Reebok Final Project 5l22o
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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
1
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
2
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 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.
3
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 deg 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 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.
4
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.
5
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 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.
6
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
7
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 s and non s. 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
8
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.
9
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 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.
10
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.
11
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 N
Minimum
Maximum
Mean
Std. Deviation
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 Data Analysis technique used: Descriptive statistics SPSS output summary: Descriptive Statistics N
Minimum Maximum Mean
Std. Deviation
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.
12
H5: Replacing old shoes is the most important stimulus for shoe purchase Data Analysis technique used: Frequency test SPSS output summary:
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.
13
H7: Sports shoe brands with discounts are highly preferred during purchase Data Analysis Technique: Simple t-test SPSS output summary:
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 Data Analysis technique used: Descriptive statistics SPSS output summary:
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.
14
H9: High Income segment of (> 5 Lac) prefer Reebok Data Analysis technique used: Frequency test SPSS output summary:
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.
15
Conclusions and Recommendations
Reebok is strongly positioned in 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.
16
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-istered by the respondents themselves. Hence the results need not be most accurate.
17
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
18
3. How would you rate NIKE for the following attributes? Attribute
Poor (1)
2
3
4
Excellent(5)
Design (Looks & Styling) Comfort Durability Brand Name Availability Price Discounts
4. How would you rate ADIDAS for the following attributes? Attribute
Poor (1)
2
3
4
Excellent(5)
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
19
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 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 20
Magazines
1
2
3
4
5
Internet
1
2
3
4
5
4 4
Very Much Preferred 5 5
2. Please rate your store preferences for purchasing sports shoes.
a. b.
Shopping malls Retail outlets
Not at All Preferred 1 1
2 2
3 3
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 Only in special occasions Once a week 2-3 times a month 4-5 times a month 6. How often you dine outside? Not at all Only in special occasions Once a month 2-3 times a month 4-5 times a month 21
7. How often you go for movies in theatres? Not at all Only in special occasions 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 No 9. Are you member of any social Group? Yes No 10. Are you member of FaceBook / Orkut or others social community groups? Yes No 11. Name: 12. Age: Under 19 20 – 25 26 – 30 31 – 40 41 – 50 Above 50 13. Your sex: Male
Female
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;
22
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
1
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
2
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 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.
3
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 deg 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 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.
4
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.
5
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 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.
6
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
7
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 s and non s. 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 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 N
Minimum
Maximum
Mean
Std. Deviation
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 Data Analysis technique used: Descriptive statistics SPSS output summary: Descriptive Statistics N
Minimum Maximum Mean
Std. Deviation
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 SPSS output summary:
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 SPSS output summary:
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 Data Analysis technique used: Descriptive statistics SPSS output summary:
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 SPSS output summary:
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 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-istered 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? Attribute
Poor (1)
2
3
4
Excellent(5)
Design (Looks & Styling) Comfort Durability Brand Name Availability Price Discounts
4. How would you rate ADIDAS for the following attributes? Attribute
Poor (1)
2
3
4
Excellent(5)
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
19
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 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 20
Magazines
1
2
3
4
5
Internet
1
2
3
4
5
4 4
Very Much Preferred 5 5
2. Please rate your store preferences for purchasing sports shoes.
a. b.
Shopping malls Retail outlets
Not at All Preferred 1 1
2 2
3 3
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 Only in special occasions Once a week 2-3 times a month 4-5 times a month 6. How often you dine outside? Not at all Only in special occasions Once a month 2-3 times a month 4-5 times a month 21
7. How often you go for movies in theatres? Not at all Only in special occasions 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 No 9. Are you member of any social Group? Yes No 10. Are you member of FaceBook / Orkut or others social community groups? Yes No 11. Name: 12. Age: Under 19 20 – 25 26 – 30 31 – 40 41 – 50 Above 50 13. Your sex: Male
Female
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;
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