Inside the Mix

Combination of Adidas' and Reebok's brand images to give both better footing in market

Combination of Adidas' and Reebok's brand images to give both better footing in market

I wasn't the coolest kid in school. Far from it. But the real nail in my coffin wasn't the grandma-knitted sweaters or the eighth-grade experiment with pink hair.

No, it was going to school proudly in my new Adidas Stan Smiths, my first branded pair of sneakers. Unfortunately, in 1983 London, it was the wrong brand. As I looked at the floor during a bout of recess teasing, I noted glumly that those laughing at me were all, to a person, wearing Nike Bert Bruins.

The only people, it turned out, who wore Adidas were soccer players (which a great number of my schoolmates were, which possibly explains my confusion), and the whole experience served as my first lesson in what brand choice can say about a person. From then on, I realized that each choice I made about what I purchased and wore would be logged and graded by my peers.

Last week's news that Adidas-Salomon was buying rival Reebok in a $3.8 billion deal in order to better compete with number one sports brand Nike sparked as many conversations about brand identity as it did about business sense. Each of the top three brands have very clear perceptions, which can be generalized thusly: Nike is a lifestyle brand. Adidas sells performance shoes. Reebok has a dual image as a youth brand, with the '80s taint of aerobics still following it. Discussions about these brands are curiously polarizing, indicating that perhaps we haven't moved on from the eighth grade as much as we'd like to think.

Marketing executives at these companies would quite justly feel short-changed on the aforementioned generalizations, so, to be fair, plenty of people recognized, say, Adidas' efforts to extend its apparel appeal by teaming up with designers Yohji Yamamoto and Stella McCartney, Nike's expansion into the outdoor/adventure market, and Reebok's savvy sponsorship deals.

But Nike's the 800-pound marketing gorilla here - in much of the coverage and conversations that occurred following the announcement, the company was described as a "marketing machine." The ubiquity of "Just do it" is hard to match, and even an expanded Adidas and Reebok is unlikely to achieve what Nike has.

What the merger will do, though, is give each of them the other's branding expertise. It's an unusual merger in that it is one of two remarkably similar companies. Their products, distribution channels, and target markets are largely the same. It's really the perception of the brands that provides the greatest point of difference, and the advantages each brings to the other are subtle. Reebok can benefit from Adidas' expertise in creating premium, performance brands, and from its success in the branded apparel business. Reebok's Americanism will add a more mainstream appeal to Adidas, whose European roots paint it as something of an outsider.

Sales volume is also a key part of this equation. Adidas' acquisition of Reebok will effectively almost double its US sales. And while that won't automatically make the shoes more attractive, it will up the brand's leverage in retail outlets. It will also make it a more attractive proposition for large-scale sponsorship deals.

Nike certainly won't be quaking in its Air Jordans over this deal. But when its two competitors have joined forces, and have a mandate to improve each of their brand offers, the playing field will definitely change.

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