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Reebok and other Global Brands in Mexico with Teo Husemann

Teo Husemann

Teo Husemann, the head of Reebok in Mexico, shares his experiences with a global strategy and local execution. He explains how Reebok’s marketing is similar to the US but has different channels, e-commerce, and seasonality. Marketing issues involve distribution; segmenting for each channel; pricing; different user experiences among Addias, ASICS and Reebok; the uncertainty of duties and taxes, and political considerations. Having worked on other brands such as Pepsi and Nokia, Teo also discusses issues of product theft and the exchange rate.

Highlights:

Teo’s journey working with great international brands

Reebok marketing in Mexico vs the United States

Adjusting products to the local market

Pricing differences in Mexico vs the USA

Brand Promises between Adidas, ASICS, and Reebok

Brand appeals in USA, Mexico, and Latin America

Marketing Pepsi and Nokia in Mexico

Unique Challenges Faced in Mexico

Teo Husemann bio:

Teo Husemann has been working with global organizations for more than 25 years. He has worked in many industries, ranging from entertainment and tech to telecomm and sporting goods, and has held roles at a local, regional and global levels.

Some of the brands he has worked with include Pepsi, Nokia, Adidas and Asics, all based in Mexico. He currently heads the Reebok brand in Mexico, and focuses on team development and strategic thinking. His past positions have also involved licensing and entertainment property management, point of sales development and retail management.

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Full Transcript

Since today’s guest comes from Mexico, I thought I would do a blooper from there. This is an example of exactly how English words can be misused and therefore why you need a professional language agency to check everything before you use either an AI version or a version done by an amateur. 

There was a sign in an Acapulco restaurant that said very simply in English, “The manager has personally passed all the water served here.” This does not quite convey the same meaning as it should, because the word “passed,” of course, has multiple meanings in this case.

Today’s guest is Teo Husemann. Teo has been working with global organizations for more than 25 years. He has worked in many industries, ranging from entertainment and tech to telecom and sporting goods, and has held roles at local, regional, and global levels.

Some of the brands he has worked with include Pepsi, Nokia, Adidas, and Asics, all based in Mexico. He currently heads the Reebok brand in Mexico and focuses on team development and strategic thinking. His past positions have also involved licensing and entertainment property management, point of sales development, and retail management.

Welcome Teo, glad you’re with us.

It’s a pleasure to be here. Thank you so much.

Before we begin, perhaps you could tell us a bit about your interesting background and how you got involved in many interesting companies.

To tell the truth, my parents were both in advertising, so I started being involved with brands at a very early age. So, in the beginning, I really wanted to be a copywriter for advertising agencies. So even when I was in college, I started working for agencies like BBDO and J. Walter Thompson. 

That’s when I started with my love for brands, and working with local brands, but just right after college, I started working in a very interesting industry. That’s basically entertainment licensing for consumer goods. I had a chance to work with very cool brands like Mini Black, Godzilla, and Spiderman at the very beginning, so I worked there for a few years and then I was fortunate enough to be recruited for Pepsi, they wanted to… Somebody that used my expertise in managing licensing and entertainment properties for promotional activities. I got recruited there, especially doing trade marketing and promotional activities for what were called on-premises companies. 

So, I started doing a lot of promotional activities for cinema chains, food service restaurants, and so on and so forth. And then I stayed there.  I started working in brands, and a lot of new initiatives. So, I did the first Red Bull competitor in Mexico for Pepsi, which was really interesting.  And then after a few years, I moved to Nokia. They wanted somebody to manage their trade marketing department for Mexico and Central America. Then I held a global role with them, managing a global operator called American Mobile. And I had loved for seven years to be first managing the sports style, then the whole brand. Then I jumped to ASICS and finally to Reebok, where I am right now.

Wow, that’s quite a wonderful progression. Quite a wonderful jump, as you said. 

So yeah, I’ve been lucky enough to be involved with some of the great brands in the world.

Since you’ve mentioned Reebok, let’s start there. How is the marketing of Reebok similar or different in Mexico than it is in the United States?

While solid channels are similar, for example, department stores and sporting goods stores, some of the multi-brand stores have actually been in Mexico. The Athlete’s Foot was here at some point.

But the problem with the US versus Mexico is that the US is very diverse, right? You have many different regions with many different customers. in Mexico, you can actually divide, let’s say, into three different tiers of the five major cities, secondary cities, and then the rest. And in that sense the major, let’s say retailers’ department stores are in the bigger cities, and then the rest you can actually cater to through secondary tier distributors. 

And the other thing that has changed a bit and might be a little closer to the US is of course e-commerce. Right now we have a very strong e-commerce business, and you can get from there to all the rest of the country, not just to the major cities, so that’s one of the things that is actually a bit different from the US, and in the US, you have major cities everywhere. You have maybe 35 or 40 major cities. Mexico, which is five. 

But otherwise, then we have a close relationship with the US. A lot of the things that happen and the way they are marketed in the US impact Mexico and that’s one of the reasons why we have to be very aligned in marketing strategies, segmentation, and product distribution to the USA.

You’re mentioning the diversification, certainly of the US market and the Mexican market in different tiers. 

One of the principles of international business is that you adjust your product to your target country or your target culture. I presume that is because you’re dealing with international footwear that the actual footwear itself is not going to change, but are there ways in which you’ve had to adjust the products to the local market?

Right. The thing is that you basically use the low range and then you select what’s adequate for your market and that’s one of the important things that you have to have both knowledge of the global catalog and see what fits into Mexico. You don’t change the product as much as you try to segment it correctly, to each of the channels. That is one of the bigger challenges that you can have as a marketing global range to Mexico. 

So basically, what you do is you take the global catalog, and you select which product goes onto each channel and then you try to find the right pricing strategy. But it’s not as much. Sometimes when you’re able, what you can actually do is find some use of a product dedicated to the country, maybe in pricing, maybe in styling, but those are the exceptions. 

Ninety nine percent of the product will come from a global range. You’ll try to use whatever is designed by the Reebok Design Group that is based in Boston, so then of course you can actually design additional products from Mexico, but you usually take the global strategy as a base for all that.

You were talking about pricing. Does the pricing in Mexico differ because the standard of living is so different from the US?

There are a few factors to it. The first one is that getting the product into Mexico is more expensive than in the US, so probably what happens is a lot of people think that sporting goods in Mexico are going to be cheaper, but the reality is that the import duties are higher. So, we might have a difference between $5 and $10 if the US is cheaper. 

The other thing that actually Impacts this bit Is the exchange rate of course. The market in China, where the products in Asia are based on the US dollar, but sometimes you have some of those fluctuations. So you end up having a little difference between the US and Mexico and it’s probably a little higher. We try to get as close as possible to the US dollar or closeness to the market. But we end up being a little higher in terms of pricing.

Does that mean that it’s not in the way of mass-market products that fewer people can afford it because the standard of living is lower?

We try to cater to the lower middle class upwards, but we try to get as many products as possible that can actually cater to everyone. But of course, pricing is a challenge. And that happens, let’s say, when you have a local production brand and international brands, there’s a natural selection in terms of pricing. There are certain prices that if you have a local brand with local production, you’ll be able to have a very low price which we cannot definitely get into there. It’s impossible there with our cost efficiencies, and with our cost constructions come information. It’s very complicated getting to let’s say a very mass-driven market, right?

What about financing for expansion? Do you get bank loans, or do you depend on headquarters?

It’s not as complicated as you might think. There’s a lot of support from financial institutions in Mexico. We have credit lines in Mexico that can actually help develop products and actually help bring products.

So, it’s not as complicated. There are a lot of financial institutions both at a national level and on a private level. Actually, it’s more of a local financing scheme and through banks and financial institutions what you can.

What would you say are the brand promises between different kinds of footwear, Adidas and ASICS, that you’ve worked for versus Reebok now?

This is a question that I get a lot. Philosophically, each one has a different history, and this is one of the things that I love. 

Adidas thinks that they make life better through sport, the key word being sport. Right. And that means that they will try to get people to enjoy the idea of sports, the Olympics, team sports, and so Forth. 

ASICS, which actually means “Anima Sana in Corpore Sano”, comes from the idea that Mister Mitsuka wants to have health and health benefits, and wellness through physical activity, that’s what “Anima Sana in Corpore Sano” [Latin: Sound Mind in a Sound/Healthy Body] means. You have a healthy body and you have a healthy mind. Right. So that means that you can do whatever, and you can do yoga, you can do martial arts. It’s not a sport as it is, it’s basically, wellness through physical activity.

And the most recent claim that Reebok has is… Life is not an expectation of sport, and that means that basically, you have to go out there. You have to be more active. You have to be more, let’s say, present. You have to be physically active regardless of who you are.

So, the first one has to do a bit more about doing sports as an activity. The other one is about wellness and the third one is Reebok’s. Right now it’s more about helping people to get out there and be more present in their lives. It’s more inclusive. It’s not only about doing sports or physical activity but also about participating in life and being more active in it. 

So, it’s the same industry with three different philosophies and I think that’s very interesting how these three companies get to the market and drive their products differently.

And these are the same brand promises that are in the US and in other countries, right?

Those are the global three promises for the three brands, yes.

And that’s the way it should be, but

And that’s the way it should be.

It’s not always what happens, but that’s the way it should be, yes.

Well, at least I can tell you about sporting goods brands. I think the brands have a similar or very close to similar global promise, especially because again, assets, brand campaigns, and brand experiences. The only thing that happens is that they are translated differently to the market, but we try to work with the global promise of the brand at a local level as closely as possible. I think that’s the right thing to do. 

Maybe just doing a little customization trying to figure out what works on the market, and what doesn’t work. In the market but trying to get that idea right and rebuild. We’re trying to help people get to their lives, be more active and I think that, let’s say, each specific market can be a little bit different, but the idea is just to try to get that global idea executed as closely to the market as possible.

Can you give us some idea of how you would tweak the product or tweak the marketing message for the Mexican market versus, for example, the US market?

I’m going to use an old activity for Reebok. They used to sponsor CrossFit, right? So of course, there was this huge CrossFit change in the US. There were a lot of activities doing that. They had CrossFit games and so on and so forth. 

 But what you can actually do instead of just doing CrossFit, what you can do is this. This kind of cross-training activity and experience might not be related directly to that brand or that of Pi. Would you land that into an experience that has exactly the same physical experience? So maybe there’s not a chain in Mexico but you try to get that experience and try to make it more attainable to the Mexican consumer. So that is one. 

The other one is for example, at  some point they were sponsoring the meals, which was a fitness philosophy kind of brand. But in Mexico, it didn’t exist, so they found at that time, they found what was equivalent to this, so it was fitness studios that maybe it was not like a meal but it was a chain of fitness and wellness experiences that you could do in Mexico. 

So, you try to find whatever gets closer to the global experience if you’re not able to bring that specifically into the marketplace.

And what about retail distribution? Many shops in Mexico tend to be small, what we would call Mom and Pop shops, versus more large department stores that you would find in the United States.

That’s a little misconception. We do have large… for example, department stores in Mexico. There’s Liverpool, there’s Palacio Yero, there’s Suburbia, there are a few others, so there’s actually a similarity, right? There’s a lot of multi-brand sporting goods companies in Mexico. There’s Sinova, Tennis, the Sport Tico. There are a few others that have a similar feeling to what you can see in the US. 

I think the difference lies in trying to get into the rest of the market, secondary cities, and so on. For there might not be a large department store, so you have to go to those multi-branded retail chains and have a conversation with them and try to get a better experience. 

So, it’s not as dissimilar as you might think, right? Some of the exceptions might be right now in the mass market chains example. In Mexico, we have this very unique distribution channel called catalogs. 

So, they basically sell catalogs. Old catalogs before that, so they have a lot of sales force. They get everywhere, and that’s probably the closest you get to an old catalog in the US. What you get in the back of the magazines and that’s a huge market in Mexico, but that’s something that is unique otherwise than that it’s very close to the US where you have department stores and multi-branded sporting goods. You have a lot of lifestyle brands and some of the let’s say retail brands in the US are coming to Mexico at some point or another. So, it’s not as dissimilar as you might think.

  1. Very interesting. Thank you. What are some of the benefits and appeals that you use in Mexico? Are they different than in the US? And are the Mexican benefits and appeals similar or the same that one would also use in Latin America?

Well, if you’re a global expat coming to Mexico, there are a lot of benefits. First is the quality of life. Right. So, for example, if you’re living in Miami, you could have a small apartment that you’re paying $4000 or $5000 to live in Miami Beach. If you come here, you’ll probably get a much larger house and have a quality of life that is better. Not in every place in South America and Central America. You get the same, but it can be similar, right?

Canada has great living standards. Guatemala is surprisingly good, but some of the benefits that you have in Mexico are, for example, the social benefits in the law. If you get fired, if you get your relationship shortened with your employer, then Mexico is one of those players that has a lot of protection towards the employee. Not in all places in Latin America you have that. 

But of course, there’s Guatemala and Panama. They’ll think those will have different benefits. For example, in Panama, you don’t pay taxes as it is. It’s basically you get tax-free, but let’s say you don’t have social benefits.

Are you referring to taxes on footwear or personal income taxes?

Right. And of course, if you want to commercialize a product in Panama, the taxes are almost nonexistent. So, you can actually sell products at a cheaper price, which in Mexico is. … You have a lot of duties, it’s very protective in terms of that.

In terms of the marketing messages, are the marketing messages pretty much the same throughout Latin America or do you change them for different countries?

If they should be the same, the only challenge that you have in South America, especially for this kind of brand, is that they’re in a different seasonality, right, when we’re in summer, they’re in the winter. So what they do and what some of the markets do is they buy the product for spring and summer, and they save it for fall and winter. So, they’re a season late.

And some of the weather in South America is more extreme. Mexico is a bit milder so. If you don’t, you don’t have winter clothes, right? If you want to sell, for example, snowboard outfits or boots, we don’t have that. And maybe in Chile and Argentina, they do have stronger winters and that’s probably one of the bigger differences we have. We’re in a different season and they have more extreme seasons as it is.

That would make sense, yes.

You’ve also worked in your career with other brands such as Pepsi and Nokia. What did you do differently from how they would market in their home countries versus how they would market their products in Mexico?

Pepsi for a start is a global brand. So basically, we have the same products. Almost the same season. Now, sometimes the only challenge that you have there is distribution, right? So, I can tell you that Pepsi in the US and Pepsi in Mexico, they’re marketed fairly similarly.

When I was at Nokia the main challenge was trying to get the higher priced or the higher-end products in the Mexican market. They used to sell, you remember the 1100s? We sold millions of those in Mexico but trying to get there trying to bring let’s say the more techs, sophisticated products into Mexico, that was a bit more challenging.

And when I was at Nokia, the bigger challenge was that basically, no one had a data plan. Now it sounds silly, but no one had data, so if you had a very sophisticated business phone, you had to sell it with a data plan to actually use it. 

So, we had at that time, and in place, we were fighting an advanced BlackBerry iPhone that was not even relevant. So, we’re trying to explain to people what data plans were important. You are the kind of user that you could actually have in that. 

Of course, now everybody has a data plan. Everybody has a smartphone, so way back then, we were just selling little phones and the cool thing was trying to sell text messages through your numerical keyboard. It was very interesting and in, let’s say, in Europe, they were more developed, they were using high-end cameras, high-end multimedia devices. And we’re just basically on that. 

So, at that point, I think the development of the market was very different between what was happening in Europe and sometimes in the US and what was happening in Mexico. It was a different moment in terms of the usage of technology as it was.

Also, back to Reebok, sportswear and footwear. Are there any unique challenges that you face in Mexico that your counterparts in other parts of the world, such as in Asia or Africa, do not face? 

Well, I can tell you that one of the big challenges in Mexico is, let’s say the stability sometimes, with government relations. I’ll tell you a little story. About some 12 years ago, the executive, the Mexican executive, the President said that they were going to lower the duties for sporting goods. They were trying to protect the footwear market in Mexico, but they understood that basically, athletic footwear was not there. 

So, they’re going to lower it from 30% to 10%. Everybody was happy about that. Because we were going to be able to compete better in better pricing and let’s say in that sense, we can actually have better pricing against the US. 

But what happened, of course, is as you can have in a country such as ours, is once the commitment had happened, there was a change of president. He basically forgot about it.  So, we’ve been waiting for that for the last ten years and it hasn’t happened. 

The other one is, of course… And I can get sometimes in Africa, we can have a challenge. The exchange rate is always challenging because you have to be very careful about how you price your products, and how you plan your pricing. 

So, if there’s any devaluation, if there’s any fluctuation between the US dollar and the Mexican peso, you can actually react better. Those are probably the quirks that you can’t have. 

That and the other one, of course, sometimes you have to deal with product theft. You have to deal with insecurity or safety issues in some of the regions. But if you’re smart enough, you can actually prepare for that and try to avoid it as much as possible. But I think those are the main challenges that you can actually get in Mexico, different for Asia or maybe Europe or in other regions.

That raises another question of return on investment. Is the ROI in Mexico similar to the United States’? 

I think it can be, but you have to be better at planning and smarter in the way that you manage the business. For example, it’s better to have direct-to-consumer (DTC) in Mexico or you have a larger part of your business getting better margins wholesale or retail in Mexico can be challenging at some points.

But if you have that mix and you cater directly to the consumer through your DTC channels, let’s say you come or retail and you have a healthy retailer or wholesale partners, you can actually have in our return to invest and sometimes you can actually do better because if you have an aspirational product, pricing can be higher. 

Let’s say you’re launching a GC shoe in Mexico. Well, if you’re smarter, you can actually manage pricing better so you can have better margins. So, there are pros and cons, so you can manage it both ways.

Very interesting also. Is there anything else you’d like to add before we close?

The challenge of managing global brands in markets such as Mexico or Latin America, you just have to be very aware of what are the quirks and twists of the country. It could be very interesting. You have to have local knowledge and local people that actually work with you so they can help you navigate through that. You have to understand that a global strategy is sometimes, will need to let’s say quite a bit to make sure that it works. 

The bigger challenge that I’ve seen is when they have global brands that want to implement exactly the same strategy in the marketplace and that’s probably when they fail. They need to go global. I know it’s a little old turn, but if you have that global strategy with local execution, it will definitely work much better.

That makes perfect sense because obviously, the world is not the same.

And it’s not the same a lot of brands think… or a lot of people at global headquarters think that that it is, but it’s not. And I think in my experience, if you want to, you want to do something based on a brand that is based in Finland or in Boston or in Kobe, and you don’t understand that there are slight differences. You will fail. Or at least you will have a bit of a headache on your execution.

And you mentioned a very good example of the different seasons in Latin America.

And that’s one. The other one is you have a for example you think that the life cycle of technology is the same and it’s not the same or if you actually think that the pricing or let’s say the out-of-pocket consumer has is the same? And it’s not so those are conversations you need to have, and you need to understand that even though there are a lot of similarities. 

And you might think that the market is marginal everywhere. There are certain quirks and I think that’s probably the bigger challenge for the global headquarters and the global strategy is just to make sure that there’s you have to probably customize it a bit and make sure that it’s the right strategy and the right execution.

And to always listen to the local executives in the country, as you are doing.

Absolutely.

That is always a challenge. Trying to make sure that you’re listened to and that they understand those differences, right? And of course, when you’re on a global level, you have to hear the people at a local level or a regional level, right? There might be a regional execution that you want to do. 

I can tell you that I had a lot of challenges making sure that the teams in South America saw what the global operator at the time American Mobile wanted to do across the region. Right. There was different seasonality. There were different calendars. 

And of course, they’re sold. So different politics. And that’s probably one of the bigger challenges as well when you’re trying to execute a global from a global perspective, original perspective going to the market, just trying to make sure that there are certain standards, but you let them execute the right way.

Well, thank you so much, Teo.

Oh, thank you.

It’s been a wonderful talk with Teo Husemann and I hope all of you will join us next week for another edition of Global Gurus, and their stories of international business.

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