Porter’s Five Forces Analysis of Reebok
|Name||Reebok International Limited|
|Industry||Fitness accessories, clothing and footwear|
|Headquarters||Boston, Massachusetts in USA|
|Profit||Profit not mentioned any where|
|Competitors||Nike, Adidas, Puma, Under Armour and Hanesbrands|
- Reebok was founded in 1890 inBolton,U.K byJospeh William Foster. Reebokinitially was a family business that made running shoes. Reebok is operatingsuccessfullyas an international sports brand.The revenue forthe year 2021 is recorded as $2.3Until 2021 Adidas owned Reebok, later it was acquired by Authentic Brands Group. Authentic Brands is an American holding corporation with over 50 brands, including Aéropostale, Nautica, and Volcom. On August 12, 2021, Authentic Brands Group announced that it will purchase the Reebok brand from Adidas for at least $2.5 billion. The transaction was completed on March 1, 2022.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a widely used model to evaluate companies’ strategies in reference to its industry for neutralizing the competition and increase the margins, it is developed by Professor Micheal E. Porter in 1979, at Harvard Business School.
Reebok Rivalry among Existing Competitor
- Reebok Business Segments:The three main business segments of Reebok are fitness apparel, fitness footwear and sports equipment or accessories. Reebok has labelled their sports shoes into further three main categories i.e. men’s, women’s, and children’s.They are often characterized as Running, CrossFit, Walking, Basketball, Training, and Classics.
- Reebok Global Operations Year 2021: Reebok’s objective over the next five years is to reach $10 billion in yearly retail sales worldwide.The company makes and sells athletic, fitness, and casual footwear, clothes, and equipment.Over time, Reebok expands into new areas and begins selling their items in over 28 countries globally.
- Nike:Nike generated the profits of $6.1 billion for the year 2022. The brand was formed in 1964 by William Jay Bowerman and Philip H. Knight and is headquartered in Beaverton, Oregon, in USA. NIKE, Inc. creates, develops, markets, and sells athletic footwear, clothing, accessories, equipment, and services.Nike annual revenue for 2022 was $46.9B and the assets worth for 2022 were $38.6B.
- Under Armour:Kevin A. Plank founded the company in 1996, and it is headquartered in Baltimore, Maryland in USA. Under Armour, Inc. creates, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and children. Itgenerated the revenue of $5.68B in 2021. Under Armour had profits created of $2.86B and assets worth $4.9Bin 2021.
- Adidas: Adidas AG made the profit of $2.5 billion in the year 2022. It mainly creates, distributes, and markets athletic and sports lifestyle goods.Adidas operates in the areas of Europe, North America, Asia-Pacific, Latin America, Emerging Markets, Russia/CIS, adidas Golf, Runtastic, and Other Businesses. Adolf Dassler established it in 1920, and it is based in Herzogenaurach, Germany. Adidas AG annual revenue for 2022 was $25.1B and the assets worth for 2022 were $25.2B.
- Investment in Research & Development-Marketing Cost and Brand Image:In December 2022, Authentic Brands Group (ABG) agreed to grant Aditya Birla Fashion and Retail Limited (ABFRL) exclusive distribution and sales rights for Reebok items in India, Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka. ABG also inked a licensing deal with Tristate Holdings Limited to become Reebok’s major licensee and operator in China, Hong Kong, Macau, and Taiwan.
Reebok Threat of New Entrants
- Global Fitness Wear Industry:The worldwide fitness sector is worth about $87 billion.In 2021, the fitness business in the United States earned $33.25 billion. 39% of Americans take fitness classes in the United States. The premium fitness brands have also patented their designs so it’s difficult for new entrants to enter the business.
- High Capital Investment -Trained Human Resources: CrossFit is a strength and conditioning program that involves expertise in ten different areas of fitness. Reebok employed 5 CrossFit trainers as full-time workers to teach Reebok employees in CrossFit workout on a regular basis.
- High Research & Development Cost: On-site at the company’s offices in suburban Boston has been the world’s largest CrossFit “box” (CF slang for “gym”). Among the five CrossFit employees were the CF Head Coach Austin Malleolo and fellow coach Denise Thomas who were assigned brand management and product feedback tasks.
- Technological Advancement: According to Reebok’s CEO Krinsky, Reebok will re-enter the running market in a big way with new technologies in 2024. This step towards innovation will also take Reebok back into other sport categories, like performance basketball. Krinsky, affirmed that the brand’s sneakers will be launched in 2024.
Reebok Bargaining Power of Suppliers
- Supplies Industry Influencer: Reebok is receiving the supply of their products from different countries that have low manufacturing cost including Vietnam, Philippines, Pakistan, Taiwan, China and Egypt etc. 52% of clothes sold in the United States is made in Asia, with the remainder coming from the Caribbean, North America, Africa, and the Middle East.
- Suppliers Collaboration The major portion of Reebok goods are made in 724 independently owned and run factories across the world. These factories employ more than 500,000 people. The clothing offered in Europe is supplied from Asia and Europe. Apparel marketed in the Asian Pacific region is generally manufactured in Asia. The quality control provides Reebok a competitive edge in business.
Reebok Bargaining Power of Buyers
- High Product Differentiation: Reebok collaborated with singer Kanye West and other famous influencers to gain customer attention.Reebok, unlike its competitors, aims to differentiate its brand by focusing on a specific group of customers who participate in mixed martial arts, and cross fit. It provides special shock absorption features in footwear to reduce the risk of injury during sports or gym exercise.
- Customer Satisfaction – After Sales Services:Reebok’s brand recognition is 87% among sports and outdoor online store consumers in the United States.Reebok was the first brand to use track spikes in their running shoes that was highly encouraged by the customers. The customer satisfaction score of Reebok is 61%. The bestselling category is Reeboks’ footwear.
- Government Rules & Regulations: Reebok follows the labor, supply chain and manufacturing related laws of their suppliers that are located in different countries around the globe.Being an international brand Reebok has gained access to licenses of different countries to which their goods are sold.
Reebok Threat of Substitute Products or Services
- Sportswear: The gym, health, and fitness club sector in the United States was predicted to be worth approximately $30.74 billion in 2021.Reebok’s sales in the United States increased 76% in the first six months of 2021, compared to 36% for the industry. This increase is reflected by both male and female customers.
- Brand Loyalty: Reebok’s brand recognition is 90% among sports and outdoor online store consumers in the United Kingdom. Reebok’s brand recognition among sneakers users in the United States is 90%. The poll was carried out in accordance with the notion of assisted brand identification, with respondents being shown both the brand’s emblem and the written brand name.
- Post-COVID 19 Market:According to a September 2021 poll, the Millennials spends the most on active-wear. Almost 60% of those born between 1980 and 1994 have purchased sportswear in the preceding 24 months.
- Forbes, Profile, Nike
- Forbes, Profile, Adidas
- Forbes, Profile, Under Armour
- Forbes, Reebok’s $2.4 Billion Price Tag Brings Hip-Hop & Sports Moguls To The Table. Available at Forbes
- Yahoo Finance, Here’s What We Know About the Future of Reebok as the Deal With ABG Nears Closing. Available at Yahoo Finance
- Statista (March 2022) Net sales of the Reebok brand worldwide from 2006 to 2021| Statista.Availableat.Statista
- Statista (July 2022) Revenue of the fitness, health and gym club industry in the United States from 2012 to 2022(in billion U.S. dollars) | Statista. AvailableatStatista.
- Statista (October 2021) Brand value comparison of Nike and adidas worldwide from 2010 to 2021(in million U.S. dollars) | Statista.Availableat Statista
- Statista (March 2022) |Net sales of the Reebok brand worldwide from 2006 to 2021(in million euros).Availableat Statista.
- Statista (Dec 13, 2022) |Reebok brand awareness, usage, popularity, loyalty, and buzz among sports and outdoor online shop users in the UK in 2022.Availableat Statista
- Statista (Dec 13, 2022) |Reebok brand awareness, usage, popularity, loyalty, and buzz among sneakers owners in the United States in 2022.Availableat Statista
- Statista (July 2022) |Reebok brand awareness, usage, popularity, loyalty, and buzz among sports and outdoor online shop users in the United States in 2022.Availableat Statista