Harvard Enterprise College 9-589-027 Rev. November eight, 1989
Tammy Bunn Hiller ready this case beneath the supervision of Professor John A. Quelch as the premise for sophistication dialogue fairly than for example both efficient or ineffective dealing with of an administrative scenario. Sure nonpublic information have been disguised.
Copyright © 1988 by the President and Fellows of Harvard Faculty. To order copies or request permission to breed supplies, name 1-800-545-7685 or write Harvard Enterprise College Publishing, Boston, MA 02163. No a part of this publication could also be reproduced, saved in a retrieval system, utilized in a spreadsheet, or transmitted in any type or by any means—digital, mechanical, photocopying, recording, or in any other case—with out the permission of Harvard Enterprise College.
1
Reebok Worldwide Ltd.
In June 1988, executives of Reebok Worldwide Ltd.’s Reebok Footwear Division (RFD) met to evaluate the corporate’s U.S. advertising communications program for the second half of the 12 months. Along with class promoting to advertise particular product strains corresponding to cardio sneakers, Reebok’s vp of promoting supposed to pursue three multiproduct umbrella campaigns: tv promoting through the 1988 Summer time Olympics; tv and print promoting with the tagline “Reeboks Let U.B.U.”; and print promoting to introduce Reebok’s new efficiency function, the Power Return System.
As well as, Reebok executives needed to evaluate their advertising communications plan for the Human Rights Now! world live performance tour. On March 29, Joe LaBonté, Reebok’s president and chief working officer, had introduced that Reebok was becoming a member of Amnesty Worldwide (AI) in sponsoring this tour which might have a good time the fortieth anniversary of the United Nations’ Common Declaration of Human Rights. Nevertheless, debate continued inside Reebok concerning the deserves of this sponsorship, about how aggressively Reebok ought to publicize its affiliation with the tour, and about how the proposed communications program for the tour associated to RFD’s general advertising communications plan.
Firm Background and Technique
Reebok’s antecedent, J.W. Foster and Sons, was based in England in 1895 as a producer of customized observe sneakers which had been marketed by mail worldwide. The corporate was renamed Reebok in 1958. In 1979, Paul Fireman purchased the North American distribution rights. In 1984 he and his backers, principally Pentland Industries plc, purchased the mother or father firm.
Fireman’s first imports into the US had been three kinds of hand-stitched, high-priced trainers. In 1982, satisfied that curiosity in working would plateau and aerobics would turn into the following health craze, Fireman launched the primary cardio/dance shoe, the Reebok Freestyle. The
Illustration by Jane Simon
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shoe was distinctive. It was made from garment leather-based. It was smooth, supple, wrinkled on the toe, and cozy to put on from day one. It was additionally extra enticing than opponents’ athletic sneakers. Moreover, it was the primary athletic shoe particularly focused at ladies.
With the introduction of cardio sneakers, Reebok started a interval of phenomenal development. Between 1982 and 1987, internet gross sales grew from $Three.5 million to $1.four billion, and internet revenue grew from $200,000 to $165 million. Reebok ranked first amongst main U.S. corporations in gross sales development, earnings development, and return on fairness for the years 1983 via 1987. Fireman’s objective was to turn into a $2 billion multinational by 1990.
Reebok’s development was completed via broadening of present product strains, growth into extra product classes and acquisitions. Exhibit 1 presents a chronology of Reebok’s new product line introductions and acquisitions. The corporate had 5 working models: Reebok North America (which included RFD and the Reebok Attire Division), Reebok Worldwide, Rockport, Avia, and Ellesse.
In 1987, RFD offered roughly 42.17 million pairs of sneakers to its U.S. retailers. The sneakers had been offered to shoppers for a mean worth of $43.00. RFD accounted for roughly 71% and 88% of Reebok’s 1987 gross sales and working revenue respectively. The division’s gross sales and estimated working revenue for 1983 via 1987 are proven in Desk A.
Desk A RFD Gross sales and Estimated Working Revenue ($ hundreds of thousands)
1983 1984 1985 1986 1987
Web gross sales $12.zero $ 64.zero $299.zero $841.zero $991.zero
Value of gross sales 6.eight 37.9 171.zero 475.zero 562.zero
Gross margin $ 5.2 $ 26.1 $128.zero $366.zero $429.zero
SG&A expense four.zero 14.zero 52.zero 131.zero 169.zero
Working revenue $ 1.2 $ 12.1 $ 76.zero $235.zero $260.zero
Within the 1980s, RFD diversified its product choices dramatically. In 1979 the division offered three sneakers. In 1988 it offered over 300 totally different sneakers in ten product classes. Cardio sneakers accounted for 56% of the division’s gross sales in 1984. In 1987, they comprised solely 29%.
The division offered its sneakers direct to retailers via seventeen unbiased gross sales organizations. This gross sales drive offered solely Reebok model merchandise and was paid on a fee foundation. A workers of discipline service and promotion representatives, employed by Reebok, supported the gross sales drive by touring the U.S. educating retailers and shoppers concerning the options and advantages of the division’s sneakers. RFD adopted a restricted distribution technique. Its sneakers had been offered solely via specialty athletic retailers, sporting items shops, and department shops. They weren’t offered in low-margin mass merchandiser or low cost shops.
RFD, like different main athletic shoe corporations, contracted out all of its manufacturing. The sneakers had been made in eight nations. Most of them, 71% in 1987, had been produced in South Korea. The division’s giant quantity wants, mixed with labor disruptions in South Korea, brought about provide issues in 1987. In late 1987, RFD added sourcing capability in Taiwan, China, Thailand, the Philippines, and Indonesia. It additionally contracted to take all the manufacturing of H.S. Company, a big South Korean footwear producer which produced roughly 30 million pairs of sneakers yearly.
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Three
The Athletic Footwear Business
Development of the Business
Between 1981 and 1987 the U.S. athletic footwear market greater than doubled in dimension. Wholesale gross sales of branded athletic footwear neared $Three.1 billion in 1987. Nonbranded footwear added one other $.four billion. Reebok held a 32.2% share of branded athletic footwear in 1987, up from Three.Three% in 1984.
The trade’s dynamic development started within the early 1980s with the working craze. The working shoe was a brand new product which didn’t change present strains. In comparison with the sneakers of the 1970s, it was made of various supplies, was extra performance-oriented and was costlier. It additionally grew to become a trend merchandise as Individuals embraced extra informal, health-conscious existence.
In 1983, working shoe gross sales declined dramatically as Individuals turned to different types of train. Nevertheless, new classes corresponding to cardio and health sneakers continued to drive trade development. The success of the cardio shoe prompted many corporations to develop ladies’s sneakers for historically male-dominated classes corresponding to basketball. By 1987, strolling sneakers, focused largely at older females, had been the quickest rising line. Business specialists anticipated eight%–12% development within the U.S. athletic footwear market in 1988.
In 1987, Reebok additionally held a four.four% share of the $four.5 billion foreign-branded athletic shoe market. Growth of overseas markets lagged three or 4 years behind the US. In 1987, the aerobics increase was simply taking off in Europe and the ladies’s athletic shoe market was largely untapped.
The Competitors
Nike, in second place, had an 18.6% share, down from 31.Three% in 1984. Based in 1964, Nike rose to prominence within the late 1970s because of high-tech improvements in trainers. In 1984, nevertheless, Nike ignored the aerobics development, wrongly relying on its trainers to maintain firm development. Its warehouses grew to become overstocked with working shoe stock which Nike needed to dump via low cost shops. This motion tarnished Nike’s repute with the commerce. From 1983 to 1985 its gross sales rose by solely 9%. Nevertheless, in 1985, the Air Jordan basketball shoe, named for Michael Jordan of the Chicago Bulls, generated gross sales of $100 million. In 1986, gross sales fell as rapidly as that they had risen when Jordan broke his foot early within the NBA season. That 12 months Nike misplaced its primary U.S. market share place to Reebok.
In 1987 Nike closed extra plant capability, slashed overhead, and spent $23 million to advertise its new “Air” line with a “Revolution in Movement” advert marketing campaign which featured the Beatles unique recording of “Revolution.” It additionally took benefit of Reebok’s provide issues to revitalize its vendor relations.
Nike’s expressed objective was to recapture the primary spot from Reebok. For 1988, in keeping with Promoting Age journal, Nike was stepping up promoting spending by 36% to $34 million. Ten million of this funds can be spent on community tv for its new “Simply do it” marketing campaign which might break in mid-August. In February 1988, Nike launched a fashion-oriented nonathletic model for ladies in an try to penetrate a market wherein it was traditionally weak. The sneakers, known as IE, didn’t carry the Nike title.
Converse held an eight.1% share of the U.S. market in 1987, down from 11.2% in 1984. The Converse title was intently recognized with canvas athletic sneakers for youngsters and youths, significantly
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for basketball. In 1988, the corporate launched the Evolo line of leather-based athletic sneakers that includes upscale Italian styling and aimed toward a extra fashion-conscious buyer.
Adidas, the world’s largest athletic shoe firm, had a 5.7% U.S. share and a 25% world share in 1987. Headquartered in West Germany, Adidas misplaced $30 million on its U.S. gross sales. Its 1988 U.S. promoting funds was estimated at solely $Three million.
Avia, owned by Reebok, was the fifth largest competitor within the U.S. branded athletic shoe market. Avia emphasised design know-how and focused lively athletic members who valued efficiency and performance over different product options. With 1987 gross sales of $157 million, its share was four.9%, up from .four% in 1984. Avia’s 1988 advert funds of $20 million was double 1987 expenditures.
Business specialists grouped Avia with LA Gear (2.Three% share) and Asics Tiger (2.2% share) as small corporations with modern merchandise and the potential to turn into vital gamers available in the market. Twenty-five different corporations competed within the branded athletic shoe market. Every had discovered a distinct segment for itself, however none had been capable of broaden past it.
Competitors remained eager in 1988. First, larger leather-based prices, elevated labor charges, and a weakened greenback had elevated the price of Far East manufacturing by 10% in 1987. Additional price hikes, which might put strain on the margins of all opponents, had been anticipated in 1988. Second, with a purpose to scale back stock markdowns, retailers had been narrowing their choices to solely 4 or 5 manufacturers and one or two strains of some different manufacturers. Third, athletic shoe product life cycles gave the impression to be shortening. By 1988 the lifetime of a brand new mannequin averaged solely about 9 months.
Shopper Attitudes and Habits
Paul Fireman credited Reebok’s success to a capability to remain near the patron. “Shopper preferences are consistently altering,” he contended, “and future progress is linked to our ability in understanding the messages despatched from so we are able to ship the suitable merchandise.”
Business specialists segmented athletic shoe shoppers into severe athletes, weekend warriors who used their sneakers for sports activities however weren’t zealous athletes, and informal wearers who used athletic sneakers just for streetwear. The “pyramid of affect” mannequin, historically utilized in advertising athletic sneakers, posited that the intense athlete was a really small section of the market however an essential opinion chief for each weekend warriors and informal wearers. Informal wearers accounted for 80% of athletic shoe purchases, needed each model and luxury, and had been thought to decide on sneakers based mostly on what they noticed severe athletes sporting.
The pyramid mannequin led athletic shoe entrepreneurs to emphasise technological and efficiency superiority with a purpose to attraction to severe athletes. New sneakers had been first launched in unique sports activities outlets and expanded into wider distribution steadily.
The validity of the “pyramid of affect” mannequin was questioned by some Reebok executives who believed that many shoppers weren’t reached by promoting directed on the severe athlete. They pointed to outcomes of a June 1986 survey which indicated that pals and relations, not athletes, had been a very powerful affect in athletic shoe customers’ model choices. Exhibit 2 reveals the sources of knowledge which athletic shoe purchasers used to resolve which model to purchase. As well as, in a world the place new athletic shoe kinds may very well be knocked off in three months, the executives questioned the appropriateness of recent product introductions not directed on the mass market.
Within the 1986 survey, shoppers had been requested how essential numerous attributes had been when deciding which athletic sneakers to purchase. Fifty-eight p.c of respondents rated consolation extraordinarily essential, adopted by help/stability (43%), design (36%), high quality (35%), worth (30%), trend (20%), and management (12%).
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An October 1987 angle and utilization research indicated that 95% of athletic shoe house owners had been conscious of Reebok sneakers, up from 57% two years earlier than. Ninety-eight p.c of all teenagers, a section that bought over three pairs of athletic sneakers per 12 months, was conscious of Reebok model. Furthermore, unaided consciousness of Reebok had doubled over the previous two years whereas that of Nike had dropped. Fifty-three p.c of youngsters surveyed thought-about Reebok the “in” shoe in comparison with 38% for Nike. Reebok was additionally rated superior to its main opponents in each high quality and luxury.
The model had excessive penetration. Fifty-two p.c of all individuals surveyed and 70% of the kids surveyed had ever owned Reebok sneakers. Two years earlier than, solely 18% of individuals surveyed had ever owned Reebok sneakers. Reebok’s present possession was 45% of these surveyed, larger than for another model. As well as, Reebok sneakers had been at the moment worn in 61% of the households wherein an athletic shoe was bought in 1987. The house owners claimed to be loyal as nicely. Two out of three of those that final bought Reebok supposed to make Reebok their subsequent buy, a repurchase fee larger than that for any competing model. Lastly, Reebok house owners had been considerably extra probably to purchase athletic sneakers at common worth than had been nonowners.
The outcomes of the angle and utilization research had been optimistic. Nevertheless, a sequence of focus group interviews in October 1987 uncovered some disturbing qualitative data.1 In previous focus teams, when members had been requested to explain Reebok sneakers essentially the most used adjectives had been modern, vivid, adventurous, experimental, particular, vibrant, and new. Nevertheless, the October 1987 focus group members used phrases corresponding to comfy, youthful, power, enjoyable, various, clear, chief, a regular, and center class. Teenagers stated they had been nonetheless shopping for Reeboks, however the best way they talked about them had modified. They used to brag about their Reeboks. Now a few of them apologized for them. On the identical time, members insisted that Reebok was not a badge model. In different phrases, sporting Reeboks didn’t model one as a jock or a yuppie or another “kind.” “My Reeboks” meant one thing totally different to every particular person.
Sharon Cohen, vp of Promoting and Public Relations for Reebok North America since 1984, concluded: “When Reebok was new, simply being found, we had a cult-like following. We had been contemporary and thrilling and had introduced new dimensions to the athletic shoe trade—model and luxury. At present we’re a mass attraction shoe and this requires new strategic pondering. Now that everybody is sporting Reeboks, our job and the job of our promoting is to maintain our model thrilling.”
Marketing Communications
Earlier than 1987
In keeping with Cohen, Paul Fireman “at all times began with promoting. If he had solely $100, he’d spend it on promoting.” Within the early years of the corporate, he made his personal media buys. He purchased astutely, making advert hoc print media purchases at low charges to make the model as seen as potential although gross sales had been modest.
By the early 1980s, RFD’s promoting program consisted of product-specific, sports-context print adverts, heavy focus in specialty periodicals focused at severe athletes, lighter buys in associated general-interest magazines, media-exposed use of the merchandise by a choose group of profitable athlete endorsers, and an excellent emphasis on grassroots involvement.
1A focus group brings collectively six to 10 people for an open-ended dialogue led by a moderator.
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Reebok paid star athletes to put on the Reebok label and to take part in Reebok-sponsored promotions corresponding to tennis clinics and autographing classes. These athletes might additionally earn bonuses by profitable specified tournaments/video games/occasions and/or by profitable specified honors inside their sports activities. As well as, lesser athletes, primarily promising children, acquired free sneakers and clothes from Reebok however had been paid nothing. By supporting their coaching efforts on this method, Reebok elevated the probability of signing them to endorsement contracts in the event that they excelled later.
RFD’s advertising of cardio sneakers exemplified its heavy grass roots involvement within the sports activities addressed by its merchandise. The division printed aerobics newsletters, sponsored seminars and clinics, funded analysis on damage prevention, and created the game’s first certification program for instructors. It additionally provided aerobics instructors reductions on sneakers and put Reebok sneakers on the toes of many tv aerobics instructors.
As well as, RFD communicated with its shoppers via point-of-sale items and merchandising promotions in retail shops, outside promoting, radio, and, beginning in 1986, tv. RFD additionally marketed in commerce publications and printed catalogues and gross sales brochures to Help its salespeople higher talk with their sellers.
As RFD’s gross sales grew, so did its promoting, promotion, and public relations budgets. Mixed, they grew from $2.7 million (four.2% of gross sales) in 1984 to $6.5 million (2.2% of gross sales) in 1985, $10 million (1.1% of gross sales) in 1986, and $30 million (Three.zero% of gross sales) in 1987.
In 1986, RFD started testing new approaches to promoting. It ran the commercial proven in Exhibit Three which featured a pair sporting Reebok sneakers driving a bike to brunch and was the primary advert to function an athletic shoe marketed exterior of a sports activities context. It was adopted by an 18- month lengthy marketing campaign with the theme “As a result of life will not be a spectator sport.” Every print advert, an instance of which is proven in Exhibit four, emphasised the participant and the enjoyment of the game, not the shoe and its attributes. The adverts used an uncommon method known as prism colour wherein pictures had been remodeled into pastel acrylic work. They ran in a balanced mixture of 40 basic curiosity and specialty sport magazines.
The 1987 Program
Annually RFD developed a divisional advertising communications funds plus separate budgets for every class of sports activities shoe. Class managers had been chargeable for the choice making and administration of their budgets whereas Cohen was chargeable for managing the divisional funds. Cohen and the class managers all reported to Frank O’Connell, the president of Reebok North America. Exhibit 5 presents the division’s advertising group in relation to the entire company.
RFD’s 1987 divisional promoting funds is printed in Exhibit 6. In 1987, RFD marketed through print, radio, and tv directed each towards the commerce and shoppers. Commerce promoting, illustrated in Exhibit 7, emphasised that “Reebok is efficiency.” Shopper promoting via July targeted on the “As a result of life will not be a spectator sport” marketing campaign. In August, the division started a brand new multithemed marketing campaign with differing tv and print adverts designed for every sport class. Relying on the game, print adverts addressed a number of of 4 themes: efficiency, new know-how, “basic” styling, and trend. Displays eight via 11 present adverts for 4 sport classes. 5 tv adverts every offered a special sports activities shoe however all dramatically employed movement and featured “actual individuals,” not excessive profile athletes. Radio was used to bolster the tv message.
The range in RFD’s 1987 promoting effort was exemplified by contrasting the second-half promoting of sneakers in two sports activities classes, tennis and basketball. Tennis shoe promoting was focused at 18- to 49-year-old adults. The class supervisor’s $975,000 promoting funds was break up practically equally between tv and magazines. Each the journal and tv copy evoked
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tennis tournaments. The TV adverts had been proven solely through the U.S. Open. The print adverts ran in 9 tennis magazines corresponding to Tennis and Racquet Quarterly and three basic sports activities magazines corresponding to Sports activities Illustrated.
Males’s basketball shoe promoting was focused at 12- to 24-year-old males. Roughly $1.2 million was spent, 60% on tv, 24% on print, and the remainder on radio. Adverts in all media confirmed newbie gamers in motion on neighborhood playground basketball courts. Tv adverts ran on community prime time and late night time and through sports activities occasions. Magazines used had been Sports activities Illustrated, Boys’ Life, and Excessive College Sports activities.
Girls’s basketball shoe promoting was focused at feminine teenagers. The $960,000 ladies’s basketball shoe funds, like that for tennis, was break up evenly between tv and print. Not like tennis, nevertheless, the adverts had been trend oriented and didn’t present sneakers being utilized in sports activities contexts. The tv advert ran on early-fringe, weekend, and late-fringe community TV and on the MTV (music tv) cable channel. The print adverts ran in seven basic curiosity, trend, and teenage magazines corresponding to Individuals, Glamour, and Seventeen.
Along with product-specific promoting, RFD sponsored a particular insert in Rolling Stone journal. The insert, titled “Artists of the Yr 1967-1986,” featured 5 Reebok shoe adverts. These adverts had been one-offs, i.e. they had been used solely as soon as, within the Rolling Stone insert. Every advert featured somebody giving a “Greatest efficiency in a pair of Reeboks” in a decidedly nonsports context. Exhibit 12 reveals one of many adverts.
Grass-roots promotions and athlete endorsements remained a big a part of RFD’s communications program in 1987, costing roughly $18 million. Promotional occasions included sponsorships of tennis tournaments for juniors and celebrities, the Reebok Instructing Professional Traditional for tennis professionals, the Reebok Skilled Aerobics Teacher Alliance, and the Reebok Racing Membership. Shoe endorsers included basketball gamers Dennis Johnson, Danny Ainge, and Brad Daugherty, marathoner Steve Jones, tennis gamers Hana Mandlikova and Miloslav Mecir, aerobics skilled Denise Austin, and the members of the U.S. Nationwide Biking Workforce.
The 1988 Program
Class promoting. The 1988 class budgets totaled roughly $22 million, $eight million of which was earmarked for category-specific print and tv adverts. The remainder was allotted to athlete endorsements and grass-roots promotional occasions. The communications program for every class diversified extensively as exemplified by the allocation of the 1988 budgets for tennis and basketball proven in Exhibit 13.
Virtually 75% of the tennis class expenditures in 1988 had been allotted to athlete endorsements and native and nationwide event sponsorship. The target was to take care of Reebok tennis sneakers’ credibility on the earth of tennis. Reebok at the moment had a 40% share of the U.S. tennis shoe market and marketed the 5 best-selling tennis sneakers on the earth. Fewer than 10% of Reebok tennis sneakers offered, nevertheless, had been used on the tennis court docket; the remainder had been used for streetwear.
Tennis shoe print promoting in 1988 was geared towards informal utilization. Thirty p.c of the funds was allotted to hard-core performance-oriented adverts. The remainder was allotted to life- model/fashion-oriented adverts, a departure from the strict efficiency orientation of the previous.
Reebok basketball sneakers, launched in late 1985, had been the best-selling basketball sneakers within the U.S. The class’s 1988 tv and radio adverts featured individuals speaking concerning the biggest basketball gamers that they had ever seen, the “legends” of the outdated playgrounds. Print and outside adverts confirmed “actual” individuals engaged in playground basketball. Shopper promotions had been of two sorts. First, a court docket portray program sponsored renovation of basketball courts in low revenue areas. Second, ten
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native basketball tournaments, such because the Gus Macker Three-on-Three event in Belding, Michigan, had been sponsored. Gamers beneath contract to Reebok attended the occasions to intensify their impression.
“U.B.U.” umbrella promoting. Based mostly on the 1987 client analysis, Frank O’Connell concluded that RFD wanted a brand new umbrella marketing campaign to rekindle the vitality of the Reebok title whereas making certain its continuity as a mainstream model. He charged Chiat/Day with growing promoting copy that was “on the sting, far out, with a singular look that will be new not solely to footwear promoting, however to the entire promoting trade.” Chiat/Day advisable that the brand new marketing campaign ought to stress freedom of expression and the individuality which one might obtain sporting a pair of Reeboks, however on the identical time keep the model’s mass attraction.
The consequence was an off-beat marketing campaign with the tagline “Reeboks let U.B.U.” The adverts featured zany vignettes of individuals expressing their particular person kinds of their Reebok sneakers: a three-legged man strutting in a baseball cap and raincoat, a woman dressed like a princess rising from a subway exit sporting her crown and her Reeboks, a bevy of wooden nymphs tiptoeing via a forest glade, a room filled with pregnant ladies cardio dancing, and a younger couple rolling on the grass. All through the TV commercials, “U.B.U.” flashed on the display in giant, jagged, typewritten-style letters. Within the remaining seconds of every advert, “Reeboks let U.B.U.” appeared throughout the display. The adverts can be focused at 18- to 34-year-old adults, significantly ladies. They might be run on prime-time and late-night reveals corresponding to “The Surprise Years,” “Moonlighting,” “LA Legislation,” “Thirtysomething,” and “Late Night time with David Letterman,” and on cable channels corresponding to MTV, ESPN, and WTBS.
The proposed U.B.U. print marketing campaign used a revolutionary new colorization course of. A wedding of images and illustration, its completed product resembled that of colorized movies. The print adverts, just like the TV ones, featured self-expression in Reebok sneakers and used the identical tag line. Exhibit 14 reveals a pattern print advert. The adverts would run in trend magazines corresponding to Esquire and Glamour, leisure magazines corresponding to Individuals, and life model/special-interest magazines corresponding to Rolling Stone, Self, and New York Lady. Insertions would start in August points and run at the least via December. As well as, adverts would seem in July editions of 5 athletic shoe commerce magazines.
Olympics promoting. RFD bought $6 million value of tv promoting time throughout NBC’s protection of the 1988 Summer time Olympics which spanned the final two weeks of September. Though Reebok sneakers weren’t “Official Merchandise of the 1988 Summer time Olympics,” this media buy represented the most important concentrated spend degree within the historical past of the athletic footwear trade and guaranteed the Reebok model exclusivity in athletic footwear promoting throughout NBC’s protection of the Summer time Video games. The Olympics promoting was anticipated to excite Reebok model sellers, lots of whom believed that the principal strategy to promote athletic sneakers was via adverts associating them with sports activities.
After committing to the Summer time Video games’ media purchase, copy needed to be finalized for each the Olympics marketing campaign and the umbrella marketing campaign. The copy proposed by Chiat/Day for the Olympics adverts featured “actual” individuals sporting Reebok sneakers frantically engaged in avenue or front-yard sports activities. Commercials started with the tagline “Summer time Video games, Bronx, New York” (or Baltimore, Maryland, and so on.). On the finish of every business, one particular person stopped his/her motion and acknowledged “And also you thought all the joy was in Seoul.”
ERS. Each the Olympics and U.B.U. adverts can be focused at style-conscious 18- to 34-year- outdated adults. With a purpose to attain lively sports activities members, RFD additionally deliberate to run a performance-based print marketing campaign that includes Reebok’s new Power Return System (ERS). ERS sneakers had been designed to compete with Nike’s Air line within the $75-$90 per pair retail worth vary. Compressed air sandwiched in 4 brightly coloured tubes seen via the only of the shoe cushioned the foot when it hit the bottom, captured a number of the power launched and returned it to the foot for further bounce. The proposed ERS adverts would carry the slogan “The Revolution is Over” in response to Nike’s profitable
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1987 “Revolution” marketing campaign. Exhibit 15 reveals a pattern advert. The adverts would run from June to December in sports activities magazines corresponding to Runner’s World, Outdoors, and Sports activities Illustrated.
RFD’s divisional advertising communications funds would cowl the $17 million mixed price of the U.B.U., Olympics, and ERS campaigns via the top of 1988. Exhibit 16 supplies a breakdown of the proposed advert spending by marketing campaign and media.
The Human Rights Now! Tour
Whereas O’Connell, Cohen, and Chiat/Day had been growing copy for RFD’s freedom of expression umbrella marketing campaign, a chance arose to Help finance a world live performance tour conceived by AI. The target of the tour, later named Human Rights Now! World Live performance Tour, was to help AI’s worldwide effort to develop consciousness of the human rights assured within the United Nations Common Declaration of Human Rights.
Chiat/Day introduced the thought to Reebok and steered that it Help underwrite the tour with a purpose to attain younger individuals with a optimistic message concerning the firm. Earlier than continuing, Joe LaBonté commissioned a phone survey of 1,000 U.S. adults to find out their consciousness of and angle towards AI. Consciousness was highest (60%) amongst individuals 18 to 34 years outdated. Virtually half of this age group (49%) had a good angle towards AI and solely 7% had an unfavorable angle. The remainder had been impartial or unaware.
Joe LaBonté determined to help the Human Rights Now! World Live performance Tour as a result of he believed within the tour’s trigger and since it provided the chance to offer one thing again to the younger individuals who had been chargeable for the corporate’s success. After discussions with Paul Fireman, he dedicated Reebok as sole underwriter of the tour. He felt that the time it might take for AI to enlist a number of sponsors would probably delay the live performance tour till 1989. As well as, being sole company sponsor would give Reebok a larger voice in tour promotion choices than if the job had been shared.
LaBonté introduced Reebok’s underwriting of the tour at a press convention in Los Angeles, California, on March 29. On the identical time, telegrams asserting the sponsorship had been despatched to all of Reebok’s retailers. Quickly thereafter, letters explaining Reebok’s involvement with the tour and the Reebok Human Rights Award had been mailed to all Reebok workers, U.S. Reebok gross sales businesses, and Reebok Worldwide Division distributors.
As soon as dedicated to the tour, LaBonté fashioned a process drive of himself, Linda Lewi, vp of Cone Communications, Reebok’s public relations company, and Angel Martinez, vp of enterprise growth, to deal with the general public relations and promoting surrounding Reebok’s involvement with the tour. Amongst their most essential duties was the administration of relations between Reebok and AI.
AI was an apolitical group with a worldwide grass-roots community that attempted to make sure respect for human rights, the discharge of nonviolent prisoners of conscience, honest and immediate trials for all political prisoners, and an finish to torture and executions. AI was funded by 700,000 members in 150 nations. It strove to be unbiased and neutral. The group didn’t help or oppose any authorities or political system and accepted no monetary contributions from governments. AI’s actions included letter-writing campaigns wherein AI members despatched letters, playing cards, and telegrams on behalf of particular person prisoners to authorities officers; publicizing patterns of human rights abuses; and conferences with authorities representatives. Members additionally organized public consciousness occasions corresponding to vigils exterior authorities embassies. Since its founding in 1961, AI had labored on behalf of greater than 25,000 prisoners all over the world. In 1987 over 150 of the prisoners of conscience “adopted” by teams in the US had been launched.
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This doc is permitted to be used solely by Katherine Tang in MGT 247 Promoting & Promotions Winter 2021-22 taught by Margaret Campbell, College of California – Riverside from Dec 2021 to Apr 2022.
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Human Rights Day, December 10, 1988, would mark the 40th anniversary of the Common Declaration of Human Rights. Adopted by the Basic Meeting of the United Nations in 1948, the declaration, based mostly on the dual pillars of freedom from need and freedom from worry, proclaimed elementary and equal rights for “all peoples and nations.” On March Three, 1988, AI launched its most formidable marketing campaign ever. Titled Human Rights Now!, its objectives had been to mobilize public opinion and strain governments to honor the declaration. In March, AI circulated copies of the declaration and petitions in help of it all over the world. The mixed petition can be introduced to the United Nations on December 10.
In 1986, AI had sponsored an American rock music live performance tour which introduced AI 100,000 new members, most of whom had been highschool and faculty college students. This success led AI to view music as an essential automobile to unfold its message. Therefore, the Human Rights Now! live performance tour was conceived and scheduled to start in September 1988. Though the venues and artists weren’t all finalized, AI hoped to incorporate nations on 5 continents, together with some with data of frequent human rights violations. Eighteen live shows had been deliberate in 16 nations. Agency venues included Los Angeles, Philadelphia, London, and Brazil. Prospects included Zimbabwe, USSR, India, Thailand, Yugoslavia, Japan, Argentina, Italy, Spain, France, Ivory Coast, Costa Rica, and Canada. The six-week tour would function each worldwide artists and nationwide artists of every nation wherein the tour performed. All artists would play free of charge. Sting, Peter Gabriel, Youssou N’Dour, and Tracy Chapman had dedicated to the entire tour. Bruce Springsteen was contemplating becoming a member of the tour. If he did so, he would headline the occasion.
AI estimated that the tour would price $22 million to supply. It anticipated to lift $12 million through ticket gross sales and broadcast rights. This left a $10 million shortfall. Due to this fact, for the primary time in its historical past, AI sought company help.
In an settlement signed on April 22, Reebok dedicated to offer $2 million seed cash instantly and to finance the tour deficit to a most of $eight million. As well as, the nonprofit Reebok Basis determined to fund as much as $2 million.2 The tour deficit was outlined because the tour receipts acquired by AI from all sources apart from Reebok and charitable contributions to AI minus all tour bills.
AI needed to seek the advice of with Reebok on all tour issues however had the ultimate choice on most features of the tour. Tour brand, title, and the design of tour merchandise required mutual approval. Reebok had sure rights to the tour title and brand in addition to pictures of the artists and audio and visible materials created by AI and Reebok through the tour. Reebok might take part within the negotiation of the sale of tv, radio, theatrical, and residential video rights for any tour live performance. The corporate might additionally create its personal promoting with respect to the tour and its functions. As well as, Reebok had the unique proper to fabricate all tour merchandise together with clothes, posters, buttons, applications, movies, and books. The tour brand, promoting, promotional supplies, and merchandise would all carry “Made potential by the Reebok Basis” as a tagline. AI can be chargeable for promoting tour merchandise on the grounds of the live performance on live performance days. Reebok had the unique proper to promote it via all different channels. Web income from sale of tour merchandise had been thought-about tour receipts. Within the unlikely occasion that merchandise internet income exceeded the tour deficit, the stability can be donated to AI.
To additional emphasize Reebok’s curiosity in human rights, the duty drive determined to ascertain the Reebok Human Rights Award which was unbiased of AI. The $100,000 annual award, to be funded via the Reebok Basis, can be break up between two younger individuals beneath 30 years of
2The Reebok Basis was a nonprofit group arrange in 1987 to hunt out grant alternatives. In its first 12 months, the Basis awarded grants to 32 organizations within the fields of schooling, arts/tradition, human/social providers, well being and faith.
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age, one male and one feminine. It might honor younger individuals who, by circumstance or alternative, acted towards nice odds to lift public consciousness of and thereby Help defend freedom of expression, or who suffered of their makes an attempt to train their freedom of expression.
In early June, the duty drive met to finalize a advertising communications program for the tour. Lewi proposed the $5 million plan proven in Exhibit 17. This expense can be along with the price of underwriting the tour. The plan consisted of pre-event, occasion, and post-event promoting, promotions, and public relations.
The proposed pre-event plan included the next: promoting the tour on nationwide and spot radio, promoting on community and cable tv stations through twenty public service bulletins that includes celebrities speaking about human rights abuses, promoting with spreads emphasizing a human rights theme in Rolling Stone, Spin, L.A. Model, Particulars, and Interview magazines and within the campus newspapers of the highest 60 faculties and universities, talking engagements by Reebok and AI executives earlier than faculty management teams, interviews of AI executives and Human Rights Now! tour artists on “Good Morning America” and related applications to clarify concerning the tour and the award, periodic newsletters and data conferences for workers, gross sales businesses, and worldwide distributors, and premiums corresponding to T-shirts with the tour brand to be given to retail retailer clerks to stimulate their consciousness and pleasure concerning the tour. The radio and journal adverts would break on August 1, adopted by the tv adverts in mid-August and the campus newspaper adverts in early September.
Tentative plans for the occasion communications included the next: broadcasting at the least one of many live shows through community TV or cable, interviews to be given by the artists, AI, and Reebok executives on “Good Morning America” and related reveals, a radio petition drive to affirm help for the Common Declaration of Human Rights, promotions via bookstores and report shops providing free live performance tickets and tour merchandise to profitable shoppers, worker and retailer sweepstakes with winners to be given free journeys and tickets to live shows in Los Angeles or London, free tickets to be given to VIP clients in every nation with a venue, hospitality suites arrange at venues to entertain VIP clients, use of Reebok athletes to attend occasion events and to offer third celebration endorsements of Reebok’s underwriting of the tour, and welcoming all RFD workers to a closed circuit viewing of one of many live shows.
The post-event plan included the next: tales launched to main newspapers, commerce publications, and leisure, life model, and enterprise magazines describing the tour’s success and Reebok’s charitable contribution to that success, sale of a tour documentary video and ebook, use of video and ebook as retailer premiums, and the Reebok Human Rights Award ceremony.
The duty drive needed to resolve what adjustments, if any, to make to the proposed communications plan. Different Reebok executives had been consulted previous to the assembly. A number of gross sales managers questioned: “How will this promote sneakers?” They wished to discover alternatives for promotional tie-ins on the level of sale and advocated working U.B.U. adverts through the tv broadcasts of the live shows. They believed that each alternative to take advantage of Reebok’s affiliation with the tour ought to be used to promote extra sneakers.
Different executives disagreed. They cited dangers to Reebok from affiliation with the tour and suggested that the corporate hold its involvement with the tour low-key in its shops. Some executives had been additionally cautious of involving Reebok’s athletes within the tour communications program. They feared that any damaging tour publicity might rub off on the athletes and harm their affect as opinion leaders.
On the outset of the assembly, LaBonté acknowledged: “The Human Rights Now! live performance marketing campaign guarantees to be essentially the most thrilling occasion this 12 months within the athletic footwear trade. Our involvement with the tour have to be perceived positively by our shoppers, sellers, distributors, and workers. We should additionally be certain that the tour’s promoting and promotion mesh with RFD’s general 1988 communications program.”
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Exhibit 1 New Product Line Introductions and Acquisitions
Introductions
Yr Product Line Launched
1979 Reebok trainers 1982 Reebok aerobics sneakers 1983 Reebok tennis sneakers 1983 Reebok health sneakers 1984 Reebok kids’s athletic sneakers 1985 Reebok attire 1985 Reebok basketball sneakers 1986 Reebok strolling sneakers 1987 Reebok volleyball/Indoor court docket sneakers 1987 Reebok sports activities conditioning sneakers 1987 Reebok infants’ and youngsters’s sneakers 1987 Metaphors ladies’s informal consolation sneakers 1988 Reebok golf sneakers 1988 Reebok biking sneakers
Acquisitions
Date Firm Acquired Product Line
October 1986 The Rockport Firm Informal, gown, and strolling sneakers
April 1987 Avia Group Worldwide, Inc.
Donner Mountain Company. (subsidiary of Avia)
Athletic footwear for aerobics, basketball, tennis, working, strolling, health/ sports activities conditioning, and volleyball Strolling sneakers, informal sneakers, and climbing boots
Could 1987 John A. Frye Company Leather-based boots and informal and gown sneakers
June 1987 ESE Sports activities Ltd. Reebok’s Canadian distributor
January 1988 Ellesse USA, Inc.: unique rights to the Ellesse trade-marks for the USA and Canada
Sportswear and athletic footwear
Exhibit 2 Sources of Info Which Athletic Shoe Purchasers Used to Help Resolve Which Model to Purchase
Reebok
Info Supply Whole Customers Nonusers
Buddy or relative 72% 69% 74% Coach or teacher 65 64 65 Salesperson 54 53 54 Article in journal 50 52 48 Commercial 45 43 47
Notice: All individuals included within the survey had purchased athletic sneakers for their very own use throughout the 12 months previous to the survey and had been conscious of the Reebok model. Reebok customers had been individuals who claimed to personal and put on Reebok sneakers pretty repeatedly. Reebok nonusers had been individuals who didn’t.
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Exhibit Three 1986 Reebok “Motorbike” Print Advert
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Exhibit four 1986 Reebok “Spectator Sport” Print Advert
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This doc is permitted to be used solely by Katherine Tang in MGT 247 Promoting & Promotions Winter 2021-22 taught by Margaret Campbell, College of California – Riverside from Dec 2021 to Apr 2022.
Reebok Worldwide Ltd. 589-027
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Exhibit 5 Reebok Footwear Division Marketing Group
COO and President Reebok lnternational Ltd.
Joe LaBonté
Company Public Relations
Cone Communications Linda Lewi
President Reebok North America
Frank O’Connell
Vice President Enterprise Growth
Angel Martinez
Vice President Promoting and Public Relations Sharon Cohen
Supervisor of Market
Analysis
Reebok Footwear Division
Class Managers
Reebok Attire Division
Canada Reebok
Class Supervisor Tennis
and GoIf
Class Supervisor
Basketball, Indoor Court docket, and Strolling
Class Supervisor Operating
and Biking
Class Supervisor Sports activities
Conditioning/ Health
Class Supervisor Kids
and Reebok
Class Supervisor Aerobics
and Informal
Exhibit 6 Reebok Footwear Division 1987 Promoting Finances ($ hundreds)
Tv Community Spot Cable Whole TV
$ 6,354 2,107
222 $ eight,683
Radio Spot $ 179
Print Magazines Newspapers Whole print
$ 7,475 166 $ 7,641
Outside and different Whole
$ 350 $16,853
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9-589-027 Rev. November eight, 1989 Harvard Enterprise College
Tammy Bunn Hiller developed this case beneath the supervision of Professor John A. Quelch to function a springboard for sophistication debate fairly than to reveal efficient or ineffective administrative administration. Sure nonpublic data has been masked.
The President and Fellows of Harvard Faculty personal the copyright since 1988. Name 1-800-545-7685 or contact Harvard Enterprise College Publishing, Boston, MA 02163 to order copies or request permission to repeat supplies. With out the consent of Harvard Enterprise College, no portion of this ebook could also be duplicated, saved in a retrieval system, utilized in a spreadsheet, or communicated in any type or by any means—digital, mechanical, photocopying, recording, or in any other case—in any type or by any means.
1
Reebok Worldwide Ltd. is a sportswear firm based mostly in the UK.
Executives from Reebok Worldwide met in June 1988 to debate the way forward for the corporate.
