y.B.M.S-A hereby declare that we have completed the project on ‘perception of product attribute in brand switching behavior’: Reebok, Nike and Adidas The information submitted in this hardcopy to Prof. Vinay Pandit, for our subject- Research Methodology, is true and original to the best of our knowledge

Roll No

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Name

Signature

Perception of product attribute in brand switching behavior ACKNOWLEDGEMENT We would sincerely like to thank all those people who have been giving us any kind of assistance in the making of this project report. We express our gratitude to Prof. Vinay Pandit who has through his vast experience and knowledge has given us the moral and guided us both ably and successfully towards the completion of the project. We hereby make most of the opportunity by expressing our sincerest thanks to all the faculties whose teachings gave us conceptual understanding and clarity of comprehension which ultimately made my job easier. Their continuous has given us the strength and confidence to complete the project without any difficulty. Last but not the least we would like to acknowledge our gratitude to the respondents without whom this survey would have been incomplete. We are also thankful to authority of Nike, Reebok and Adidas for providing us the reliable information

By: KARAN ARORA

9100104

KINJAL GAJERA

9100109

JAGPREET BATRA 9100111 POOJA CHHEDA

9100128

GANDHALI HOMKAR 9100141 PRIYAM JAIN

TABLE OF CONTENT 4

9100148

Perception of product attribute in brand switching behavior CHAPTER 1: INTRODUCTION 1.1: Industry Profile 1.2: Company Profile 1.3: Product Profile CHAPTER 2: COMPANY ANALYSIS 2.1: History of Nike, Adidas, Reebok 2.2: The Strategic Plan a) Statement of Mission b) Statement of Vision 2.3: SWOT Analysis 2.4: Top Competitor Analysis 2.5: Advertising and Promotion Strategy CHAPTER 3: MAIN STUDY 3.1 Statement of a Problem 3.2 Objective of the study 3.3 Statement of Hypothesis 3.4 Scope of the Study 3.5 Limitation of the Study CHAPTER 4: REVIEW OF LITERATURE

CHAPTER 5: RESEARCH METHODOLOGY 5

Perception of product attribute in brand switching behavior 5.1: Research Design 5.2: Research Instrument 5.3: Sources of Data 5.4 Sample Size 5.5: Sampling Method CHAPTER 6: RESEARCH AND DATA ANALYSIS 6.1: Data Interpretation 6.2: Graphs CHAPTER 7: CONCLUSIONS 7.1: Findings 7.2: Conclusions CHAPTER 8: APPENDIX 8.1: Annexure 8.2: Bibliography

CHAPTER 1 : INTRODUCTION 1.1 INDUSTRY PROFILE NIKE

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Perception of product attribute in brand switching behavior In 1998, Americans spent approximately $38 billion to purchase more than 1.1 billion pairs of shoes. The wholesale value of athletic shoes for the US market totaled $8.7 billion in 1998 down 8.5% from the year before. According to the Sporting Goods Manufacturers Association, athletic footwear s for almost 35% of all footwear purchases. In general, consumers are spending less worldwide for athletic footwear. The current domestic industry focus is on casual and comfortable shoes. Although athletic footwear sales appear to be recovering, demand is still leaning toward the "brown shoe" casual footwear with a comfortable and rugged design. This switch is due to the increasing number of workplaces adopting casual dress codes. Industry Profitability The athletic footwear industry is a challenging and saturated market. Intense competition, fashion trends, and price conscious consumers have slowed growth in this industry. Manufacturers are combating sluggish sales with radical new styles, along with offering more styles at lower price points. Companies are looking for new ways to boost sales by capitalizing on direct Internet sales to consumers. Many companies are also increasing profitability by transferring production to cheaper offshore facilities. This segment has reached a point of maturity in the domestic market and can look forward to only modest sales growth for the long term. However, sales are improving slightly, especially in the areas of running shoes, cross-trainers and basketball shoes. Therefore, companies with strong brands will increasingly turn to international markets for growth. Industry Seasonality Overall, sales in the athletic footwear industry remain stable throughout the year. The global variance in our market balances the seasonal fluctuations. Typical trends in seasonality appear for spring apparel, the back-to-school season, and the Christmas holiday season. Industry Cyclicality In fiscal year 1999, the economy was relatively favorable for footwear manufacturers. The footwear industry and its profitability are closely tied to economic cycles. Modest inflation, low unemployment, and a booming stock market will all contribute to healthy consumer spending. The theory behind the slowdown in sales is that growth in athletic footwear and apparel is cyclically sensitive to the Olympics. Historically, years of the Olympic Games have demonstrated surges in growth followed by difficult sales periods. The outlook for increased 7

Perception of product attribute in brand switching behavior sales trends is optimistic due to the Olympic Games slated for this year. Nike can also look forward to a boost in demand from the World Cup events. Industry Entry and Exit Barriers

ADIDAS Adidas AG Industry profile is the essential source for top-level company data and information. The report examines the company’s key business structure and operations, history and products, and provides summary analysis of its key revenue lines and strategy. Adidas AG (Adidas) produces sportswear and sports equipment. The group offers its products primarily through three brands, including Adidas, Taylor Made-Adidas Golf, and Reebok. The group primarily operates in Europe, the Americas and Asia. It is headquartered in Herzogenaurach, and employed about 31,344 people as on 31 December 2007. The group recorded revenues of E10, 299 million during the fiscal year ended December 2007, an increase of 2.1% over 2006. The operating profit of the group was E949 million during fiscal year 2007, an increase of 7.7% over 2006. The net profit was E555 million in fiscal year 2007, an increase of 11.9% over 2006. E1.37074 = $1 Reasons to Purchase - sales activities by understanding your customers’ businesses better - Qualify prospective partners and suppliers - Keep fully up to date on your competitors’ business structure, strategy and prospects - Obtain the most up to date company information available Entry Barriers The athletic footwear industry is a very competitive and mature market. The leaders of this industry are very well established. Leaders like Nike and Reebok have made the industry what it is today. Consequently, long-time competitors like Saucony and K-Swiss have been struggling 8

Perception of product attribute in brand switching behavior for years just to keep their brands alive. This cutthroat environment has hindered the entry of new competitors. Economies of scale also contribute to the lack of newcomers into this market. In order to have an edge over the leaders, companies must be able to compete at all levels such as reasonable pricing, efficient production, and high product quality. These things are difficult to achieve without the resources of an established manufacturer. Another key barrier to entry is the access of traditional distribution channels. When combing the shelves at stores like Sports Authority and Footlocker, it is evident that the leaders dominate the shelves. Lesser-known brands are viewed by retailers as being too risky to replace an established brand name like Nike or Reebok on the shelf. These walls seem to be breaking down with the help of the Internet. The costs of overhead that come along with traditional brick and mortar retail distributors are being significantly diminished. New entrants are now able to slide into markets without these high startup costs, making it more profitable to begin production. Exit Barriers When a company decides to exit from this industry it must be aware of things such as indebtedness and its ability to meet those obligations. A company must also be cognizant of lawsuits filed by its stakeholders and claims made on any residual assets

REEBOK •

Athletic footwear’s manufactures captured nearly one third of the total footwear market in the early 1970’s

•

Over a span of more than 25years, American consumers spent $300 billion on 7.5 billion pairs on athletic shoes

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Reebok International LTD. And Adidas became $3.5 billion companies, while Nike Inc became the first ever $9.5 billion company

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By 1996 the number of establishments had dropped to about 52,with 12 factories since closing since 1995

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Chins imports increase by 6% to 1.26 billion pairs shoes 9

Perception of product attribute in brand switching behavior •

Brazil share increased 23% to 83.5 million pairs

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Vietnams share jumped 91.9 & to 23.5 million pairs

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The U.S companies continue to be dominated by imports from companies of low cost labors

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From 1997-2001, the value of the industry shipments decline from 219.6 million to $106.5 million

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U.S shoe manufacturing plants declined by 775 between 1967 and 2001

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Perception of product attribute in brand switching behavior 1.2 COMPANY PROFILE NIKE Headquarters: Portland, Oregon Area Industry:

Sporting Goods

Type: Public Company Status: Operating Company Size 30,200 employees 2007 Revenue $16,326 mil (9%) Founded:

1964

Website:

http://www.nike.com/

NIKE, Inc., a consumer products company, engages in the design, development, and marketing of footwear, apparel, equipment, and accessory products worldwide. It designs athletic, casual, and leisure footwear for men, women, and children. The company’s footwear products include running, training, basketball, soccer, sport-inspired urban shoes, and children’s shoes. It also markets shoes designed for tennis, golf, baseball, football, lacrosse, walking, outdoor activities, skateboarding, bicycling, volleyball, wrestling, cheerleading, aquatic activities, and other athletic and recreational uses. The company sells sports apparel and accessories, athletic bags, and accessory items, as well as offers apparel for licensed college and professional team and league logos. It also sells a line of performance equipment under the NIKE brand name, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, and other equipment designed for sports activities. In addition, NIKE provides licenses to produce and sell NIKE brand swimwear, cycling apparel, children’s clothing, school supplies, electronic devices, eyewear, golf accessories, and belts. Further, it manufactures and distributes ice skates, skate blades, protective gear, hockey sticks, licensed and team apparel, and accessories. The company sells its products to retail s, through its owned retail stores, and through a mix of independent distributors and licensees, as well as through Internet Web site, nikestore.com. As of May 31, 2007, it operated 254 retail stores in the United States and 232 retail stores internationally. The company was founded in 1964 and is headquartered in Beaverton, Oregon. By 1982 the company's line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet 11

Perception of product attribute in brand switching behavior sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike's earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983, when the company posted its first ever quarterly drop in earnings as the running boom peaked and went into a decline, Nike's leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries. .In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing "Just Do It" campaign, and the "Bo Knows" television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon. in 1996, Nike branched out into sports equipment in the mid-1990s. Nike enjoyed record results in the fiscal year ending in May 2004, posting profits of $945.6 million on revenues of $12.25 billion. Profits surged past the $1 billion mark the next year, hitting $1.21 billion, while revenues jumped to a new high of $13.74 billion. Late in 2004 Knight stepped aside from his executive position, while remaining chairman, to bring William D. Perez onboard as president and CEO. Perez, a marathon runner and avid golfer, was hired a way from S.C. Johnson & Son, Inc., the family-controlled consumer products company, where he spent 34 years and rose to the top as president and CEO. His vast international experience was expected to help Nike as it continued its expansion abroad, and Perez was known as an excellent marketer with a stellar reputation of acquiring and managing well-known brands. Within months of Perez's appointment, Nike's need for such an experienced hand appeared to grow when Adidas-Salomon AG agreed to buy Reebok International Ltd. for approximately $3. 8billion. The deal, announced in August 2005, promised to combine two of Nike's biggest rivals, giving the newly enlarged company about 3 0 percent of the worldwide athletic footwear market, compared to Nike's 37 percent. A revitalized Nike nevertheless seemed to have the strategies in place to fend off this new threat and stay on top of the global sneaker heap.

ADIDAS 12


In 1997, Adidas became Adidas-Salomon with its US$1.4 billion purchase of Salomon, a French manufacturer of skis and other sporting goods. The deal put Adidas one step closer to competitor and world market leader Nike, and one step ahead of Reebok. Salomon, aside from its winter sport equipment, also owns golf club brand Taylor Made and cycle brand Mavic. The merger makes Adidas/Salomon the second largest sport marketers in the world, and number one in Europe. Salomon is currently very strong in North America and Japan, Adidas has the largest market share in Europe. Position and perspectives—Solomon Salomon Worldwide strength and philosophy lies in its reputation of deg true innovative products, with both technical advantages and esthetics, resulting in a true partnership with sportoriented men and women. This strategy is ed by strong investments in R&D and marketing (respectively 5% and 20% of sales). The company has proven its ability to quickly attain strong market positions and profitability. Its strategy is to become a leader in the "freedom actions sports": Facing the decline of its traditional markets (winter ski and fixations), Salomon — still world leader in winter sports — has diversified its activities in the fast growing snowboard and in-line skates markets. Taylor Made is number two in metal woods worldwide — driven by the success of Burner Bubble irons, it is the golf brand with the strongest growth on the American market — and expects to confirm its position as an innovative brand. There are now over 1000 Adidas stores around the world and, in the run up to the Beijing Olympics the company opened an average of two stores a month in China. By 2010, the aim is to generate at least 30% of the group’s revenues through controlled space.

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Perception of product attribute in brand switching behavior As well as sponsoring the Beijing Olympics Adidas is also ing the 2012 Olympic Games in London in a deal worth around $200 million: in this sector such brand awareness is critical. Going forward, Adidas is also embracing a number of niche sports and lifestyle activities fuelled by the current trends in individualism, health and wellbeing with, for example, a new woman's Yoga range. As it aims to take over world number 1 position in the sector from Nike, Adidas will be innovating incessantly both within existing sports and outside the core. Adi was credited with numerous inventions during the late 1940s and 1 950s, including the first shoes designed for ice and the first multi- studded shoes. Adidas is also credited with pioneering the now common place practice among athletic shoe manufacturers of selling sports bags and athletic clothing bearing their brand name. Among Aid’s most notable early contributions was his improvement of the soccer shoe. In 2005, Adidas returned to its history of footwear innovation, launching the world's first "smart" shoe, a running shoe with a microprocessor built into its heel. The computerized shoe utilized a sensor to react to surface conditions, measuring shock impact and making minute adjustments to the heel cushioning. The company hoped the new shoe, which could be adapted to the company's high-performance basketball and soccer shoes, and even to its entire range, would become the next revolution in sports technology. Following the Adidas-Reebok merger, many observers expected Nike to strike back by acquiring longtime Adidas arch-rival Puma.

REEBOK Headquarters: 100 Technology Center Drive Stoughton, MA 02072 United States of America Website: webwww.reebok.com 14

Perception of product attribute in brand switching behavior Company Size: 6100 employees Stock: RBK analytics Founded: 1890 Reebok International feels comfortable stepping out onto any surface. The company, a subsidiary of 's Adidas AG, has long been at home in sporting arenas as a top US maker of athletic shoes. In addition to its namesake sportswear and accessories, Reebok caters to hockey aficionados through its Canadian Reebok-CCM Hockey division, and its Sports Licensed Division. It operates more than 220 retail stores. Reebok, which has been credited with igniting the aerobics craze of the early 1980s, has fallen out of step since then. Under Adidas, the company is trying to regain traction in the athletic shoe and apparel market. Company Description Reebok International feels comfortable stepping out onto any surface. The company, a subsidiary of 's Adidas AG, has long been at home in sporting arenas as a top US maker of athletic shoes. In addition to its namesake sportswear and accessories, Reebok caters to hockey aficionados through its Canadian Reebok-CCM Hockey division, and its Sports Licensed Division. It operates more than 220 retail stores. Reebok, which has been credited with igniting the aerobics craze of the early 1980s, has fallen out of step since then. Under Adidas, the company is trying to regain traction in the athletic shoe and apparel market. Competitive Landscape Because plastic products are widely used in industry and as consumer products, demand depends on the health of the US economy. The profitability of individual companies depends on product mix and production efficiency. Large companies have economies of scale in buying raw materials and in manufacturing commodity products such as bottles and plastic film. Small companies can compete effectively by specializing. 1.3

PRODUCT PROFILE

NIKE 15

Perception of product attribute in brand switching behavior Our primary product focus is athletic footwear designed for specific-sport and/or leisure use(s). We also sell athletic apparel carrying the same trademarks and brand names as many of our footwear lines. Among our newer product offerings, we sell a line of performance equipment under the Nike brand name that includes sport balls, timepieces, eyewear, skates, bats, and other equipment designed for sports activities. In addition, we utilize the following wholly-owned subsidiaries to sell additional sports-related merchandise and raw materials: Cole Haan Holdings Inc., Nike Team Sports, Inc., Nike IHM, Inc., and Bauer Nike Hockey Inc. Our most popular product categories include the following: • Running • Basketball • Cross-Training • Outdoor Activities • Tennis • Golf • Soccer • Baseball • Football • Bicycling • Volleyball • Wrestling • Cheerleading • Aquatic Activities • Auto Racing ADIDAS Adidas-Salomon produces under the following brand names: 16

Perception of product attribute in brand switching behavior · Adidas: footwear, apparel and hardware · Erima: Apparel · Bonfire: Apparel Newly acquired brands: · Salomon: skis, snowboards, bindings, ski boots, cross country ski equipment, in-line skates · Taylor Made, golf clubs and accessories · Mavic, bike wheels and rims Eye

Adventure Shoes

Basketball shoes

Cycling shoes

Backlash Lo

Downtown

Campiolo

Chili

Central

Backlash Mid

EQT Elevation Lo

DirtSurfer

Cookie

EQT precision

EQT Arooga Lo

EQT Elevation Mid

Garda

Cop

Response FYW

EQT Arooga Mid

Squire

Ghissalo

Lizard

Spitfire Lo

EQT Badlander

Turnaround

Off Ramp

Robin

The Open

Violation

Vuelta

Sprocket

The Wells

Twini

Top rank Mid

Track

and

Field

Shoes Adistar Accelerator Adistar Hammer/Discuss Adistar High jump Adistar Javelin Adistar LD 17

protection

Tennis shoes

Soccer shoes

Running Shoes

Training shoes

Copa Mundial

Alfrescon Trail

4 by 1

EQT Real Liga EQT Velez Liga Predator Cup Rapier

Traxion

Equipment Salvation Equipment Trident Lexicon Extra

TraxionOzweego

Bradenton Lo Dorsey Equipment Extreme Fast

The

World

Cup

Soccer Ball The

World

Soccer Ball

Cup

Perception of product attribute in brand switching behavior junior Adistar Long jump

World cup

Response

Malice

Adistar MD

Response Trail

Roll Out

Adistar Race Walk

Supernova

Speed Trainer

Adistar Shot Put Adistar Sprint Adistar Steeple Adistar Triple jump Titan LD

REEBOK EASY TONE WALKING SNEAKERS: A PRODUCT REVIEW Easy Tone Sneakers Reebok has been inundating the television, print ads and the Internet with their newest product, Easy Tone walking shoes. Even Oprah has jumped on the bandwagon. Reebok has always brought great products to their customers and now they have made getting fit a little easier for the busy modern lifestyle. The target demographic area women who are on their feet for the better part of the day. The word is that wearing these shoes is like walking in sand. Living on the East Coast of Florida, I know what kind of workout that can be. Coupled with the fact that I have been a Reebok customer for over 20 years, I would buy these shoes without a doubt New Shoes If you are going to buy new shoes this year, I recommend Reebok's EasyTone shoes. They have a patented destabilizing element in the soles of the shoes that requires the wearer to walk in a 18

Perception of product attribute in brand switching behavior certain way, in order to stay balanced. The shoes work your gluteous maximus, hamstring, and calf muscles to tone your lower body as you walk around doing ordinary tasks. The more you are on your feet, the better they work. You can feel a difference after just two weeks. The company claims that the shoes can improve muscle tone up to 28%. Customers claim that it is like walking on soft pillows. What more can you ask from a shoe? What Style do you want? The shoes come in a variety of styles and colors and you can even customize your own for an additional charge. They have the standard black, white, and the ever popular two-toned shoe. They also have a shoe with extra designed for the jogger in the family. The "Reeinspire" walking shoe comes in white, silver, purple, and citron, while the stylish Easy Tone training shoe comes in champagne or white. Whatever your preferences are, Reebok has a shoe for you.

CHAPTER 2: COMPANY ANALYSIS 2.1 HISTORY OF THE COMPANIES HISTORY OF NIKE

Bill Bower man and Phil Knight founded Nike Inc. as Blue Ribbon Sports in 1962. The partners began their relationship at the University of Oregon where Bower man was Knight’s track and field coach. While attending Stanford University, Knight wrote a paper about breaking the German dominance of the U.S. athletic shoe industry with low-priced Japanese shoes. In an attempt to realize his theory, Knight visited Japan and engineered an agreement with the

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Perception of product attribute in brand switching behavior Onitsuka Tiger Company, a manufacturer of quality athletic shoes, to be their sole distributor in the United States. In 1962, Knight received the first shipment of 200 pairs of Tiger shoes to his parent’s garage in Oregon. The shoes were bought by Blue Ribbon Sports (BRS), the name of the partnership between Knight and Bower man that they formed with only $1,000 in capital. Knight peddled Tiger’s shoes at local track meets grossing $8,000 of sales in their first year. In 1966, Bowerman, who had previously designed shoes for his university athletes, worked with Tiger to design the Cortez running shoe. The shoe was a worldwide success for the Onitsuka Tiger Company and was sold at the first BRS store. In 1971, BRS, with creditor , started manufacturing their own line of shoes. Later that year, the first BRS shoe was introduced. The shoe was a soccer shoe that bore the Nike brand name, referring to the Greek Goddess of Victory, and the Swoosh trademark. A student designed the Swoosh trademark for a paltry fee of $35. The Swoosh was meant to symbolize a wing of the Greek Goddess. 1972 marked the breakup of the BRS/Tiger relationship. BRS soon changed its name to Nike, Inc. and debuted itself at the 1972 Olympic trials. In 1973, Steve Prefontaine was the first prominent track star to wear Nike shoes. The late 70’s and early 80’s also saw John McEnroe, Carl Lewis, and Joan Benoit sporting Nike shoes. Nike popularity grew so much that in 1979 they claimed 50% of the U.S. running market. A year later with 2,700 employees, Nike went public selling 2 million shares on the New York Stock Exchange. The 1980’s were marked by the g of Michael Jordan as a product spokesperson, revenues in excess of $1 billion, the formation of Nike International Ltd., and the "Just Do It" campaign. Nike also expanded its product line to include specialty apparel for a variety of sports. In 1990, Nike sured the $2 billion mark in consolidated revenue with 5,300 employees worldwide. In addition, we opened the Nike World Campus in Beaverton, Oregon. In 1991, Nike pushed revenues to $3 billion, up from $2 billion the prior year. This mark would continue to grow throughout the 90’s, with revenues in 1999 reaching $8.8 billion. These revenues grew based on improvements in shoe technology and successful marketing campaigns. International revenues fueled a great portion of this growth with an 80% increase in 1991 from the prior year. In 1992 international revenues topped $1 billion for the first time and ed for over one-third of our total revenues. Such growth continued throughout the 1990's as we continued to focus our marketing efforts on major sporting events like the World Cup, and the 20

Perception of product attribute in brand switching behavior next generation of celebrity endorsers, such as Tiger Woods, Lance Armstrong, and the players of women's professional basketball (WNBA). At the end of the 90’s, Nike’s goal, as stated in our company web site, is to become a truly global brand. As of 2008, it employed more than 30,000 people worldwide. Nike and Precision Cast parts are the only Fortune 500 companies headquartered in the state of Oregon, according to The Oregonian. The company's first selfdesigned product was based on Bower man’s "waffle" design. After the University of Oregon resurfaced the track at Hayward Field, Bower man began experimenting with different potential outsoles that would grip the new urethane track more effectively. His efforts were rewarded one Sunday morning when he poured liquid urethane into his wife's waffle iron. Bowerman developed and refined the so-called 'waffle' sole which would evolve into the now-iconic Waffle Trainer in 1974.

HISTORY OF ADIDAS

In 1925, in a small German village, the world got it's first taste of Adidas. It was there, in a village by the name of Herzogenaurach, located 12 miles to the north and the west of Nuremberg, that those simple three stripes were brought to life by Adidas' founder, Adolf "Adi" Dassler. Adi created Adidas after realizing the need for performance athletic shoes. Adidas began small, producing soccer and running shoes, which ironically enough are still the main products that Adidas is known for. As Dassler’s experience grew, so did his reputation. Dassler became widely known as the "equipment manager of the world." His shoes were first worn in Olympic competition in 1928, and from then on he worked with everyone from Olympic athletes to national soccer teams. 21

Perception of product attribute in brand switching behavior Some of history's greatest athletic performances are in debt to Dassler and his work. Jesse Owens wore Adidas track shoes, during his spectacular Olympic performance in 1936, where he earned four gold medals. And Armin Harry was the first athlete to run the 100-m sprint in 10 seconds, also wearing Adidas shoes. In 1949, Dassler created the first soccer shoe with molded rubber studs, adopting the trademark three stripes. The German National team triumphed in the 1954 World Cup wearing Adi's soccer boots with screw-in studs, which enabled the game to be played under vastly different conditions without slipping. Hundreds of world records, Olympic medals and World Cup victories stand as a testament to Adi Dassler's life work. One of Dassler's goals in producing athletic shoes was to design them according to each sport's specific demands. Dassler's drive to fulfill this goal resulted in more than 700 patents. His long list of sport shoe innovations includes nylon soles and running spikes. He considered any material that might enhance the performance of his shoes. Dassler experimented with sharkskin as a sole material and kangaroo skin for the sides of his shoes. Whatever the athlete's needs, Dassler took them into consideration when deg a shoe. Gold medals, world records and personal athletic accomplishments are the true testaments to Dassler's shoes and the effectiveness of Adi's innovations. Recognizing the genius of Dassler's work, the American Sporting Goods Industry Hall of Fame inducted Dassler in 1978 as its first nonAmerican member. Today the world refers to Dassler as the founder of the modern sporting goods industry. Yet it was not Adi's creativity and mastery of shoe technology alone that catapulted Adidas to the top of the athletic shoe industry. Dassler's wife, Kathe, and their five children all had a hand in the business. Horst, the Dasslers' first-born, perhaps made the most significant contribution to his father's company. While Adi's were creative talents, Horst had a head for marketing. With the combination of Dassler shoe quality and Horst's ability to market that quality, Adidas was bound for success in the athletic shoe market.

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HISTORY OF REEBOK

Reebok was founded in 1895 in Bolton, England by J.W. Foster. In its first incarnation, the company was called simply J.W. Foster and Sons. Foster’s goal was simple: make a running shoe that enabled athletes to run faster. His solution was to add spikes to the bottom of the sole at a time when very few shoemakers were employing this technology. Foster’s clientele was elite. He designed shoes for top athletes around the world. In fact, several athletes at the 1924 Olympic Summer Games were wearing shoes designed by J.W. Foster and Sons. J.W. Foster and Sons did not become Reebok until 1958 when Joe and Jeff Foster (J.W.’s grandsons) rechristened the company. Reebok is the Afrikaans spelling of rhebok, which is a 23

Perception of product attribute in brand switching behavior kind of African antelope. The spelling was somewhat of an accident. Joe and Jeff found the word in a South African dictionary that Joe had won as a child. The shoes were not available to the American market until 1979 when the American Paul Fireman ran across Reebok shoes at an international trade show. When Reeboks were first released in the United States, they cost 60 dollars and were the most expensive running shoes being sold at that time. Reebok really took off in the 1980’s when women’s athletic footwear hit the market. While companies like Nike still dominated Reebok when it came to running shoes, Reebok was the lion among the competitors when it came to aerobics. The Reebok Freestyle was released in 1982 (high-top version in 1985), and it quickly became a cultural sensation. The male version of the Freestyle, dubbed the Ex-O-Fit, followed soon after. With bright colors and Velcro straps, the Freestyle and Ex-O-Fit helped to define 80’s fashion. During the 1980’s Reebok’s popularity exploded into international markets, with the brand ultimately becoming available in over 170 countries. In the last decade, Reebok has made partnerships with the National Football League, the National Basketball Association and the National Hockey League. Spokespersons for the brand included the likes of Jay-Z, Lucy Liu and Allen Iverson. In January 2006, Reebok was bought out by Adidas and became a subsidiary of the company. Adidas, which was formally one of the biggest competitors of Reebok, paid $3.8 billion. Later that year in November the National Basketball Association and Women’s National Basketball Association decided to replace Reebok branding on their merchandise with Adidas because Adidas is better known outside of US and UK markets than Reebok.

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Mile stones achieved in recent years NIKE: •

1962: Philip H. Knight founds Blue Ribbon Sports (BRS) to import Japanese running shoes.

•

1980: Nike goes public.

•

1981: Nike International, Ltd. is created to spearhead oversea s push.

•

1985: Company signs Michael Jordan to endorse a version of its Air shoe, the "Air Jordan."

•

1988: Cole Haan, maker of casual and dress shoes, is acquired; "Just Do It" slogan debuts.

•

1990: First Nike Town retail outlet opens in Portland, Oregon.

•

1994: Company acquires Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, later renamed Bauer Nike Hockey Inc.

•

1995: Company signs golfer Tiger Woods to a $40 million endorsement deal.

•

1996: The Nike equipment division is created.

•

1999: Company begins selling its products directly to consumer s via its web site.

•

2003: Converse Inc. is acquired for $305 million.

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ADIDAS: •

1993: Adidas acquires Sports Inc., a U.S. company; Tapie sells Adidas to a group of European investors, and Robert Louis-Dreyfus s Adidas as CEO.

•

1995: Adidas goes public.

•

1997: Adidas acquires Salomon Worldwide and is renamed Adidas- Salomon AG.

•

2000: The Company restructures in an effort to boost its image as a "lifestyle" brand.

•

2001: First Adidas Originals retail stores open in Berlin and Tokyo.

•

2002: The Company acquires Arc'Teryx, a high-end equipment and apparel group based in Vancouver; opens first Adidas Originals store in United States.

•

2003: Cycling division Mavic-Adidas Cycling is formed; company fails in attempt to acquire golf ball manufacturer Top Flite.

•

2005: The Company agrees to sell Salomon to Amer Sports in Fin land; announces acquisition of Reebok International, to be completed in 2006.

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REEBOK: 1890-1930's Reebok's United Kingdom-based ancestor company was founded for one of the best reasons possible: athletes wanted to run faster. So, in the 1890s, Joseph William Foster made some of the first known running shoes with spikes in them. By 1895, he was in business making shoes by hand for top runners; and before long his fledgling company, J.W. Foster and Sons, developed an international clientele of distinguished athletes. The family-owned business proudly made the running shoes worn in the 1924 Summer Games by the athletes celebrated in the film "Chariots of Fire." 1950-1980 In 1958, two of the founder's grandsons started a companion company that came to be known as Reebok, named for an African gazelle. In 1979, Paul Fireman, a partner in an outdoor sporting goods distributorship, spotted Reebok shoes at an international trade show. He negotiated for the North American distribution license and introduced three running shoes in the U.S. that year. At $60, they were the most expensive running shoes on the market. 1980's By 1981, Reebok's sales exceeded $1.5 million, but a dramatic move was planned for the next year. In 1982, Reebok introduced the first athletic shoe designed especially for women; a shoe for a hot new fitness exercise called aerobic dance. The shoe was called the Freestyle™, and with it Reebok anticipated and encouraged three major trends that transformed the athletic footwear industry: the aerobic exercise movement, the influx of women into sports and exercise and the acceptance of well-designed athletic footwear by adults for street and casual wear. Explosive growth followed, which Reebok fueled with new product categories, making Reebok an industry leader.

27

Perception of product attribute in brand switching behavior In the midst of surging sales in 1985, Reebok completed its initial public offering (stock symbol is NYSE: RBK). A year later, Reebok made its first strategic acquisition, The Rockport Company. Rockport was a pioneer in using advanced materials and technologies in traditional shoes and the first company to engineer walking comfort in all types of dress and casual shoes. In the late 1980s, Reebok began an aggressive expansion into overseas markets and Reebok products are now available in more than 170 countries and are sold through a network of independent and Reebok-owned distributors. . 1990's In 1992, Reebok began a transition from a company identified principally with fitness and exercise to one equally involved in sports by creating several new footwear and apparel products for football, baseball, soccer, track and field and other sports. That same year, Reebok began its partnership with golfer Greg Norman, resulting in the creation of The Greg Norman Collection. In the late 1990s, Reebok made a strategic commitment to align its brand with a select few of the worlds most talented, exciting and cutting-edge athletes. Since then, the company has focused on those athletes who represent the top echelon of sports and fitness. 1999-2000 In 1999-2000, Reebok and the National Football League announced an exclusive partnership that serves as a foundation of the NFL’s consumer products business. The NFL granted a long-term exclusive license to Reebok beginning in the 2002 NFL season to manufacture market and sell NFL licensed merchandise for all 32 NFL teams. The license includes on-field uniforms, sideline apparel, practice apparel and an NFL-branded footwear and apparel collection. 2001 In 2001, Reebok formed a long-term strategic partnership with the National Basketball Association under which Reebok designs, manufactures, sells and markets licensed merchandise for the NBA, the Women’s National Basketball Association (WNBA) and the National Basketball Development League (NBDL), the NBA’s minor league. Reebok also had exclusive rights, with limited exceptions, to design, manufacture, market and sell headwear, T-shirts, fleece and other apparel products for all teams in most channels of distributions. In 2006, Reebok transferred the NBA rights to the Adidas Brand.

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Perception of product attribute in brand switching behavior 2002 In 2002, Reebok launched Rbk – a collection of street-inspired footwear and apparel hook-ups designed for the young man and woman who demand and expect the style of their gear to reflect the attitude of their lives: cool and edgy, authentic and aspirational. Inspired by street fashion, Rbk’s marketing is culturally relevant as well. 2003 2003 was a landmark year for Rbk. Reebok formed an unprecedented partnership with rap musician Jay-Z, which included the design and marketing of the "S. Carter Collection by Rbk," which launched in April. With the partnership, Jay-Z became the first nonathlete to have a signature athletic footwear collection. 2004 In 2004, Reebok became the world’s leading producer of hockey apparel and equipment with its acquisition of The Hockey Company. The Hockey Company’s brands, CCM, Koho and Jofa, are among the most respected in the sport. Reebok has a long-term licensing agreement with the National Hockey League, under which the company serves as the supplier of authentic “on-ice” game jerseys to all 30 NHL teams. 2005 In early 2005, Reebok launched Rbk Hockey, a new and innovative line of ultra-high performance hockey equipment, sticks and skates and signed hockey phenom Sidney Crosby, who has lived up to his billing as the league’s next great player. In two short years, Rbk Hockey has become one of the most visible and in-demand hockey brands on the market. In 2005, Reebok launched its largest global integrated marketing and advertising campaign in nearly a decade. "I Am What I Am" is a multi-faceted campaign which links all of the brand's marketing and advertising efforts under the "I Am What I Am" umbrella.

29

Perception of product attribute in brand switching behavior 2006 In January 2006, Adidas-Salomon AG acquired Reebok, forever altering the worldwide sporting goods industry landscape. Fireman got his start working for his family's fishing tackle business. He’s sold fitness giant Reebok to Adidas for $3.8 billion .Shortly after the close of the acquisition, Reebok Chairman and CEO Paul Fireman announced he was leaving the company to pursue other interests, and Paul Harrington was named President and CEO of the Reebok brand. 2007 Reebok launched Run Easy, one of the most comprehensive running campaigns in the brand’s history. The goal of the campaign was to inspire consumers around the world to fulfill their potential and celebrate their individuality. In addition, Reebok's partnership with the National Hockey League took center stage with the unveiling the Rbk Edge Uniform System, a complete, team-wide redesign and re-engineering of the NHL uniform, and the opening of the NHL Powered by Rbk retail store in New York City. Reebok also launched its "There are Two People in Everyone" marketing campaign for the second half of 2007 in select regions. The campaign, featuring international sport stars such as Allen Iverson, Yao Ming, MS Dhoni and Nicole Vaidisova, declared that there is more to an athlete than his or her sport. 2008 Reebok’s global marketing campaign, ‘Your Move’ launched in March of 2008 and evolved Reebok’s positioning as the brand that celebrates individuality and s those who choose to do things their way. In the summer of 2008, Reebok and driving ace Lewis Hamilton announced a multi-year partnership at a spectacular 3-D event in Amsterdam, home of Reebok’s European Headquarters.

2009 In February 2009, Reebok launched the Jukari Fit to Fly workout, the first in a series of initiatives to come out of a new, long-term partnership with Cirque du Soleil. Jukari Fit to Fly 30

Perception of product attribute in brand switching behavior makes fitness fun again by introducing a new way to move. Also in 2009, Reebok made a pledge to tone the butts and legs of women around the world with its innovative Easy Tone footwear.

2.2 THE STRATEGIC PLAN NIKE Mission Statement Our mission at Nike is to be a company that sures all others in the athletic industry. We will maintain our position by providing quality footwear, apparel and equipment to institutions and individual consumers of all ages and lifestyles. We pledge to make our products easy available worldwide through the use of retail outlets, mail order and our company web site. Nike’s management believes that our success lies in the hands of our teammates, customers, shareholders and the communities in which we operate. We vow to keep this in mind with the execution of every decision within our company. Values Statement Nike will focus its commitment to all stakeholders by continuing to make strides towards being a company that sets the precedents in social responsibility. Nike is continuously making efforts to ensure that all employees and of its surrounding communities are treated in a manner that is inline with our mission. Nike has made many alliances with human rights organizations in an attempt to ensure labor rights for employees of the industry overseas. We are committed to treating our employees with the utmost respect, which is reflected in our compensation and human resource policies. We are also committed to making sound decisions in regards to our

31

Perception of product attribute in brand switching behavior environment, resources, and the fight against pollution. Vision Statement At Nike, our vision is to remain the leader in our industry. We will continue to produce the quality products that we have provided in the past. Most importantly, we will continue to meet the ever-changing needs of our customers, through product innovation.

ADIDAS Mission statement , "Our mission is to become the best sports brand in the world. To that end, we will never equate quantity with quality. Our founder Adi Dassler was ionate about sports. For Adi, the athlete came first. He gave those on the field, the court and the track the unexpected and the little differences that made them more comfortable and improved performance. This is our legacy. This is what the brand stands for. This will never change." Vision statement Striving to be the global leader in the sporting goods industry is not just about results; it is about how those results are achieved. Our vision is for everyone in the Group and our supply chain to share a common set of values and to follow responsible business practices. Our governance framework aims to help us realize this vision. REEBOK MISSION STATEMENT Always Challenge and Lead through Creativity At Reebok, we see the world a little differently and throughout our history have made our mark

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Perception of product attribute in brand switching behavior when we’ve had the courage to challenge convention. Reebok creates products and marketing programs that reflect the brand’s unlimited creative potential. PROPOSED MISSION STATMENT To continue to offer quality products with increasing growth in the industry and expanding globally. Our mission has always been to provide a competitive edge by developing the most technological products. Keeping in mind fair labor practices in all our suppliers’ factories, while maintaining a competitive advantage, with the shareholders interests, and company profits in mind. We also believe our employees are one of our most important assets. To increase the responsibility towards the environment by evaluating the impact of day to day operation and attempts to change operations that have a negative impact. Reebok is an American-inspired, global brand that creates and markets sports and lifestyle products built upon a strong heritage and authenticity in sports, fitness and women’s categories. The brand is committed to deg products and marketing programs that reflect creativity and the desire to constantly challenge the status quo. VISION STATEMENT Reebok is dedicated to providing each and every athlete - from professional athletes to recreational runners to kids on the playground - with the opportunity, the products, and the inspiration to achieve what they are capable of. We all have the potential to do great things. As a brand, Reebok has the unique opportunity to help consumers, athletes and artists, partners and employees fulfill their true potential and reach heights they may have thought un-reachable. PROPOSED VISION STATEMENT “Continue to bring inspiration to present and future athletes, while maintaining the company's standard of quality for its products.” Always Challenge and Lead through Creativity At Reebok, we see the world a little differently and throughout our history have made our mark when we’ve had the courage to challenge convention. Reebok creates products and marketing programs that reflect the brand’s unlimited creative potential.

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2.3 SWOT ANALYSIS NIKE Strength • Competitive •

Strong research and development

•

No factories

•

Fortune 500 company

•

Strong marketing campaigns

•

High quality products

•

Global brand

•

Innovative products

•

Brand awareness and loyalty

Weakness • Highly dependent on it's share made in the footwear department •

Pricey retail sector, retails offer same experience and price

•

History of child labor and overworking and underpaying factory workers

•

Partnering companies kept secret

Opportunities • • 34

Expand outside of sports world, into a fashion brand Other products besides footwear


Attract vast audience/demographics with wide range of products

•

Use strong brand recognition to expand globally -Global events (Olympics) -Sponsorship of new athletes -Focusing more on innovation and leading in innovation.

Threats

35

•

Exposed to international market of trade

•

Competitors are developing alternative market brands to take from Nike's market share

•

Recession of economy

•

Consumer looking for the better deal


ADIDAS Strengths •

Competitive pricing

•

Good financial position

•

Effective Marketing Strategy

•

Market Leadership

•

Strong online presence

•

Strong brand

•

Strong international operations

•

Strong distribution chain

Weaknesses •

High cost structure

•

Over pricing

•

Low quality products/services

•

Limited product line

Opportunities •

Change in consumer lifestyles.

•

Available technological innovations

•

Entering new markets

•

Expand customer base (Geographically or through new products)

•

Expand product/service lines

•

Market Diversification

•

Merger or takeover

•

Adidas should look into expanding into Africa 36

Perception of product attribute in brand switching behavior Threats •

Competition from foreign markets

•

Competitor's actions

•

Change in consumer lifestyles

•

Changing consumer patterns

•

Growing power of customers to set the price

•

Growing power of suppliers to set the price

•

Financial slowdown

•

Increase in taxation

REEBOK 37


Strength:•

Size & strong brand awareness and perception.

•

Wide range of celebrity associated sponsorship

•

It's strong position in the women's sector

•

Research and development

•

Marketing

Weaknesses:•

Too much reliance on retail stores to sell products.

•

poor employment practices at overseas manufacturing sites

•

High % of upper management turnover

•

Dependency on Footwear sales

Opportunities:•

Emergence of more Sporting events

•

Women’s Marketplace

•

College/Pro Sports

•

Reebok is also leveraging the digital space to control distribution and build direct consumer

•

Broaden market expected from convergence of broadcasting, telecom and entertainment industry (reality shows)

Threats:38


2.4

•

Strong competition.

•

Rising price of row material

•

Chinese products

•

Global/Domestic Economies

TOP COMPETITOR ANALYSIS 39


NIKE Distinctive Competency - Marketing (Consumer Loyalty ) Despite the tough times Reebok has recently come upon, reasons for optimism remain. Reebok has managed to hold the loyalty of a large portion of the industry’s female consumers market. While Reebok’s spending on advertising has fluctuated, individual product designs have come and gone, female consumers have, as a group, remained loyal to Reebok and their products. Can Reebok use this distinctive competency to inflict damage on Nike? Yes, Reebok can use their distinctive competency to wound our company. If Reebok can expand their appeal to incorporate female consumers who are not currently Reebok customers, Reebok could expand their market share and take customers away from Nike products. Can Nike protect itself against this threat? Yes, we can protect our market share among female consumers within the industry by targeting some of our promotions to female consumers. Nike’s sponsorship of the 1999 Women’s World Cup Soccer Tournament was a great example of how Nike is appealing to female athletes.

ADIDAS Reebok, in of their products, is not entirely different from Adidas. Reebok is involved in the design and marketing of both athletic and non-athletic footwear and apparel, as well as other various fitness projects. Reebok’s market share is a distant third in the footwear industry at 11.2% (compared to 30.4% and 15.5% for Nike and Adidas respectively). 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. Reebok’s financial woes are illustrated in their declining net sales. Reebok’s net sales declined 9% during the first three40

Perception of product attribute in brand switching behavior quarters of fiscal year 1999. During that same period, net income declined 17%. Taking these and other factors into leaves Reebok’s current financial position, as a whole, looking bleak. Competitor’s Key Weakness – Marketing – (Advertising/Promotion) 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 by familiar slogans like Nike's "Just Do It," Reebok’s, "Are You Feeling It," does not equate to their brand name in the eyes of most consumers.

REEBOK Competitors’ analysis Reebok faced primary competition from industry leader NIKE, after Nike puma is also a strong competitor of Reebok in shoe industry. Adidas’ acquisition of Reebok developed increased opportunities to achieve competitive advantage through branding. The Reebok brand also gain sustainable competitive advantage through increased brand recognition. Globally, Reebok will benefit greatly from Adidas’ distribution around the world. Combined R&D helped speed development of cutting edge technologies, an important feature of the increasingly fast paced industry. Expedited research developed higher consumer demand for innovation across all brands, putting pressure on Nike’s R&D capabilities. 2.5 ADVERTISMENT & PROMOTION STRATEGY IN

INDIA

NIKES GAME PLAN IN INDIA For the first time, Nike's logo is appearing in connection with an "India [ Images ]n" sport: cricket. A few months ago, Nike wrested the rights to become the official kit sponsor for the

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Perception of product attribute in brand switching behavior Indian cricket team for the next five years, beating arch-rivals Reebok and Adidas; it paid Rs 196 crore (Rs 1.96 billion) to the Board of Control for Cricket in India for the privilege. The first "Just Do It" cricket ad also made its appearance during the Champions Trophy last month. "We want to look at what drives the ion for cricket in India. We aim to connect emotionally with our customers," declares Sanjay Gangopadhyay, marketing director, Nike India. The swoosh has finally swung, and how. The American sports footwear and apparel giant has had a presence in India for close to a decade, but it's consciously held on to its "international" image. Where Sachin Tendulkar and Dhanraj Pillai were endorsing rivals' products, Nike's ads stuck to Maria Sharapova and Ronaldinho. India didn't really figure in the company’s marketing and promotion activities. That's changed now. And it's likely to change the rules of the game of the Rs 1,100-crore (Rs 11 billion) Indian sports footwear and apparel market.

In 2004, instead of renewing the franchise, Nike India became a subsidiary. Nike is also thinking ahead and taking its commitment to cricket to the grassroots level. In December 2005, it tied up with coaching schools like the BCCI's National Cricket Academy. The academies will work with Nike to understand the product requirements of the players. It's a win-win situation for both the company and the academies. While Nike creates brand awareness and has a shot at creating loyalists at a young, impressionable age, the academies' need for equipment such as shoes and training gear is looked after by the company.

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ADIDAS PLANS TO MAKE INDIA PRODUCTION HUB The company has planned to set up a production facility for apparels in the country, which would serve as a basses for its global requirements. Sachin unveils new Adidas shoes Christopher Bezu, chief executive officer, marketing and sales division, Asia Pacific, Adidas, said, "As part of the company's global strategy, the procurement division is looking at setting up an apparel manufacturing facility in India. Although we have not yet finalized the details of the centre, a decision will be taken in the near future." 43


The company has short-listed several locations in the country for setting up the facility, he added. "India has a strong base for apparel manufacturing and along with that there is a cost advantage in manufacturing and exporting products from India," Andreas Gellener, managing director, Adidas India, said. Adidas has a large manufacturing base in China, which is currently the main procurement centre for the Asia Pacific region. Adidas is also revamping its marketing strategy for India. The company is planning to reinforce its distribution network by setting up more outlets across the country. "Our initial strategy did not bring desired results as we felt that our distribution network, range management, asset management and company structure were not very strong. We have formulated a new marketing plan, which addresses all these issues," Bezu said. The company is planning to set up more outlets to strengthen its distribution network. "We are looking at segmenting our range of products systematically and will introduce new 'localized' models," he added. The company is also planning a recruitment drive to "reinforce our team in India". Adidas has included Sachin Tendulkar in its global campaign "Impossible is Nothing" and plans to feature him across cricketing nations and the Asia-Pacific region. Adidas is the first global company to borrow an Indian name to sell its products outside the country. The campaign also features David Beckham Muhammad Ali, Ian Thorpre among 10-12 other Adidas's global ambassadors. Christophe Bezu, chief executive officer, Adidas, Asia Pacific, said, "Tendulkar has an incredible recognition value in countries where cricket is popular. Therefore we are looking at launching him in these markets as he is perhaps the most popular name in cricket. His inclusion 44

Perception of product attribute in brand switching behavior stems from his caliber as a global athlete and his potential to become a global ambassador for Adidas." Although the current campaign will feature Tendulkar only in the cricketing countries and the Asia Pacific region, the company is looking at including him in its other global campaigns.

REEBOK Advertising Agencies In 2004, Reebok hired McGarry Bowen as there advertising agency. Till 2007, McGarry was Reebok’s brand agency. McGarry Bowen was founded in 2002 and has offices in New York and Chicago. McGarry Bowen is a fully-integrated agency with advertising, design, relationship marketing and a digital arm. The Agency has been the recipient of many honors, including Adweek’s President’s Award for the “non-traditional agency having the greatest impact on the industry.” The Agency works with many of the of the world’s best known companies including JPMorgan, Chase, Kraft, Disney, Marriott International, Chevron, Pfizer, HP, Reebok International, Crayola, InBev, Century 21, News Corp, The Wall Street Journal and the U.S.Olympic Committee. During the period of McGarry Bowen, Reebok had done advertising and marketing for various products. Pump sneakers ments, “Two People in Everyone” ad campaign, Runners head game- I am what I am ad campaign were all under this advertising agency.

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Perception of product attribute in brand switching behavior In early March 2009, Reebok appointed DDB Worldwide as its creative advertisingagency.DDB will provide creative solutions across a range of brand advertising and marketing communications and will service the business from three hubs: Berlin, Chicago, and Hong Kong. DDB Worldwide Communications Group Inc (www.ddb.com) is the largest consolidated advertising and marketing services global network in the world, according to Advertising Age.DDB also has been frequently ranked as the most awarded agency network in the world by Creativity magazine and The Gunn Report, among others. With more than 200 offices in over 90countries, the DDB Group believes that creativity is the most powerful force in business, building enduring and powerful brand experiences that create Talk Value,™ influence social communities and drive results. DDB Worldwide is part of Omnicom Group Inc. The agency handles brand advertising and marketing communications as the brand seeks to establish the brand in the women's fitness market. The ad campaign “Your Move” was done under this agency. In September 2007 in Hong Kong, Reebok handed its regional advertising business to WPP subsidiary Soho Square. Reebok is the founding client for Soho Square, which will manage Reebok’s key markets in the Asia Pacific including Hong Kong, Japan, Korea, Australia and India and China. Promotion Strategy The Reebok segment is comprised of the Reebok brand, Reebok-CCM Hockey and Rockport. In2008, the Reebok brand has further refined its strategy considering the brand’s heritage and values, consumer insights and positioning within the Adidas Group port folio. Inspired by its roots in sport and women’s fitness, Reebok developed a clear roap for its key businesses going forward: Own Women’s Fitness, Challenge Men’s Sport and Revive Classics. Central to Reebok’s brand heritage is the courage to challenge convention. Unlike many other brands, Reebok is committed to make fitness fun again – challenging men and women to fulfill their potential in sport and in life by providing them with the opportunity, the products and the inspiration to have fun staying in shape Reebok provides great deals on quality footwear, apparel, and fitness equipment for women, men, and kids. Reebok sports and lifestyle products are built on a strong heritage, commitment to creativity, and the desire to constantly challenge the status quo. The company uses various promotional tools to bring awareness among its customers. It offers discounts, vouchers, coupons 46

Perception of product attribute in brand switching behavior and custom made sneakers on their products. Apart from this, there are celebrity endorsements, road shows, sponsorship events, television commercials, print ads, billboards, alliance events. Rebook has hired currently DBB Worldwide as its advertising and creative agency. Reebok, a multinational company, have separated 15% of its sales for its advertising and promotion activities. It has different advertising strategy in different areas of the world.

CHAPTER 3: MAIN STUDY 3.1

STATEMENT OF PROBLEM

A problem statement is a clear concise description of the issue(s) that needs to be addressed by a problem solving team. Thus, in this study we are trying to ascertain as to what are the factors related to ‘Product Attributes’ that influences a buyer’s brand loyalty i.e. leads to develop a brand switching behavior in a buyer.

47


3.2 OBJECTIVES OF THE STUDY: Following are the objectives of the study: •

To determine the customer’s satisfaction of sports brand s.

•

To ascertain the factors that influenced the customers in selecting the brands.

•

To find out the major driving factors for their purchase decisions.

•

To determine the performance of the companies in the study.

3.3 STATEMENTS OF HYPOTHESIS: HYPOTHESIS 1: H0: There is no relationship between PRICE and BRAND SWITCHING BEHAVIOUR. 48

Perception of product attribute in brand switching behavior H1: There is a relationship between PRICE and BRAND SWITCHING BEHAVIOUR. HYPOTHESIS 2: H0: There is no relationship between QUALITY and BRAND SWITCHING BEHAVIOUR. H1: There is a relationship between QUALITY and BRAND SWITCHING BEHAVIOUR. HYPOTHESIS 3: H0: There is no relationship between MENTS AND PUBLICITY and BRAND SWITCHING BEHAVIOUR. H1: There is a relationship between MENTS AND PUBLICITY and BRAND SWITCHING BEHAVIOUR. HYPOTHESIS 4: H0: There is no relationship between TRENDS AND STYLES and BRAND SWITCHING BEHAVIOUR. H1: There is a relationship between TRENDS AND STYLES and BRAND SWITCHING BEHAVIOUR.

3.4 SCOPE OF STUDY: •

The scope of the study is restricted to only three companies.

•

The scope is restricted to the study of the factors affecting preferences of the consumers while choosing a sports brand in Mumbai.

3.5 LIMITATIONS OF THE STUDY: Following are the limitations of the study: •

Surveyed area is limited to the customers who were interviewed at colleges and malls.

49


Sample size may not fully represent the whole population.

•

The seriousness of the respondents and their ability to justify their answers may also be a limitation.

•

The sample size is small due to the specified reasons.

•

Findings are based on sample survey.

•

All interview questions are undisguised or direct. Hence there is a scope for the respondents to be biased or pretentious.

•

The survey was limited to the area of South Mumbai Region

CHAPTER 4 : REVIEW OF LITERATURE Behavior is considered as an important issue for the marketing managers. Anand and Sachar (2004) showed that the purchase probability of a product/brand is a function of the match between the consumer’s taste and the product/brand attributes. Thus, if the brand failed to fulfill the consumer’s expectations, the consumer is likely to switch her/his brand. In particular, marketers of consumer non-durable goods, every purchase occasion of the cosumers is an opportunity for the firm to retain its customers or loose them to its competitors, until the brand establishes a strong brand loyalty and equity. Thus, any successful brand establishes a special relationship with the consumers through its unique combination of perceived attributes (Dyson et al, 1996) Customers evaluate purchases as an aggregate function of a number of factors. Value , or the tradeoff between the quality of the item and its costs, is a primary consideration (Iacobucci et al, 1994). As a result, a consumer can be both satisfied and dissatisfied with different aspects of the same product. Although such phenomena are not easy to model in an overall satisfaction approach, the attribute-level approach provides a simple and elegant solution: Mixed feelings toward a product exist because a consumer may be satisfied with another (Mittal et al, 1998). Deighton et al (1994) argued that a central influence on current purchase is the effect of previous 50

Perception of product attribute in brand switching behavior purchase, which would be conceived as the inertial effect of consumers tending to rebuy the brand they purchased previously. Hence, the effect of previous purchase(s) should be positive enough to trigger the efforts. If perceived performance of a product/service exceeds a consumer’s expectations, (a positive disconfirmation) then the consumer is satisfied with the brand/service. However, if perceived performance falls short of his/her expectations (a negative disconfirmation), then the consumer is dissatisfied (Spreng et al, 1996) with the brand/service. Satisfaction conceptualized as an attitude-like judgment following purchase act or based on a series of consumer-product interactions. Existence and nature of the asymmetric and non-linear response of satisfaction to attribute level preference highlighted that negative performance of an attribute has greater amount of impact on repurchase intentions and satisfaction levels (Mittal et al, 1998). The drivers of satisfaction with product quality shift over time in different ways based on the nature of the attribute used to form satisfaction with product quality (Slotegraaf and Inman, 2004). A common problem faced by consumers, is making choices with completely and easily compared information on some attributes but only partial (or difficult to compare) information on other attributes (Kivetz and Simonson,2000). How consumers form preferences for products and brands is considered as continuously important issue for the marketers over a period. While the issue has been well researched from several angles, there is very little research on the equally important issue of how people develop their preferences for the attributes or aspects of products and brands (Muthukrishnan and Kardes,2001). Thus, many studies concentrated on branding, brand loyalty and these topics are continuously occupying top priority for the marketers of products and services. Brand loyalty gives greater advantage to the firms in of reduced marketing costs, customers engaging in positive word-of-mouth communication (Mahajan, Sharma and Buzzell, 1993) and greater resistance to the competitors’ promotional activities. Two aspects of brand loyalty viz., purchase loyalty and attitudinal loyalty play vital roles in greater market share and willingness to pay higher price for the brands (Chaudhari and Holbrook, 2001). Brand switching behavior is not a result of single product related attribute which failed to fulfill its expectations; rather a combination of various product related attributes which failed simultaneously to provide the expected value.

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Perception of product attribute in brand switching behavior Thus, the above discussions provides some general insights into the importance of product attributes and brand loyalty; it falls short of revealing the relative importance of one variable with other or a set of variables. In addition, many of analytical tools do not provide a picture of the nature of the relationship among the variables.

CHAPTER5:RESEARCH METHODOLOGY 5. RESEARCH INSTRUMENT Our research instrument for this study is a Questionnaire which consisted of 7 close-ended questions where it had to be answered in a Yes or a No and there were questions where there are multiple choices. There is 1 open-ended question where the respondent is free to give his/her valuable or opinions or suggestions. 5.1 RESEARCH DESIGN: Our study is to differentiate between the brand switching behavior of the customer with regards to Price, Quality, Publicity and ments and Trends and Style in the sports wear department considering the top brands like Reebok, Nike and Adidas. The research is being done specifically to analyze consumer behavior in respect to brand switching. We have taken factors like Price, Nike and Adidas. The research is being done specifically to analyze consumer behavior in respect to brand switching. We have taken factors like Price, Quality, Publicity and ments and Trends and style. Primary data is obtained from questionnaire. Whereas secondary data is obtained from the internet and various e-books. The data was obtained by surveying people and also the internet. Simple random sampling approach is used. Data was collected by personally interviewing the respondents. And the data is analyzed by using the Chisq. technique.

5.3 SOURCES OF DATA • COLLECTION OF PRIMARY DATA: 52

Perception of product attribute in brand switching behavior Communication and observation are the two basic means used for collecting primary data. Communication involves questioning to secure the desired information by using data collection instrument called ‘Questionnaire’. The questionnaire used in our study consists close-ended questions and an open-ended question.

• COLLECTION OF SECONDARY DATA: Internal And external secondary data is collected for the purpose of study. Internal secondary data is collected within the company. This includes company records, previous research records and other relevant information. External secondary data is generated from outside. This data is retrieved from publications, government records and internet. 5.4 SAMPLE SIZE : The sample size for our research is limited to 100 surveys 5.5 SAMPLING METHOD For our research Simple Random Sampling Approach has been adopted.

CHAPTER 6: RESEARCH AND DATA ANALYSIS 6.1 DATA INTERPRETATION Q. Which sports brand you prefer? Reebok Nike Adidas Others (Please Specify) Q. What are your major driving factors in brand switching? AGREE DISAGREE PRICE QUALITY PUBLICITY & 53

STRONGLE AGREE

STRONGLY DISAGREE

Perception of product attribute in brand switching behavior ADDS TREND & STYLE From the responses of the above survey, chi -square method has been used to find out the results. PRICE WITH RESPECT TO BRAND SWITCHING BEHAVIOR Reebok Nike Adidas Others Total

Agree 20 36 16 6 78

Disagree 6 6 8 2 22

Total 26 42 24 8 100

Solution HYPOTHESIS HO= There is no relationship between price and brand switching behavior. H1= There is a relationship between price and brand switching behavior.

Observation

O

Expected= row total x column total/grand total 20.28

(O-E)2/E

Reebok + Agree

20

Reebok + Disagree

6

5.72

0.013

Nike + Agree

36

32.76

0.32

Nike + Disagree

6

9.24

1.14

Adidas + Agree

16

18.72

0.40

Adidas + Disagree

8

5.28

1.4

Others + Agree

6

6.24

0.009

Others + Disagree

2

1.78

0.03

54

0.003

Perception of product attribute in brand switching behavior ∑(O-E)2 / E=3.315

Total χ2cal = 3.315

Degree of freedom= (r-1) (c-1) = (4-1) (2-1) = (3) (1) =3 2 χ critical @ 5% level of significance and degree of freedom at 3 = 7.815 ∴ χ2 cal < χ2critical ∴ 3.315 < 7.815 ∴ H1 is Rejected H0 is Accepted ∴ There is no relationship between price and brand switching behavior

Error Statement: When null hypothesis is wrong and if we accept H0 then it is a Type II Error

QUALITY WITH RESPECT TO BRAND SWITCHING BEHAVIOR Reebok Nike Adidas Others Total

Agree 6 16 10 5 37

Strongly Agree 17 29 14 3 63

Total 23 45 24 8 100

Solution HYPOTHESIS Ho = there is no relationship between quality and brand switching behavior H1 = There is a relationship between quality and brand switching behavior Observation

0

Reebok + Agree Reebok + Strongly Agree Nike + Agree Nike + Strongly Agree Adidas + Agree

6 17 16 29 10

55

Expected= row total x column total/ grand total 8.51 14.49 16.65 28.35 8.88

(O-E)2 / E 0.74 0.43 0.02 0.014 0.14

Perception of product attribute in brand switching behavior Adidas + Strongly Agree

14

15.12

0.08

Others + Agree Others + Strongly Agree Total

5 3

2.96 5.04

1.41 0.82 ∑(O-E)2 / E = 3.654

χ2 cal = 3.654

Degree of freedom = (r-1) (c-1) = (4-1) (2-1) = (3) (1) =3 2 χ critical @ 5 % level of significance and at 3 degree of freedom = 7.815 ∴ χ2calculated < χ2critical ∴ 7.815 < 3.654 ∴ H 1 is rejected ∴ H0 is accepted. ∴ There is no relationship between quality and brand switching behavior Error Statement: When null hypothesis is wrong and if we accept H0 then it is a Type II Error PUBLICITY AND ADS WITH RESPECT TO BRAND SWITCHING BEHAVIOR PUBLICITY AND ADS WITH RESPECT TO BRAND SWITCHING BEHAVIOR PUBLICITY AND ADS WITH RESPECT TO BRAND SWITCHING BEAHVIOR Reebok Nike Adidas Others Total

Agree Disagree Total 11 13 24 28 17 45 11 14 25 4 2 is wrong and if we accept 6 Error Statement: When null hypothesis H0 54 46 II Error 100 then it is a Type

Solution HYPOTHESIS H0 = There is no relationship between publicity and ads and brand switching behavior H1 = There is a relationship between publicity and brand switching behavior Observation Reebok + Agree

11

Expected= row total x column total/ grand total 12.96

Reebok + Disagree Nike + Agree Nike + Disagree Adidas + Agree

13 28 17 11

11.04 24.3 20.7 13.5

56

O

(O-E)2/ E 0.29 0.35 0.56 0.66 0.54

Perception of product attribute in brand switching behavior Adidas+ Disagree Others + Agree Others + Disagree Total

14 4 2

11.5 3.24 2.76

0.54 0.18 0.21 ∑ (O-E)2/E= 3.33

χ2 cal = 3.33

Degree of freedom = (r-1) (c-1) = (4-1) (2-1) = (3) (1) =3 2 χ critical @ 5 % level of significance and at 3 degree of freedom = 7.815 ∴ χ2 calculated < χ2critical ∴ 7.815 < 3.33 ∴ H 1 is rejected ∴ H0 is accepted. ∴ There is no relationship between publicity and ads and brand switching behavior Error Statement: When null hypothesis is wrong and if we accept H0 then it is a Type II Error

TREND AND STYLE WITH RESPECT TO BRAND SWITCHING BEAHVIOR Agree 20 39 22 5 86

Reebok Nike Adidas Others Total

Disagree 3 5 2 4 14

Total 23 44 24 9 100

Solution HYPOTHESIS H0 = There is no relationship between trend and style and brand switching behavior H1 = There is a relationship between trend and style and brand switching behavior Observation

O

Reebok + Agree Reebok + Disagree Nike + Agree Nike + Disagree Adidas + Agree

20 3 39 5 22

57

Expected = row total x column total/ grand total 19.78 3.22 37.84 6.16 20.64

(O-E)2/E 0.002 0.015 0.035 0.218 0.089

Perception of product attribute in brand switching behavior Adidas+ Disagree Others + Agree Others + Disagree Total

2 5 4

3.36 7.74 1.26 χ2 cal = 7.836

0.55 0.969 5.958 ∑(O-E)2 / E= 7.836

Degree of freedom = (r-1) (c-1) = (4-1) (2-1) = (3) (1) =3 2 χ critical @ 5 % level of significance and at 3 degree of freedom = 7.815 ∴ χ2calculated > χ2critical ∴ 7.836 > 7.815 ∴ H 0 is rejected ∴ H1 is accepted. ∴ There is relationship between trend and style and brand switching behavior

6.2 GRAPHS Q. Are you a brand loyal person? RESPONDENTS

YES

NO

TOTAL

MALES

36

20

56

FEMALES

21

23

44

TOTAL

57

43

100

58


OVERVIEW: The above table and graph indicates the number of males and females who are brand loyal and who aren’t.

Q. Which brand would you associate as the most valuable brand? BRANDS

MALES

FEMALES

TOTAL

REEBOK

09

11

20

NIKE

30

16

46

ADIDAS

13

10

23

NONE

04

07

11

TOTAL

56

44

100

59


OVERVIEW: The above table and graph clearly indicates that both the category-males and females choose Nike as their most valuable brand and then follows Adidas, then Reebok and finally other brands.

Q. What is your opinion about the ments and Publicity of the following brands? MALES(a)

TOTAL

BRANDS

E

G

S

N.S

REEBOK

07

28

17

04

60

56

FEMALES(b)

TOTAL

E

G

S

N.S

09

20

11

04

44

Perception of product attribute in brand switching behavior NIKE

26

17

12

01

56

14

14

13

03

44

ADIDAS

10

30

12

04

56

09

14

18

03

44

TOTAL

43

75

41

09

32

48

42

10

(a)

(b)

61


OVERVIEW: The above table and graph shows the ratings given by our respondents for the respective brands where both the-males and females have rated the ments and Publicity as good and a few have gone for excellent. So it shows that today’s buyer is very much aware about the promotional activities of their brands.

Q. Would you recommend others the brand you use or try the other one?

62

Perception of product attribute in brand switching behavior RESPONDENTS CURRENT BRAND

OTHER BRAND

TOTAL

MALES

46

10

56

FEMALES

32

12

44

TOTAL

78

22

100

OVERVIEW: The above table and graph indicates that more than 75% of the people that we have interviewed would not like to change their and would recommend their current brand to others.

63

Perception of product attribute in brand switching behavior Q. Does controversy affect your brand choice/loyalty? RESPONDENTS

YES

NO

TOTAL

MALES

13

43

56

FEMALES

16

28

44

TOTAL

29

71

100

OVERVIEW: From the above table and graph its visible that from both-males and females only 29 agree that controversy affects their brand choice/loyalty.

CHAPTER 7: CONCLUSION 7.1 FINDINGS

64


In the following project, we can conclude that from the considered parameters, Trends and Styles is a major driving factor that may influence the buyer’s purchase decision.

•

And then follows Quality whereas the parameters of- Price and ments and Publicity is given lesser importance while buying a sports product.

•

We have even learnt that a lot of people are firm loyals of their respective brands and most of them consider their brands as the most valuable brand where Nike tops as the most preferred valuable brand among both men and women.

•

We even found out that today’s buyer is very aware about its brand and is very well aware about their respective brand’s ments and each and every move taken by the company. So the buyers are hardly bothered by any sort of controversy and it doesn’t affect their brand loyalty in any which way.

7.2 CONCLUSIONS Consumer’s brand switching behavior is neither mere influence of the promotional measures nor the failure of a single attribute; rather a combination of many product attributes which failed to fulfill the expectations. Consumers might use brand names and product attributes as retrieval cues for information about product performance. In effect, brand names and product attributes are the links to diagnostic information about product performance. An understanding of the perception of attributes will provide a more detailed perspective of group purchase decisions and significant factors influencing the brand switching behavior or enhance the loyalty factor. A majority of the ments aim to influence consumer beliefs (regarding primary product attributes) that are of sufficient magnitude to potentially influence choice behavior. In order to develop appropriate communication strategies for the target market, the marketers need to know about the sets of attributes perceived as important in product purchases. A study by Vishwanathan and Childers (1999) suggests that identifying attributes on which the market leaders rate higher or lower than the competitor(s) would help the latter have a knowledgeable and sound basis for (re)positioning its image, either through an affiliation or differentiation strategy. 65

Perception of product attribute in brand switching behavior CHAPTER 8: APPENDIX 8.2 ANNEXTURE QUESTIONNAIRE PERCEPTION OF PRODUCT ATTRIBUTE IN BRAND SWITCHING BEHAVIOUR We the students of Lala Lajpat Rai College studying in S.Y.B.M.S –‘A’ are doing a research project on Perception of Product Attribute and Brand Switching Behavior. We would like to get your valuable responses and the responses will be kept confidential. Name: No. : Gender:

M F

Age: Less than 16 16-24 25 & above Occupation: Business/Service/Others Income: Less than 20,000 / 20,000-40,000 / 41,000 & above QUESTIONS 1. Are you a brand loyal person?

Yes No 2. Which sports brand you prefer? Reebok Nike Adidas Others (Please Specify)

3. Which brand would you associate as the most valuable brand? Reebok 66

Perception of product attribute in brand switching behavior Nike Adidas None 4. What are your major driving factors in brand switching? AGREE

DISAGREE

STRONGLY AGREE

STRONGLY DISAGREE

PRICE QUALITY PUBLICITY & ADDS TREND & STYLE 5. What is your opinion about the ment and publicity of the following brands? EXCELLENT

GOOD

SATISFACTORY NOT SATISFACTORY

REEBOK NIKE ADIDAS 6. Would you recommend others the brand you use or try the other one? Current Brand Others 7. Does controversy affect your brand choice/loyalty? Yes No 8. Suggestions:

THANK YOU 8.2 67

BIBLIOGRAPHY


•

Adidas, Annual Report 2002

•

Adidas, Annual Report 2001

•

Nike, Annual Report 2002

•

Nike, Annual Report 2001

•

Reebok, Annual Report 2002

•

Reebok, Annual Report 2001

•

Reebok.com

•

Nike.com

•

Adidas.com

•

Google.com

•

Wikipedia.com

68

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