Thursday, December 22, 2011

Reebok Relaunching EasyTone Shoes After Settling FTC Suit

PumaPulse Curated By ZenithOptimedia, The ROI Agency Find out more at

Reebok got itself into a heap of trouble with the Federal Trade Commission when it put out an ad campaign that claimed that the design of its EasyTone and RunTone shoes help give anyone who wears them better muscle tone than anyone who wears other shoes.

The company had such noted muscle-tone experts as Kim Kardashian spreading the news of its effects. Back in 2009, the kontroversial starlet blogged her love for the product, the Daily Mail reports. 

“You guys wouldn’t believe it, these shoes have a ball (kind of like that big balance ball you use to do sit ups on) on the bottom of the shoes!” Kardashian wrote. “So basically it works your leg and butt muscles as you simply walk!”

Back in September, the shoemaker agreed to pay the FTC $25 million to help settle the matter, but that didn’t mean Reebok didn’t think its shoe was doing the muscle-toning job. “Settling does not mean we agree with the FTC's allegations; we do not,” the company said in a statement, the Mail reports. “We have received overwhelmingly enthusiastic feedback from thousands of EasyTone customers, and we remain committed to the further development of our EasyTone line of products.”

Now, Reebok has announced that it will re-introduce the shoes to the marketplace and continue developing them, the Mail adds.

Since the toning market is 85 percent made up of women, that is likely where Reebok’s advertisements will continue to be aimed. “Toning was driven by the insight that women care about their looks, and that insight doesn’t change,” said Reebok president Uli Becker, the Mail reports.

One suspects that Reebok won’t likely restart its “Make Your Boobs Jealous” campaign that raised the hackles of feminist consumers everywhere.


Tuesday, December 20, 2011

China's Li-Ning Takes on Nike, Adidas With U.S. E-Commerce Site

PumaPulse Curated By ZenithOptimedia, The ROI Agency Find out more at

Top Chinese sports brand Li-Ning is making a second pass at the U.S. market and for now their strategy is branded e-commerce. 

"The biggest brand you've never heard of ... now available here," proclaims the greeting on a bold red background on, which officially launches Monday. The company's first English-language consumer website has already picked up some popular U.S. e-commerce tactics, like free holiday shipping and a Facebook page. 

The company's founder, former Chinese Olympic gymnast Li Ning, has ambitious plans to challenge rivals like Nike on their home turf with his namesake brand. 

"The U.S. is obviously important for any sports brand to have a presence in ... [and] in the short term the most cost-effective manner to reach that market, to get products to consumers, is through the e-commerce platform," said CMO Frank Chen. 

Li-Ning has been in the U.S. since 2007, when it opened a design center in Portland, Nike's hometown and a regional hub for Adidas. Its first attempt at selling products through U.S. retailers fizzled because of supply-chain problems. 

It's a big challenge for any Chinese brand to overcome perceptions of being a producer of cheap, copycat goods, but even more so in the sporting goods industry, where branding is key. And American consumers will see a strong similarity between Li-Ning's logo and the Nike swoosh. But the Li-Ning team, led by the straight-talking Mr. Chen, a U.S.-educated former Greater China CMO at Philips Electronics and general manager at Electronic Arts China, says the key to success lies in clearly differentiating themselves from rivals.
"If you just have the product without the branding, it's like having a car without the gas -- it wouldn't run," said George Lu, CEO of Digital Li-Ning and a Chicago technology entrepreneur who's also chairman of Acquity Group. The independent digital marketing agency sealed a joint-venture with Li-Ning a year ago to form Digital Li-Ning, with a $10 million startup investment. The international e-commerce site will initially focus on the U.S. 

Along with Acquity and other partners, Li-Ning plans to invest a combined $100 million on global marketing over the next five years. 

Li-Ning sees its niche in the U.S. as an Eastern-inspired brand that emphasizes the spiritual side of sports, focusing on balance of mind and body over brute strength and power. To start, the company is selling products in three categories: basketball, running and women's fitness. 

The marketing campaign is still at an early stage and messaging has not yet been fully developed. But as an example, women's fitness products will be marketed as sporty yet still feminine. 

"There is a market segment of women who don't want to build up muscles and sweat all the time and feel they have to compete with men. They may be involved in kickboxing or whatever but it's the psychological side that we need to cater to," Mr. Chen said. "It's a very Eastern philosophy. Nobody owns that."
Added Mr. Lu: "We're not just putting Chinese shoes in a box and sending it to the U.S. We're designing entire new sets of products just for the U.S. and we've mapped out the next five, ten years," in terms of products and messaging. 

For now, the company is doing exactly that, offering a selection of shoes and apparel from Chinese product lines on while the company develops products geared toward Americans in terms of sizing, design and material. New products are scheduled to roll out around the time of the 2012 London Olympics. 
A sneak preview of what's to come: a close-fitting, low-profile shoe that promotes agility and natural movement. "Think ninja," Mr. Chen said. 

The London Olympics will be key in putting Li-Ning in front of consumers and driving traffic to the new site. The brand has endorsement deals with international athletes but is counting on gold-medal performances from the Chinese gymnastics, diving, badminton, ping pong and shooting teams. 

Mr. Chen noted that to succeed in the youth-driven basketball category, Li-Ning is targeting starters on the NBA All-Star teams and is currently in talks with agents to ink a deal in time for the start of next season.
"It's going to cost us, but we need a big name. Not just in the U.S. but in China," Mr. Chen said. "The Kobe, Lebron shoes, these are the ones that can drive the premium up to 1000 RMB ($150)."
Li-Ning views branded e-commerce as the best entry point into the U.S. market not only because young consumers spend so much time online, but also to avoid the retail footprint of the biggest players.
"If [Nike and Adidas] are too aggressive with e-commerce ... it'll backfire from their channels. Footlocker would be pissed off," Mr. Lu said. "We have nothing to lose!" 

In the midterm, the company plans to open flapship stores in major U.S. cities to display products, though consumers will still be encouraged to buy online. It's a selling model based on Apple's strategy.
Mr. Chen and Mr. Lu won't give specific sales goals for the e-commerce initiative but point out that global revenue is less than 5% of total sales now. CEO Zhang Zhiyong has said he wants international sales to make up 20% of global revenue by 2018, half of it from the U.S. 

"We're very much aware our priority's in China," Mr. Chen said. "To succeed globally you've got to fortify your position domestically." 

At home, Li-Ning is still trying to find its footing after an attempted relaunch last year aimed at making the brand more youthful and upmarket, to compete directly with Nike and Adidas. Li-Ning's COO, CMO and head of e-commerce all resigned. Net profits tumbled 50% in first-half 2011, to $45.8 million, and the stock price is down 70% from a year ago. 

In China last year, Li-Ning continued to trail market leader Nike in the apparel category, which includes clothing and footwear, and was even with Adidas. Upstart local brand Anta was just behind Li-Ning in market share and growing quickly, according to data from Euromonitor.
"All the rebranding in the world hasn't allowed them to differentiate themselves that much from the other up-and-coming Chinese brands," said Ben Cavender, associate principal at the China Market Research Group. 

Chinese consumers balked at paying premium prices for Li-Ning, when aspirational foreign brands cost only a little bit more. Meanwhile, distributors were still trying to unload inventory that had piled up since the heady days following the 2008 Beijing Olympics. 

"At the end of the day it's pretty confusing to the consumer whether they've been through a rebranding or not," Mr. Cavender said. 

Mr. Chen doesn't mince words when discussing the flawed relaunch. 

"On a rebranding effort you have to have innovation, your product has to change, your tone has to change -- teen to teen rather than father to teen," Mr. Chen said. "Obviously my predecessor didn't recognize that."
For now, Li-Ning's advertising is back to basics and product-focused. Everything in the pipeline features real athletes, according to Stefan Petzinger, general manager at Leo Burnett Shanghai, Li-Ning's agency of record in China for all categories except basketball. 

Mr. Petzinger said that for the 2012 Olympics campaign, expect cinematic-style advertising "that's very close to the heart of the Chinese people."