Problems
In reviewing the case of New Balance Athletic Shoe, Inc. it is clear that there are a few major problems that the company is facing. First of all, New Balance falls behind its other major competitors, Nike, Adidas and Reebok, in the area of marketing. Unlike its competitors, New Balance does not undertake celebrity endorsements. This puts them at a disadvantage when it comes to brand building. This also causes the company to lose out somewhat on gaining awareness on a global scale as it lacks endorsements in major sporting events. Most global brand names generate strong brand recognition through celebrity endorsements in sporting events that would give them the needed momentum to carry their brand name further into the global market.
A second problem that New Balance faces is its limited product line. New Balance prides itself on providing quality athletic shoes for the serious athlete. However, the market has been shifting to not only include serious athletes, but it now also caters to the more fashion-oriented crowd. This crowd tends to be from the younger generation, the part of the population that New Balance has so far not been focusing on. New Balance has geared itself toward the older crowd, which has severely limited the company as far as its ability to expand into new product areas and remain competitive in the changing market.
Another problem that New Balance has been facing is manufacturing costs. With its competitors outsourcing most of their manufacturing to other countries such as China, Nike, Adidas and Reebok have been able to cut their manufacturing costs significantly. New Balance on the other hand only outsources 75% of its U.S. volume while retaining the remaining 25% for final assembly in one of its five factories.
Strategies
In dealing with New Balance’s weakness in the area of marketing it would be beneficial for the company to find a celebrity to endorse their product line. New Balance has always been against celebrity endorsements which emphasize fashion trends and sway potential customers more by popular personalities than by performance and function. This has severely limited the company’s ability to reach the same kind of global awareness as its competitors. New Balance should find a serious, yet well known athlete who holds to the same kind of ideals as the company, to endorse their brand. This will create the type of brand recognition that they need in order to stay competitive.
These individuals come from educated and sophisticated backgrounds and socioeconomically fall within the middle to upper class. This target customer won’t buy new clothing based on the fact that it might be worn out or too old, they buy habitually in order to keep up with the latest trending styles and innovations that money can buy. “Other than their poise and perfect coifs, you can identify members of this gym robot army by their brand of clothing. You’ve seen them at your gym, at the Whole Foods and in line for green juices; they’re the Lululemon ladies and they’re fancy as fuck.” (Blisstree) This consumer segment is also very brand and status orientated, and therefore views and wears Lululemon as a status symbol of high end and high quality, athletic
Through the restructuring that started in 2005, the restructuring involved are explained as below. Adidas had lineup sporting goods comprise of three different business segments, including Adidas, Salomon and Taylor Made. Adidas business segment provides various Sathletes’ products. Adidas business segments has three different products line, including Adidas Sport Style, Adidas Sport Heritage, and Adidas Sport performance. On the other hand, Salomon business segment is the number one brand that provides winter sports like snowboard, Alpine and Nordic. The Salomon business segment has five different products line, including Cliché, Arc’ Teryx, Bonfire, Mavic – Adidas cycling, and Salomon. Next, Taylor made business segment provides a variety of golf hardware and accessories in full range. The Taylor made business segment has five different products line, including Adidas golf and MAXFLI.
At the meeting, management revealed plans to address both top-line growth and operating performance. To boost revenue, the company would develop more athletic-shoe products in the midpriced segment3a segment that Nike had overlooked...
1. Is the international market arena in which your athletic footwear company competes characterized by multicountry competition or global competition? Explain why.
New Balance is a privately held company that manufactures athletic shoes and apparel. New Balance has a strong social culture of responsibility and a commitment to creating the best environment for their employees. This is reflected in their mission by “demonstrating responsible leadership, we build global brands that athletes are proud to wear, associates are proud to create, and communities are proud to host” (Veleva, 2010, page 1). New Balance began as a simple shoe support insert, built to help alleviate pain for people who spent all day on their feet, and in later years developed into the athletic shoe that it is today. Sports shoes remained the focus for many years. However there is also a small but growing apparel and accessories business.
Marketing companies know that by associating a product with an athlete it can drastically increase sales. Fig 1. Gaines, Cork. "... ... middle of paper ... ...
The corporation should invest more money in research and innovation since this is what has helped them to make a product that rivals their competitors. At the same time, it is imperative for them to improve their machinery for cheap labor costs which will help the company increase its production allowing it to meet the demand in the market. By improving production leading to lower costs of making shoes, apparel, and equipment, Nike will achieve higher demand assuming a quality product is maintained in that process. They will stand a better chance of competing in the industry (Hill, 2009). The organization is already in a better position for meeting the demand, customer taste, and needs. The company should improve quality by focusing on developing lightweight products that are more durable compared to those offered by the competitors. Also, Nike can keep up their success by continuing to reinvent and improve their items and continue to meet the current demand by using new technology. It can also use the Internet to communicate with consumers (Hill, 2009). By developing new technology, Nike will allow the customers to suggest and design their shoes online. To achieve this goal, it is fundamental to enhance areas such as their website to make it more user-friendly. Finally, the company should pay attention to small startup organizations that enter the
Many global companies like Nike, Inc. are seen as role models both in the market place as well as in society in large. That is why they are expected to act responsibly in their dealings with humanity and the natural world. Nike benefits from the global sourcing opportunities, therefore areas such as production and logistics have been outsourced to partner companies in low-wage countries like China, Vietnam, Indonesia and Thailand. As a result the company is limited nowadays to its core competencies of Design and Marketing.
With the increased monitoring and enforcement of labour practices; Nike being in the public spotlight and subject to negative publicity on their subcontracted factories is forced to readjust the working conditions of their cross ocean factory workers to abide with proper regulations. This has caused Nike to modify their factory standards and employee working conditions by; limiting the maximum hours worked a week, implementing proper ventilation systems to filter out toxic fumes, increase worker access to protective equipment, and increase the capacity of medical facilities and medical staff for their workers.
In this Case Study Analyses, an objective SWOT Analyses will be done to help identify potential strengths, weaknesses, opportunities, and threats within the Nike Corporation.
Nike is a company-- young and yet mature--developed and respected by popular athletes both past and present, whose icon remains a "swoosh" printed both large and small on many different forms of apparel. The "swoosh" constitutes a dream of being the best bec...
by paying there workers less because they are in the far east. Nike and Reebok
Manufacturing in foreign countries typically means cheaper production costs resulting in higher profit margins. Nike operates manufacturing plants worldwide, with most of their clothes and shoe...
Nike is the number one innovator in the world in athletic footwear, apparel, equipment, and accessories. This worldwide company operates in an extremely different organizational structure than other companies, such as Reebok and Adidas. Nike operates tremendous marketing strategies and develops inventive designs to inspire athletes around the world. This company is one of the largest suppliers in the world in athletic footwear and apparel, main producer of sports equipment, and making Nike the most valuable brand among sports companies. The task for Nike is to join diversity and inclusion to encourage ideas and innovation. Around the world, this company is a popular brand.
Celebrities advertising are no panacea for achieving attention and higher sales. Their belief is the celebrity message deliver a higher degree of appeal, and attention. Marketer’s claims that a celebrity creditability increase memorability of the message and may provide positive effect that could be generalized to the brand states M. Mohan & B, Loue & R, Hudson. Firms have come to realize celebrity spokespersons like Tiger Wood have believability, purchase intentions and favorable effect on consumers. “ “The casual observer is somewhat inclined to believe that professional sport athletics are in greater demand as celebrity product endorser” (S, George, & J, Mathew & J, Jones, 2003).