Macro-environmental analysis – Why Did Reebok Fall?
According to Ginter and Duncan, (1990), a macro-environment is a major external and uncontrollable factor that may influence a company’s decision making, strategies. Analysing macro-environmental factors is an essential part of systematic planning within a business. Some examples of a macro-environment may include other competitors within their market segment, weather/environmental factors, law and regulations, etc.
Reebok currently has stores operating in over 55 different countries. These countries will all have different cultures, economic backgrounds, and laws, which are all of concern for Reebok’s macro-environmental analysis. Reebok’s market in Europe and North America is facing financial crisis, but in other regions such as Asia (particularly India and China), they are second to Nike in sales (Kotler and Armstrong, 2010).
The Fall of the Reebok Pump
The Reebok Pump was a basketball shoe made by Reebok in 1989, which featured an air pump on the tongue of the shoe which could inflate the bottom of the shoe with an air bubble, giving athletes more spring in their jump. The peak of the shoe’s popularity came in the late 1980’s and early 90’s. Originally made famous by Dee Brown in the 1989 NBA Slam Dunk Contest, the Reebok Pumps were worn by many other famous NBA players in following years (Weinfuss, 2020). However, the shoes’ popularity fell off significantly due to several macro-environmental factors that were poorly analysed by Reebok.
The reason why Reebok was successful initially was because of their macro-analysis of Nike’s new shoe at the time, called the Air Pressure. Reebok noted the benefits of having an air pump, however the Air Pressure’s pump was handheld and therefore not practical for in-game use. This is where they came up with the Reebok Pump, which had the air pump on the actual shoe. This is the primary reason the shoe was so successful during it’s first couple of years on the market.
One macro-environmental factor that Reebok didn’t take into consideration was the price of the shoe. At $170 per pair, they were a similar price to Nike’s Air Pressure, which retailed at $180 (Weinfuss, 2020). After a year, Nike lowered the price of the Air Pressures ($85-110), making them a much cheaper option than the Pumps. The Air Pressures became the much better option for customers, which Reebok failed to recognize. This helped lead to the fall of the Reebok Pumps.
Another macro-environmental factor that they failed to examine was Nike’s creation of a different type of shoe. Nike soon released the Air Max 90s in 1990, which were also a very popular shoe. Once Nike came out with the Air Max’s, Reebok had to do something in order to stay at the top of the market, however they failed to create a new brand of shoe. This ultimately led to Reebok falling to Nike in the basketball shoes market (Acasestudy.com, 2020).
References
Acasestudy.com (2020). Reebok Marketing Plan. Available at: <https://acasestudy.com/reebok-marketing-plan/> (Accessed 12 March 2020).
Charisius, C. (2020). Sportswear Maker Adidas To Buy Reebok. [online] msnbc.com. Available at: <http://www.nbcnews.com/id/8805430/ns/business-world_business/t/sportswear-maker-adidas-buy-reebok/#.XmdxMkB2vIU> (Accessed 10 March 2020).
Ginter, P. and Jack Duncan, W. (1990). Macroenvironmental analysis for strategic management. Long Range Planning, 23(6), pp.91-100.
Kotler, P., Armstrong, G. (2018). Market analysis of reebok. Available at: https://www.ukessays.com/essays/marketing/market-analysis-of-reebok-marketing-essay.php?vref=1 (Accessed: 2 March 2020).
Weinfuss, J. (2020). Inside the rise and fall of the iconic Reebok Pump on its 30th birthday. ESPN.com. Available at: https://www.espn.com/nba/story/_/id/28149048/inside-rise-fall-iconic-reebok-pump-30th-birthday (Accessed: 2 March 2020).
Understanding Reebok 