Reebok 2006 Annual Report Download - page 61

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Brand Segments › » Reebok
Selective Approach to Solidify Leadership in Lifestyle
Despite our initiatives to reinforce our sports credibility and
increase our sports-related business, catering to sports life-
style consumers continues to be an important pillar of our
brand strategy at Reebok. Over the last years, we established
our brand as a major competitor in the global sports lifestyle
market. In particular, we built our brand’s connection with
urban consumers by, for example, introducing music-related
footwear products with entertainers such as Jay-Z and
50 Cent. To position Reebok as a sports and lifestyle brand,
we will continue to offer fashion-oriented sports-inspired
products. However, we are taking a selective approach to
ensure that we maximize credibility in sport by limiting expo-
sure to the sports lifestyle market. We will continue to partner
with entertainers, actors and artists to appeal to a variety of
consumers and to stress individuality in our product offering
combining elements of sport, entertainment and fitness. This
will also be reflected in our marketing concepts, such as our
“Best On | Best Off” campaign.
Rockport: Casual Lifestyle Market Focus
The Rockport brand represents another vehicle for us to
tackle the global lifestyle market. At Rockport, we strive to
be a leading global, casual lifestyle brand that delivers real
and tangible differences that better the consumer’s experi-
ence through style and technology. To fully address consumer
needs in the casual lifestyle market, our product offering
comprises dress casual, casual and outdoor footwear as
well as apparel and accessories with a focus on functionality
and style. We will continue to convert Rockport from being
a brand whose business is heavily weighted towards North
America and which particularly targets mature male consum-
ers to a global, style-oriented brand targeting younger male
and female consumers. Our marketing concepts will concen-
trate on driving the brand’s perception in consumers’ minds
as a leader in functionality and style. We strive to expand our
global market position by leveraging our heritage as the first
brown shoe brand to incorporate comfort technology coupled
with a significant technical advantage over the competition.
Balancing Global Wholesale Distribution
To reduce overexposure to certain retail channels (e.g. athletic
specialty, family footwear), we are refining our distribution
strategy at Reebok. As part of our efforts , we are broaden-
ing our presence in all major retail formats (athletic specialty,
sporting goods, family footwear, and department stores) to
get a more balanced product distribution and to reduce the
dependence on a particular channel or customer. At Reebok,
we utilize our own-retail network primarily to best manage
our clearance activities. As a result, we generate the vast
majority of revenues through our wholesale business. On a
global basis, we are buying back distribution rights for the
Reebok brand in Europe and Asia to increase control of our
brand and drive revenue growth in these regions. We will uti-
lize Reebok’s expanding infrastructure but also leverage the
existing adidas sales platform.
Refined Pricing Policy to Drive up Average Selling Prices
To reinforce Reebok’s position as a premium sports and life-
style brand, we intend to significantly improve and increase
our product offering at high- and mid-price points to drive
growth in average selling prices. Although this approach may
slow our top-line development in the short term, we believe
it enables us to build a platform for future sales and profit-
ability growth. As a result of our new pricing strategy, there
will be a certain level of competition between the adidas and
Reebok brands, particularly at mid-level price points. To pre-
vent cannibalization, we will clearly differentiate both brands
by communicating distinct brand messages targeted at differ-
ent consumer types.