Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, June 4, 1990 TAG: 9006020135
SECTION: EXTRA PAGE: E1 EDITION: EVENING
SOURCE: JOAN TYNER THE BALTIMORE SUN
DATELINE: LENGTH: Long
The ad, bizarre even by contemporary standards, represents an adieu to sportsmanlike competition among athletic shoemakers. And Reebok is not the only one jabbing the competition. In a interview with Sports Illustrated, a Nike spokeswoman quoted company Chairman Philip Knight as saying "the most sophisticated piece of equipment in Reebok's research facility" is its Xerox machines.
"The gloves have really come off," says John Horan, publisher of Sporting Goods Intelligence, a Glen Mills, Pa., industry newsletter. "There was a time when these guys wouldn't whack each other's shoes; now it's starting to look like the cola wars."
Competition in the athletic shoe arena has been around since sneakers meant the Converse high-tops you wore in gym class. Lately, though, gentlemanly sparring is turning cutthroat, a trait that will likely characterize marketing in the 1990s.
"It all comes down to taking market share," says Steven Eisner, president of Eisner & Associates, a Baltimore ad agency. "There are a lot of maturing industries out there; knocking the other guy is one way to get your product noticed by consumers."
Like many consumer product businesses, the $8 billion athletic shoe market is bumping up against maturity. Sales growth that accompanied the social phenomenon that brought sneakers out of the gym and into the fashion world has peaked. And growth from legions of women wearing sneakers on their way to work and in aerobics classes is starting to slow, too. As Horan points out, "There are only 440 million feet in the country and only so many hours in the day you can get away with wearing athletic shoes."
Thus, growing sales and profits means grabbing sales from the other guy. And in an industry that sells image as much as footwear, that means marketing.
Says Gregg Hartley, executive director of the Athletic Footwear Association, a trade group: "Priming the public is everything in this business. The truth is, a runner looking for a good shoe can choose from a half-dozen brands; it's the image that makes a person hot for a pair of Nike's or Reeboks."
Certainly, looks and performance are important. Baltimore retailers still cringe at the memory of the mauve basketball shoes that didn't sell.
And because it largely targets inner-city youths, athletic shoe marketing is becoming increasingly controversial. Shoe companies, say critics, have created a selling machine that is dangerous and exploitative, driving overly acquisitive kids to violence.
Nonetheless, the industry's meteoric growth shows how savvy marketing can turn an everyday product into a gold mine.
Plain vanilla sneakers, the rough equivalent of social hari-kari among the junior high school set, have gone the way of the Edsel. A cruise through one sport shoe store reveals a dizzying assortment of high-tops and low-tops in plaid, checks, pulsating neons and radical glow-in-the-dark.
For the truly sports-minded, there are state-of-the-art jobs with mechanical-sounding features - air cylinder suspension systems, outrigger support and inflatable air bags. Reebok makes Weeboks - pint-size sneaks for the car-seat crowd. And fashion designers like Armani, Chanel and Calvin Klein have gotten into the act with entries like spectator sneakers for the ultra-chic.
Even more remarkable, much of what people take home comes from three companies that did not even exist a quarter-century ago - Nike Inc. of Beaverton, Ore.; Reebok International Ltd., based in Boston; and L.A. Gear of Marina del Rey, Calif.
Together, the "big three" account for a whopping 60 percent of a market that moves 200 million pairs of shoes a year. More than 90 other manufacturers divvy up the rest.
Industry pioneers like Puma and Adidas are still around, but they and other brands from the past have pretty much been relegated to narrow market segments such as basketball shoes. The big three, says Hartley, have done a superior job of "figuring out the design, colors and features that turn people on."
They have also become masters at the marketing game, wooing consumers with powerful jocks in flashy television ads. Industry sources estimate that the top three manufacturers spent a princely $200 million on advertising and promotion last year, more than the earnings of many Fortune 500 companies.
And the juggernaut shows no signs of slowing, even at a time when many companies are pruning ad spending. "We'll spend whatever it takes," says Reebok's marketing and communications manager, Mimi George, who reckons the company will spend between $40 million and $60 million on advertising in 1990. "The competition in athletic footwear is tremendous. We're basically fighting over a few market-share points."
Reebok, which virtually created the aerobic segment in the '80s, is scrapping to regain the No. 1 spot it lost to Nike last year.
At the end of last year Nike weighed in with 24.8 percent of the market, up from 22.7 percent the year before; Reebok dropped to 23.7 from 27.1 percent; and L.A. Gear had 11 percent, up from 4.7 percent.
Nike, which devotes a whopping $15 million to celebrity endorsements, says it plans to drop upward of $100 million on advertising and promotion in 1990.
The company will not talk specifics, but industry speculation has it that basketball great Michael Jordan pulls down $1.6 million a year for plugging Nike Air Jordans.
Some industry watchers view the Air Jordan phenomenon as the turning point in sports shoe marketing. "The Air Jordan wasn't something that just happened," says Footlocker's Myers. "Nike and Michael Jordan literally created a shoe together that hits every corner of the market, from the technical buyer to the kid who wants to wear the same shoes Michael does."
The campaign, along with Nike's "Just Do It" series of ads, has helped the company's revenues from shoes and related gear soar by 95 percent since 1987, pushing Nike ahead of arch-rival Reebok for the first time.
Marketing, says Elizabeth Dolan, a Nike spokeswoman, "is definitely more important than ever before. If you can't cough up $50 million in an advertising campaign, it's very difficult to get your message heard."
Shoe companies increasingly are using mega-personalities to hawk their wares. Nike has signed up Madonna as a pitchwoman. And L.A. Gear's shoes reportedly soon will be promoted by former basketball player Kareem Abdul-Jabbar, Priscilla Presley of Elvis fame, and rock legend Michael Jackson, whose "Unstoppable" sneaker will look like a space boot.
"Today's society is really into hero worship," says Hartley of the AFA. "People want to wear what they see the stars wearing."
If marketing gets shoemakers on retail shelves, it is a steady stream of new and innovative shoes that keep them there. Take Reebok. Last year, the company made a comeback on the success of its popular, if pricey, Pump basketball shoe, a technological marvel sporting an inflatable ankle support and a $170 price tag.
The shoe, which is pumped by pressing a spot on the tongue, has sold about 100,000 pairs since it was introduced last November. It was a sellout during last year's Christmas season. Sales have since cooled, according to retailers, but the shoe did what Reebok wanted it to: It expanded the company's market and proved that buyers could be persuaded to pay more than twice the going rate for a pair of shoes.
Consider the results of a study by Yankelovich, Clancy and Shulman, a footwear consultancy: Only 34 percent of Pump buyers were Reebok devotees. Another 18 percent bought mostly from competitors; 48 percent were not followers of any one brand. Even better: 61 percent thought the shoe helped their performance, 71 percent said it was worth the money, and an overwhelming 85 percent said they would buy it again. Industry analysts expect the Pump to sell about 3 million pairs this year.
This spring, Reebok is coming out with less costly Pumps retailing as low as $90 to "widen the shoe's appeal." The company is adding new colors and versions aimed at the aerobics and cross-training segments of the market.
Such line extensions are a matter of course in the athletic shoe business. Because sales are largely driven by young, hip, often fickle buyers, manufacturers typically come out with a "new" shoe every six months. But new often means a new color or style. Developing and marketing a truly new entry can cost hundreds of thousands of dollars, and even then, success rides on the whim of buyers, not necessarily on the quality of the shoe.
This fall, Nike is introducing the "Nike Force" shoe, which will have an inflatable ankle collar activated by a built-in pump. The shoe will be promoted by an ad entitled "Kick Butt" featuring David Robinson, the Naval Academy graduate who plays center for the San Antonio Spurs.
Reebok has a long way to go on the ad trail if it hopes to snatch back the No. 1 spot from Nike. Its quirky "Reebok lets U.B.U." commercial showed images of people being themselves in wacky ways, like vacuuming carpets on lawns. Although often funny, the ads did nothing to promote shoes - or sales, for that matter. Later, the company bombed again with its "Physics behind the Physiques" campaign featuring muscle-bound people working out in gyms.
The Reebok commercial that showed two men engaging in the daredevil Australian sport of Bungee cord jumping proved too radical for American viewers. CBS yanked the spot after a single showing - during the telecast of an NCAA basketball tournament game last month - drew calls from parents, who were apparently concerned that their children would mimic the stunt. It was subsequently axed.
George defends the ad, saying Reebok was only trying to convey the "cutting-edge image of the product with a cutting-edge commercial."
"I guess we learned we can't please everybody with our ads," she says.
Some find fault with athletic marketing in general, blaming it for such tragedies as the killing of a Houston 16-year-old for a $125 pair of Air Jordans. Another teen-ager was convicted in the case last month. During the trial, the prosecutor, Mark Vinson, expressed dismay that "we create [such] an image of luxury about athletic gear that it forces people to kill over it."
George Buntin, executive director of the Baltimore Chapter of the National Association for the Advancement of Colored People, said he heard similar sentiments during the NAACP campaign to rid inner-city Baltimore neighborhoods of illegal billboard advertising. He wonders, however, at the logic of taking marketers to task for what he views as a social problem.
"I don't know if we can go after everybody who advertises to the black community," Buntin says. "Cigarettes and alcohol clearly are harmful influences, and [ads for them are] overly represented in poor black neighborhoods. If there's a problem when it comes to something like shoes and pants, we've got to look at doing some internal work to change values."
Nike's Dolan expresses a similar view, saying that "it's unfair to blame sneaker companies for problems in the inner city."
Nonetheless, Nike is spending 17 percent of its $30 million 1990 basketball shoe ad budget on public service messages encouraging kids to stay in school.
Some suggest that the furor over athletic shoe marketing may make companies tread lightly in targeting minorities. Still, industry observers say viewers are likely to see more, not less, sport-shoe advertising.
"I think we're going to see a lot more slamming the competition in this business," says Hartley. "In the past, the competition was gentlemanly because these companies were taking sales away from other kinds of footwear. Now they're taking away from each other."
by CNB