South-Western - Management  
Reebok, Adidas, Nike Aim to Bring Back the $100-Plus Sneaker
Topic Strategy
Key Words Strategy, competition, price-points
News Story

Sneaker companies like Reebok, Adidas, and Nike are selling new technologically advanced shoes, in hopes of bringing back the consumer trend of buying over $100 sneakers. In the last few years, the trend towards classic, simple sneakers has cut into the profits of these companies. They are hoping to entice customers to pay more with new shoes that offer custom-fit technology on the $100-$250 range.

Reebok has unveiled the $100 Pump 2.0, a laceless sneaker that uses inflatable air bladders to conform to the foot at the push of a button. After ten steps in the shoe, the pressure stabilizes at five pounds per square inch, which experts believe is the comfort zone for most laced shoes. Adidas is offering the $120 T-Mac 4 sneaker. This shoe is also laceless, and is cinched with a dial that controls cabling that keeps the shoe on the foot. Adidas will also be bringing out a new shoe with fit controlled by a computer chip at a base cost of $250. Nike is selling its Shox shoes, with visible shock absorbers for $110.

According to the market tracker NPD Group, the average price of a pair of sneakers fell 1.7% to $31.84 last year and is down 23% from a peak of $40.07 in 1998. Higher volume has helped offset the decline in price, as sales climbed 4.5% to $16.4 billion last year. Footlocker, the largest sneaker retailer in the U.S. has been emphasizing the sale of more classic sneakers in their stores but is starting to see the comeback of the higher-priced, more technical shoe.

Questions
1.

What strategy are sneaker makers using to up corporate profits?

2.

Nike, Adidas, and Reebok are direct competitors, meaning that they offer very similar products and services and acknowledge each other as direct rivals. What strategy are these companies using to compete with one another? What factors determine what brand is going to come out on top?

3.

Name some other direct competitors. What competitive strategies do these companies typically employ? Is this similar to the strategy employed by the sneaker makers?

Source "Reebok, Adidas, Nike Aim to Bring Back the $100-Plus Sneaker," The Wall Street Journal, Nov.10, 2004, pp.D1, D5.
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