By and  on August 23, 2007

CANTON, Mass. — Reebok will focus on running and women as new parent company Adidas-Salomon AG seeks to establish a clear strategic vision for the sports brand.

As a much smaller third player in the Nike and Adidas-dominated athletic universe, Reebok wants to find its place at the intersection of sport and lifestyle, said executives at the company's 60-acre campus here. That may steer Reebok, with an estimated $4.1 billion in revenues, on a collision course with Puma for the same customers.

"Our biggest accomplishment so far has been to set a strategy," said Uli Becker, a 16-year Adidas veteran who joined Reebok 12 months ago as chief marketing officer. "The lack of consistency was a big issue."

The athletic sector overall is thriving — and garnering acquisitive interest — as more women turn to activewear as a substitute for sportswear in addition to donning it in the gym. The sector generates $22 billion in revenues in the U.S. annually.

German sports conglomerate Adidas-Salomon acquired Reebok for $3.8 billion last year to gain another brand vehicle to reach consumers, particularly in the U.S., as it competes with Nike. French retail and luxury giant PPR bought Puma in July in a deal valuing the company at $7.3 billion. Reebok and Puma have been struggling with soft U.S. sales, although Puma had been one of the hottest brands of the past decade with an apparel business Reebok hopes to emulate.

Former Reebok chief executive officer Paul Fireman, who turned an obscure British track brand into an athletic powerhouse over decades of leadership, engineered the Adidas deal. But toward the end of his reign, Becker said Reebok chased one too many creative whims, diluting its appeal to consumers and straining its internal teams. The remedy, he added, is strategic discipline.

"We want to define the line between sport and lifestyle without hitting the extreme of either one," he said. "We believe Puma isn't fully legitimate in sport. They don't own [the niche] yet and we think we can over time."

In a departure from the Fireman era, Reebok is moving away from partnerships with entertainers and hip-hop artists to focus on product it believes will have broader appeal and salability. Reebok had inked endorsement and design deals with rapper 50 Cent, quadriplegic rugby player Mark Zupan and actress Scarlett Johansson, among others. The brand signature was "I Am What I Am," an advertising campaign featuring gritty, black-and-white photos of stars.Becker said products and advertising campaigns weren't vetted thoroughly by consumers before being rolled out.

The new Reebok team, in contrast, likes focus groups. It also likes football — meaning the kind played by David Beckham and promoted heavily by parent company Adidas.

"We call it global football and it's one of the biggest ways of reaching youth," Becker said.

Reebok sales fell 14 percent in the second quarter, to $693 million. Becker described 2007 as a transition year, and said poor sales are the result of product conceived just to hit revenue targets.

He said sales of "Scarlett [Hearts] Reebok" product were disappointing but didn't provide specifics. Becker blamed the performance on a rushed development process.

The decision to focus on running and women's products is logical given that they represent two of the largest market opportunities. However, Reebok arguably lacks brand capital in both areas.

"We have no running image, but fantastic running shoes," Becker said.

For women, Reebok is working with the concept of fit, in both product and marketing. The ad campaign "Your Move," tries to reach both the hard-core competitor and the casual enthusiast with a series of questions. "Dog Eat Dog or Downward Dog? Your Move," reads one which will appear in spring 2008.

"We're going to tell her who we are and reestablish contact around the idea that she has the choice in her life," said Rich Prenderville, Reebok's head of brand marketing, who rejoined Reebok after a decade in Adidas' European operations.

Spring 2008 apparel will offer workout pants in three inseam lengths for the first time. There's also three new body fits, identified by specific hangtag icons, for performance activities, strength training and casualwear.

Designer Lauren De Angelo also worked in fashion touches, such as soft corsetry seams on a double-layer bra top and an interior trim printed with "relax, smile, enjoy life" on hoodie tops.

The company has integrated X-Static, a thermostatic and antimicrobial silver fiber that Reebok designers have had knitted into a variety of seamless performance tops. It's the first mainstream application of the fiber, but Olympic athletes have used it in competitions.Becker would not predict when Reebok will return to its former strength, but he said the brand is a keystone of the athletic sector.

"All the big brands are doing fine, but the only big brand not there yet is Reebok and the industry is waiting for us to come back," he said. "Is it in two years, or in four years? I don't know, but there is no brand with a bigger and better upside."

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