Businessweek Archives

Reebok and Adidas Merger Looks Good. But Will It Be Good?


? NASCAR News: Oh Joy! |

Main

| Marketing The Army Cold War Style in a Hot War Time. ?

August 03, 2005

Reebok and Adidas Merger Looks Good. But Will It Be Good?

David Kiley

On paper, the acquisition of Reebok by Adidas looks great, and totally logical. But we know that mergers don't get executed on paper. They get executed in real life where people can blow executions. Mercedes-Benz and Chrysler? Quaker and Snapple? HP and Compaq?

In terms of closing the gap between Adidas and Nike, this deal helps. It gives the German shoemaker about 22% of the U.S. shoe market, for example, compared with Nike's 36%. And that's still a pretty wide gulf.

What looks like a good plan is if the deal allows Adidas to really focus on premium product full of design and innovation--the kind of shoes people with too much money like to buy. Let Reebok fill the middle market and take care of the traditional ladies' aerobics and jazzercise categories. By the middle market, I mean fashion shoes worn by suburban kids who don't necessarily play sports. And Reebok has to keep up the successful hip hop strategy. Fiddy Cent's shoes and stuff are flying off the shelves. But will Adidas's tie-up with Missy Elliott make sense for the long term now?

But it's far from a slam dunk that Adidas is going to encorach on 30% share in the U.S., which is what the company execs say is in their plans. Nike, BMW, Apple...these are brands that seldom make a mistake with product or image. They stay aspirational because they create mystique around their brands year after year after year.

Adidas may make some headway, but I've seen this movie before. They might not know where the Adidas brand ends and the Reebok brand begins, and so the two will be jockeying for the same customer. The Germans are infamous for this. Witness Volkswagen's foray into the luxury car market with the Phaeton even though VW owns Audi, which should be taking care of that market for the company.

Like I said, successful mergers are not made on paper.

06:11 PM

Brands In Motion

TrackBack URL for this entry:

http://blogs.businessweek.com/mt/mt-tb.cgi/

Listed below are links to weblogs that reference Reebok and Adidas Merger Looks Good. But Will It Be Good?:

? Merger Issues for Adidas/Reebok from ProHipHop - Hip Hop Business News

Now that Adidas is officially buying Reebok there's plenty of speculation about how they'll do together (I'm trying to avoid saying "fit" due to ProHipHop's internal ban on bad puns). The merged companies will maintain their individual brands yet, toge... [Read More]

Tracked on August 5, 2005 06:25 AM

More confused Germans eh? And with such a powerful merger too... it'll be a truely sad sight if Addidas & Reebok together can't take down Nike. As much as I dislike Nike, here's the truth... they still do a pretty DAMN good job of innovative marketing and product release. Too bad others don't follow suit. Just like mergers, although made on paper easily, when out in the world, people always screw up the essentials.

p.s. - very good entry, definite mush for munch.

Posted by: K at August 3, 2005 11:56 PM

The merger looks really good. But, as author says, to Be good Adidas should never intrude atleast in Reebok fashion shoe/sandal market.

Posted by: Vignesh N at August 18, 2005 05:08 AM

i'm allall for reebok and adidas but would reebok still be the same reebok? or would it be completely changed? i been wearing reebok since i was a little kid and they're awesome. im hoping it will be reebok with benefits.

Posted by: Nick at October 4, 2005 01:42 PM


Hollywood Goes YouTube
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus