Due to the sharing of the global markets, both the companies would face a problem of cannibalization and thus this may reduce the market share. The main advantage is that Adidas group will have no nearest competitor apart from Nike and hence there will be fair chance to concentrate on the development of the company and improvement of the operational and managerial processes.
The market analysts were doubtful about the merger being a strategy to withstand the competition from the nearest rival, Nike. Due to the merger, the companies will implement the cost reduction techniques, sharing of the patents, technology and human resources.
Adidas will benefit from increased distribution in North America, where Reebok already has a significant presence. Also, the time for the manufacturing of the goods will be decreased drastically with the combination of the streamlined operations. With the over dependence of the Reebok brand on Adidas will affect the sales of Reebok.
The promotion of both the brands can be flexible with the star athletes under the same group. The customers will have a wrong perception in getting accustomed to the brands if and only if the management is able to establish and clear off the doubts of the customers. The development cycle of 18 months to 3 years is far too large.
Locke, Positioning The primary problem Reebok faces is one of positioning. Porter, Promotion Reebok does not invest enough in stable athletes or advertising campaigns. Adidas was a German sports goods maker and was the world's second largest after its nearest rival Nike.
Strong brands help build corporate image, making it easier to launch new brands and products and gain acceptance by distributors and consumers. Increasing its presence is the key to achieving sustainable competitive advantage, because the increased presence further engrains the most important advantage in this industry, brand name.
Furthermore, in the past, Adidas has not been able to expand because it had problems shipping goods to the United States. These brands are positioned for targeting the emerging and lucrative alternative pop culture and extreme sports markets.
With the merger, the companies can share the common marketing strategies, manufacturing processes and financial operations. Do you think the swoosh logo has become too widespread, that it is turning off many people.
Reebok is a discount sports goods brand where as Adidas is a premium brand. Reebok is a 44 year-old company that has enjoyed financial success.
The company had increased the sales as well as the market capitalization due to the merger. There are UK writers just like me on hand, waiting to help you. This merger may force the competitors to look for self-defense options and hence the competition may grow thus making many mergers to take place.
Their channel, product, promotion, and price focuses are not properly aligned with those of the market. In this case the core issue is Reebok needs to find a way to dramatically shift Reebok from a fashion athletic to a performance athletic brand through sports marketing and investment in high profile athletes, teams and leagues.
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