Reebok Final Project

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Reebok Sports Shoes

Consumer Behavior - Final Project Report

Submitted to:

Prof. Prem Purwar

Submitted by:

Group 1, Section C

Dev Karan Nehra – PGP25300

Prem Prakash Dalua – PGP25316

Suresh Sahoo- PGP25334

Sushant Sharma- PGP25335

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Contents Executive Summary ............................................................................................................................................. 3

Objective .......................................................................................................................................................... 3

Context: ............................................................................................................................................................ 3

Results & Recommendations ........................................................................................................................... 3

Introduction: ........................................................................................................................................................ 4

Background ...................................................................................................................................................... 4

Market Overview .......................................................................................................................................... 4

Future Prospects .......................................................................................................................................... 5

Reebok Overview ................................................................................................................................................. 6

Objective .............................................................................................................................................................. 7

Marketing Objective ........................................................................................................................................ 7

Research Objectives ......................................................................................................................................... 7

Consumer Behavior Objectives ........................................................................................................................ 7

Methodology ....................................................................................................................................................... 8

Secondary Research and Hypotheses .............................................................................................................. 8

Data Collection Methods ................................................................................................................................... 10

Data Analysis: .................................................................................................................................................... 11

Conclusions and Recommendations ................................................................................................................. 16

Limitations ......................................................................................................................................................... 17

Appendix ............................................................................................................................................................ 18

Sports Shoes Questionnaire ........................................................................................................................... 18

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Executive Summary

Objective

The objective of this consumer behavior project was to figure out how to increase the market share of

Reebok in the Indian Market?

Context:

Reebok sports shoes and apparels is one of highly regarded brands in India. As of now it is the market

leader, closely followed by its parent company brand Adidas. There are several attributes like comfort, cost

effective, brand image on which Reebok scores highly, but there are few other characteristics such as design

& styling in which Reebok lags behind. The idea of this project is to understand which are attributes are

most important for the consumer while buying a sports shoes product. And also to identify on which of

those attributes Reebok scores well and on which it is not so good.

Results & Recommendations

The crux of the findings of the project showed that Comfort is the most important attribute one looks for

while selecting a sports shoes. While Friends are most influencing for one’s shoe purchase, discounts are

highly preferred during purchase. And Reebok is considered to be the best priced among sports shoes but it

is perceived to be low on style compared to other sports shoes.

Reebok is strongly positioned in terms of Brand quality and Price. Still then it is most preferred by the High

Income segment group whose income is generally greater than 5 lacs per annum. Retail outlets are

preferred to shopping malls. Hence, more sales promotion activities should be run at retail outlets than in

shopping malls. Reebok is highly perceived by the consumers as sports shoes so its association with the

Sport utilities must be maintained. The perception of Reebok as a stylish shoe is low when compared to its

competitors. Reebok must concentrate its marketing efforts to change its image into a most stylish brand by

co branding with fashion designers etc. Reebok is considered as the best priced in the market, so it should

continue to maintain this image by competitive pricing.

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Introduction: Reebok International Limited, a subsidiary of German sportswear giant Adidas, is a producer of athletic

footwear, apparel, and accessories. 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 designing products and marketing programs that reflect.

Background

Market Overview

The Indian footwear market generated total revenues of $3,558.7 million in 2008, representing a compound

annual growth rate (CAGR) of 9.3% for the period spanning 2004-2008. Clothing, footwear, sportswear and

accessories retailers proved the most lucrative distributors for the Indian footwear market in 2008,

generating total revenues of $3,295.2 million, equivalent to 92.6% of the market's overall value.

The performance of the market is forecast to accelerate, with an anticipated CAGR of 10.2% for the five-year

period 2008-2013, which is expected to drive the market to a value of $5,791.4 million by the end of 2013 an

increase of 62.7% since 2008. The Rise of organized retailing helped the footwear industry as well. Organised

retailing chains helped the marketers to showcase their products properly and also target the premium

segment customer who often visited these newly developed malls and multi brand retail stores. Recession

had less impact on the Indian footwear market as the market was largely dependent on internal

consumption that remained robust.

A lot of players announced plans to open their own retailing stores in 2008. But the most popular

distribution channels remained the multi branding stores and newly established retail malls. The wholly

owned stores provide better margins to footwear makers and also helped them with their branding needs.

International players especially preferred to go solo and open many new wholly owned distribution

channels.

Footwear industry was fragmented with many national and international players operating in a fast growing

market but none having a substantial market share. Though the demand for footwear is fast growing in

India, 70%-80% of footwear units are still in the unorganized sector. So, to meet growing demand there is an

urgent need to enhance the capabilities of organized segment units. In the same endeavor, central

government during the 10th Plan encouraged development of Footwear Complexes/Parks.

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FOOTWEAR BRAND SHARES 2005-‘08

Future Prospects

In the forecast period footwear is expected to outperform the growth witnessed in the previous review

period. The growth in footwear industry in India will come due to increased incomes of urban young workers

and professionals, growth in organized retailing and increased awareness of global fashion trends. The

footwear market is also likely to benefit from the demand from rural and semi-urban India in the forecast

period due to their economic empowerment. One of the biggest challenges for footwear in the forecast

period is likely to be adaptability. As the market grows so people will demand newer designs, better quality

and increased distribution at shorter time cycles than before. Some of the leading footwear players like

Adidas, Puma and Nike are likely to channel a part of their purchase and production from China to India.

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Reebok Overview Reebok has dominated the Indian sportswear market. While its major competitors Adidas (as

Brand) and Nike have not been as successful in the Indian market, Reebok ended 2005 with total

sales exceeding $91 million. Sales in 2004 were $59 million. In contrast, according to market

sources, Adidas India’s sales revenues are about $22 million. Reebok's main advantage has been

that it understood the Indian consumer very well and has made an effort to grow alongside him.

For instance, when the company came to India, all that the consumers wanted was an international

brand of footwear and Reebok gave them that at an affordable price. One aspect to Reebok's

success has been its ubiquitous retail chain. By the end of 2005, the company was retailing from

182 franchised stores. It also retails from two thousand multi-brand outlets.

Reebok India commands a 51% market share in the premium sportswear industry. It plans to

increase the store count from the existing 500 to over 600 before the next financial year. Reebok

reaches out to its target customers through its 500 exclusive Reebok Stores, 200 Shop in the shop

outlets & 2500 dealer outlets. It offers different segments for both men and women like sports and

fitness footwear, apparel, accessories, fitness equipment and the lifestyle section. Taking retail to

new heights, Reebok’s new store offers the finest shopping ambience to customers with products

displayed by categories such as ‘Running’, ‘Walking’, ‘Aerobics’, ‘Tennis’, ‘Cricket’ and ‘Lifestyle’, to

help customers make better purchase decisions. Reebok started its operations in India in 1995.

Reebok India has a pan-India presence with branch offices in Mumbai, Kolkata and Bangalore and

ranks at the top amongst international footwear companies in India. The Company's brand vision is

fulfilling potential, its mission – Always challenge and lead through creativity. Reebok’s positioning

is to celebrate individuality in sports and life.

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Objective The objective of the project is to figure out ways increase the sales substantially of the Sports Shoes Brand

Reebok (parent company – Adidas Group). The Group is world's second largest maker of athletic footwear,

apparel and equipment by sales (2009) after Nike. But in Indian Sports shoes and apparels market – Reebok

is the no-1 brand, being the market leader. Our objective to suggest ways by which Reebok can increase it’s

market share and maintain the No- 1 spot in Indian market.

Marketing Objective

How to increase the market share of Reebok in the Indian sports shoes Market?

Research Objectives

1. To understand which brand attribute has the highest impact on the overall Brand attitude

2. To find out which sports shoe brand is preferred the most by the consumer

3. To identify the major drivers behind choice of shoes for various needs demonstrated by the

customer (price, product quality, promotions, style, brand, store environment etc)

4. To identify the impact of demographic and psychographic characteristics of customers on

choice of sports shoes

Consumer Behavior Objectives 1. To understand which factors are important for sports shoe buying behavior

2. To understand which attribute differentiates the No.1 brand(market leader) from the market

challenger

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Methodology

Secondary Research and Hypotheses

Hypotheses have been derived with the in-depth interviews, Consumer Behavior theories and prior

researches that we have studied. The following have been studied in the process of obtaining reasonable

hypotheses for the research.

1. “Factors affecting Consumer‘s decision on buying shoes”; Chitpan Kanhasiri, University of Thai

chamber of Commerce.

2. “Sports marketing strategy: A consumer behavior case analysis in China”; Multinational Business

Review, Spring 1996 Geng, Lizhong, Barbara, Blakemore, Andrus, Ray.

Based on our secondary research and in-depth interviews we found that the preferences, buying intentions

vary significantly with age, sex and income. Also, according to the reference 1 mentioned above, Income

levels are one of the crucial factors which affect the purchase behavior of sports shoes. During in-depth

interviews we found that youth segment is more inclined towards Reebok and preferences varied between

men and women, working and non-working consumers. Also, according to consumer behavior theories such

as Maslow’s, psychographic profile of a consumer significantly affects his purchasing behavior.

The following Hypotheses were developed keeping in view of the Research Objective:

H1: Comfort is the most important attribute while purchasing sports shoes.

Customers buy shoes mostly on a seasonal basis. The most important attribute for them according the

secondary research articles and the interviews is the comfort of the product. They are willing to spend more

money for a better comfort product.

H6: Reebok is considered to be the best priced among sports shoes

Reebok brand is associated with value for money among the different brands in the market. This perception

is seen among the both users and non users. The in-depth interviews and the secondary research also point

in the same direction.

H7: Reebok is perceived to be low on style compared to other sports shoe brands

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One of the main inferences from the in-depth interviews is that consumers perceive that Reebok shoes are

not that fashion conscious or up to the latest fashion even though they are very comfortable. This

hypothesis is to test whether this perception among the customers in true

H4: Mean Brand Attitude of Reebok is highest among the brands in consideration

Out of the major three brands – Nike, Reebok and Adidas, there is a general perception that Nike is the best

Brand, but that does not seem to be true among Indian consumers. We need to test that out.

H5: Replacing old shoes is the most important stimulus for shoe purchases

From our secondary research and the in-depth interviews conducted we have found that most of the

consumers shop for sports shoes on a periodic basis. They buy them once in a year or two years depending

upon the usage.

H6: Consumers prefer Retail outlets to shopping malls while purchasing a sports shoes

Consumers perceive that sports stores in malls don’t have a wide range of collection so they have a very

little variety available for them. They believe that the retail outlets have a greater range and better service.

H7: Sports shoe brands with discounts are highly preferred during purchase

Sales promotions play an important role while making a sports shoe purchase as most consumers perceive

them to be a value for money purchase during promotional campaigns

H8: Friends are the most influencing source for sports shoe purchase

Primary informal group is the most influential while making the purchase decision. According to consumer

behavior theory, for a product which is visible and reflects the identity of the person, the reference group

attitude towards the product is very critical. Friends and peers are mostly consulted while making such

decisions.

H9: High Income segment of (> 5 Lacs) prefer Reebok

The main consumer for Reebok are affluent with their annual income more than 5 lakhs. This shows that the

main segment of consumers is upper middle class. Even in the secondary research done we have seen the

same trend among the consumers of sports footwear.

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Data Collection Methods Sample Size

As suggested by the objectives document the sample size will be kept in the range of 150.

Sampling Plan:

Simple random sampling shall be used to collect data. But, this will be within a set stratum of

people. The people who

On campus: SRS using the Roll number list of PGP1 and PGP2 (25 samples from each year).

Off campus: SRS in malls and markets. We shall include people who are going to make purchase

decision regarding buying a shoe by visiting shoe shops, multi-brand shoe outlets.

We will also include people who may have purchased shoes in the recent past to get an idea of post

purchase behavior.

Sampling Frames:

1. 50 people will be from the campus. So, the sampling frame would include :

Staff and family members in the campus

Graduates pursuing post graduation

People who may or may not have made a purchase decision in recent times

Age group of 20-45

Middle income to upper middle income backgrounds

2. Around 50 people will be from outside the campus. The sampling frame will mainly include

people visiting malls. Our focus will be on getting response from people who are making or

going to make a purchase decision for shoe by collecting samples from shoe outlets. And

also focusing on people who may be wearing relatively newer shoes thus getting response

from people who may have bought shoes in the recent past. Hence, sampling frame will

include following kinds of respondents:

People who have already identified a need and are going to make a purchase

decision for a shoe in the near future or have made in the recent past

Age group - 15 – 25 (20 people at least)*

26 – 40 (20 people at least)*

40 + (20 people at least)*

Middle income to higher income level *we shall try to include people who are going to make purchase decision regarding shoes by visiting shoe

outlets (both single and multi-brand)

3. Around 70 respondents from the Online Survey filled.

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Data Analysis: The survey data was analyzed to check the validity of the above hypotheses. The analysis has lead to the

following results.

H1: Comfort is the most important attribute while selecting sports shoes

Data Analysis technique used: Descriptive statistics

SPSS output summary:

Interpretation:

From the above descriptive statistics it can be inferred that comfort is the most important attribute one

looks for while selecting a sports shoe. Therefore, our hypothesis is accepted.

H2: Reebok is considered to be the best priced among sports shoes Data Technique Used: Descriptive Statistics SPSS Output Summary:

Descriptive Statistics for Price Preference

N Minimum Maximum Mean Std. Deviation

Reebok price 172 1.00 5.00 3.6744 1.06997

Nike price 172 1.00 5.00 2.9360 1.17552

Adidas price 172 1.00 5.00 3.1860 1.07618

Power price 172 1.00 5.00 2.8953 1.11899

Valid N (list wise) 172

Interpretation

The Average Rating for the Reebok Price is high compared to the rest. Hence Hypothesis is accepted.

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H3: Reebok is perceived to be low on Design (looks & styling) compared to other sports shoe brands Data Technique Used: Descriptive Statistics SPSS Output Summary:

Descriptive Statistics


Reebok style 172 2.00 5.00 3.5407 .90714

Nike style 172 2.00 5.00 4.1453 .86979

Adidas style 172 1.00 5.00 3.7965 .93620

Power style 172 1.00 5.00 3.7674 1.13090

Valid N (listwise) 172

Interpretation

The Average Rating for the Reebok Style is low compared to the rest. Hence Hypothesis is accepted

H4: Mean Brand Attitude of Reebok is highest among the brands in consideration



Descriptive Statistics


Reebok 172 1.00 5.00 4.1325 .98684

Nike 172 3.00 5.00 4.6627 .52445

Adidas 172 2.00 5.00 4.1807 .81367

Power 172 1.00 5.00 3.6867 1.03324

Valid N (list wise) 172

Interpretation:

As it can be seen from the output summary, the descriptive statistics on the respondents group shows that

Nike’s brand image is perceived to be highest compared to other shoe brands as the mean is highest

compared to other brands. This disproves our hypothesis that Reebok is perceived to be highest on overall

Brand Attitude by consumers. But it can be seen that Reebok is perceived as a close 3rd Position.

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H5: Replacing old shoes is the most important stimulus for shoe purchase

Data Analysis technique used: Frequency test


Interpretation: As it can be seen from the output summary, the frequency of option 1(shoe replacement) is

very high compared to the other purposes. Therefore, it obvious that replacement of old worn out shoes is

the main reason for the purchase of shoes by consumers.

H6: Consumers prefer Retail outlets to shopping malls while purchasing a sports shoe

Data Analysis Technique: Paired wise T-test

SPSS Output summary:

Inferences:

From the above table, it can be inferred that there is significant difference between the inputs. Also, the

computed mean of retail outlets is quite high compared to that of shopping malls. This proves our

hypothesis that retail outlets are highly preferred to outlets at shopping malls.

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H7: Sports shoe brands with discounts are highly preferred during purchase

Data Analysis Technique: Simple t-test


Inferences:

From the above table, it can be inferred that the discount rating is significantly different from 3, and the

obtained value of mean is greater than 3. This proves our hypothesis that discounts are highly preferred

during purchase.

H8: Friends are the most influencing source for sports shoe purchase



Inferences:

From the above descriptive statistics table, it can be inferred that friends have the highest mean and are the

most influencing for one’s shoe purchase. This proves our hypothesis.

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H9: High Income segment of (> 5 Lac) prefer Reebok

Data Analysis technique used: Frequency test


Interpretation:

As it can be seen from the output summary, the income level 3 – that is above Rs. 5 lakhs income group

dominates the buyer segment. This proves our hypothesis that high income segment are more likely to buy

Reebok shoes.

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Conclusions and Recommendations Reebok is strongly positioned in terms of Brand quality and Price

Reebok is most preferred by the High Income segment group whose income is generally greater than

5Lacs per annum

Promotions should be directed towards this segment of people with income greater than 5 Lacs.

Retail outlets are preferred to shopping malls. Hence, more sales promotion activities should be run at

retail outlets than in shopping malls.

Reebok is highly perceived by the consumers as sports shoes.

Its association with the Sport utilities must be maintained by Reebok

The perception of Reebok as a stylish shoe is low when compared to its competitors. Reebok must

concentrate its marketing efforts to change its image into a most stylish brand by co branding with

fashion designers etc.

Reebok is considered as the best priced in the market, so it should continue to maintain this image by

competitive pricing

Reebok should make sure that the shoe buying experience in the retails shops in the malls should be

good. This can be done by providing buyers comfortable trial facilities and good ambiance.

Comfort being the most important criteria in buying shoes Reebok should differentiate itself based on

comfort

Seasonal purchase behavior is seen among the consumers who also are highly motivated by promotional

sales campaigns. Reebok should leverage on this fact and come up with regular sales campaigns.

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Limitations The Respondents collected are not heterogeneous. Hence results might be slightly biased

The Random sampling technique is used in this project. Other sampling techniques like Stratified

sampling could have been better.

For many of the data analysis cases, simple descriptive tests are used. Sophisticated statistical tests

might reveal the results with most statistical significance.

The questionnaire is not surveyed personally by the researchers. It’s self-administered by the

respondents themselves. Hence the results need not be most accurate.

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Appendix

Sports Shoes Questionnaire

1. How important are the following attributes for selection of the sports shoes?

Attribute Not Important at all (1) 2 3 4 Highly Important (5)

Design (Looks &

Styling)

Comfort

Durability

Brand Name

Availability

Price

Discounts

“Recommendations

of Friends”

“Exclusive Brand

Outlets”

2. How would you rate REEBOK for the following attributes?

Attribute Poor (1) 2 3 4 Excellent(5)

Design (Looks &

Styling)

Comfort

Durability

Brand Name

Availability

Price

Discounts

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3. How would you rate NIKE for the following attributes?


Design (Looks &

Styling)

Comfort

Durability

Brand Name

Availability

Price

Discounts

4. How would you rate ADIDAS for the following attributes?


Design (Looks &

Styling)

Comfort

Durability

Brand Name

Availability

Price

Discounts

5. How would you rate SPARX for the following attributes?

Attribute Poor (1) 2 3 4 Excellent (5)

Design (Looks &

Styling)

Comfort

Durability

Brand Name

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Availability

Price

Discounts

6. How would you rate POWER for the following attributes?

Attribute Poor (1) 2 3 4 Excellent (5)

Design (Looks &

Styling)

Comfort

Durability

Brand Name

Availability

Price

Discounts

Rank the following Shoes Brands in terms of overall Brand preference to buy:

Brand Name Ranking (most preferred to buy :1 and so on till 5)

Reebok

Nike

Adidas

Sparx

Power

1. Please rate the importance of the following information sources in your selection of a sports shoe

brand for purchase.

Not at All Very

Important Important

Family 1 2 3 4 5

Friends/Peers 1 2 3 4 5

Sales person 1 2 3 4 5

Experts 1 2 3 4 5

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Magazines 1 2 3 4 5

Internet 1 2 3 4 5

2. Please rate your store preferences for purchasing sports shoes.

Not at All Very Much

Preferred Preferred

a. Shopping malls 1 2 3 4 5

b. Retail outlets 1 2 3 4 5

3. How regular you are in going to the Gym or your Sports activity? (select One of the following)

No Gyming / Sports at all

Only in special occasions

Once a week

2-3 times a week

4-5 times a week

Everyday

4. Which of the following is the most likely reason for you to purchase a new pair of sports shoes?

Old ones worn out

For exercise/gym

New model Arrival

Needed new shoes (Casual, occasional wear etc.)

Others

5. How often you go for outdoor trips /excursions?

Not at all


Once a week

2-3 times a month

4-5 times a month

6. How often you dine outside?

Not at all


Once a month

2-3 times a month

4-5 times a month

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7. How often you go for movies in theatres?

Not at all


Once a month

2-3 times a month

4-5 times a month

8. If your peer group uses a particular product would you like using it?

Yes

9. Are you member of any social Group?

Yes

10. Are you member of FaceBook / Orkut or others social community groups?

Yes

11. Name: 12. Age:

Under 19

20 – 25

26 – 30

31 – 40

41 – 50

Above 50

13. Your sex:

Male

14. Education:

Undergraduate

Graduation

Post-graduation

Technical

15. Occupation:

Student

Self-employed

Govt. employed

Pvt. Employed

16. Family Income:

< Rs 2 lac;

Rs 2 lac – Rs 5 lac;

Over Rs 5 lac;

No

No

No

Female

Documents

Reebok Final Project