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Brown Shoes Introduction:

Brown Shoes Introduction:. Notes Will not be posted on Web This discussion covers one possible marketing analysis process and answer Points of discussion include: Student responsible

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Brown Shoes Introduction:

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  1. Brown Shoes Introduction: • Notes Will not be posted on Web • This discussion covers one possible marketing analysis process and answer • Points of discussion include: • Student responsible • Talking points – NOT student responsible (For example, I will discuss the case facts in terms of the 5Cs of situation analysis) • Who do are we role playing? • Assistant product manager for Brown who is competing for budget dollars • What decision are we faced with? • Decide direction of a new athletic shoe design with only 10 days lead-time • What options do you have? • Family shoe in the inexpensive athletic shoe product category • Extreme/Off road shoe in the inexpensive athletic shoe product category • Determine positioning and marketing strategy by selecting one of the options for one TM that is specifically defined as possible. • 10 days and limited marketing research • Now, let’s talk about what factors did you consider when deciding which market…

  2. Company – Brown Shoes: History/Background: • Brown Shoes is a 17-year-old company. • The company is family-owned. • Very cohesive and committed to the company’s strategy of focusing on producing inexpensive athletic shoes. • A majority of the managers have been with the company since its inception. • Product not Brand managers • The product managers have been with the company on average 12 years. • Recently, the first of these managers retired and your boss was hired. • IMPLICATIONS

  3. Company – Brown Shoes: Goals/Strategies • Develops and manufactures inexpensive athletic shoes that retailers like Wal-Mart or Sears would sell as inexpensive competitors to Nike’s and Adidas’ offerings. • Me-too or follower strategy in terms of Carlton shoe design. • Promotion - Brown has done little sales promotion. they have mimicked Carlton’s strategy of show casing their products. • Feel should be second in the industry (reputable industry consultants) • Third place in the inexpensive shoe industry • Very short of their profit goals (reputable industry consultants) • The fact that this has not yet been achieved concerns upper management. • IMPLICATIONS

  4. Company – Brown Shoes: Culture • Company has become fiscally conservative Resources/Constraints • New sole and lacing technology • Stable, safe, comfortable • Family – sell to 25-34 parents for small children and possibly seniors (life cycle marketing) • Extreme – tested well. Good for off-road walking. • Two years ago, Brown Shoes received an infusion of capital which is exhausted • Capital used to update their only production plant • Production capacity 750,000 (pairs) shoes for next five years • Marketing expenditures cannot exceed 50% of the total profit from this/last year. • IMPLICATIONS • Note – death spiral possibility

  5. Company – How do they like to make their money: • Financial perspective: Profit = Units sold*(Price - VC) - FC |Contribution Margin| • Look at Last’s year financial numbers • They seem to be small margin medium numbers (mass marketer) • Let’s look at competition…

  6. Competition • Carlton: • Culture • Resources/Constraints • Seem to have the biggest margins • Goals/strategies • Recent brand recognition TV ads. • SuperBowl ad costs approximately 2.25 million dollars. • Prior to this year, the only promotional activities done by the three biggest competitors (Carlton, WFS and Brown) have been co-marketing efforts with the retailers, revolving around local inserts in Sunday newspapers. • Carlton’s inserts primarily showcased their products.

  7. Competition • WFS: • Culture • Resources/Constraints • Seem to have the biggest margins • Goals/strategies • Recent brand recognition TV ads. • Considering a 1.75-million-dollar ad campaign during the Men’s March Madness College Basketball tournament. • Prior to this year, the only promotional activities done by the three biggest competitors (Carlton, WFS and Brown) have been co-marketing efforts with the retailers, revolving around local inserts in Sunday newspapers. WFS has utilized price promotions in the range of 15%. • Over the last quarter, “buy one pair get one half-price” specials, in order to increase sales. • IMPLICATIONS • Buy one get one free means 25% price reduction for each pair. Where are WFS competing?

  8. Review 4Ps for Inexpensive Shoes • Place – Sears and Kmart, possibly Wal-mart. If Wal-mart would probably have to drop Sears and Kmart. • Product&Price – inexpensive athletic shoes • Inexpensive knock-offs of Nike, Adidas, etc… • Three tiers good, better, best • Carlton best tier leader, co-leader in better tier • WFS co-leader in better tier • Brown leader in the good tier • Now, consider WFS price promotion again • Possible issue: 25% drop in price takes a better tier shoe and puts it in direct competition with good tier shoes. We would want to determine if the average price includes the full effect. • 22 X .75 = 22- $5.50 = $16.50

  9. Competition • Wooster Family Shoes (WFS): • Culture • Resources/Constraints • It is • Goals/strategies

  10. Any other important criteria used to evaluate your recommendation? Conditions: Economic Social Technical Political/Legal, etc…

  11. Strategic What did you do to in terms of coming up with your recommendation? • Family or Extreme/Off-road • Positioning

  12. TM/Product Category: • Family • 12 and under • Children 12-17 not so hot,.. • But 25-34 would have input for 12 and under and some at 12 -17 • Seniors 55 and over • Decent attribute match • Extreme/offroad • 18-24 • Excellent attribute match

  13. Family Positioning • Mem – inexpensive athletic/walking shoe • TM – parents (25-34) of young children • POD – mention comfortable, safe, stable and/or attributes rate well on • RTB - lacing system & new sole design

  14. Family Positioning (Seniors) • Mem – inexpensive athletic/walking shoe • TM – 55+ • POD – mention comfortable, safe, stable and/or attributes rate well on • RTB - lacing system & new sole design

  15. Family Positioning (Seniors) • Mem – inexpensive athletic/walking shoe • TM – 55+ • POD – mention comfortable, safe, stable and/or attributes rate well on • RTB - lacing system & new sole design

  16. Strategy evaluation • Family Positioning (42-35) • Family Positioning (55+) • Extreme Positioning (18-24) • Look at the attribute match • Consider the culture and company goals strategies & conditions • Extreme gets an opportunity to create POD – rough terrain for example, but… • Been follower me-too • Been product oriented and conservative • WFS is threatening with price • Seemingly willing to be more aggressive • 50% of profits • Motivated by profits…let’s look at the finances

  17. Financial What did you do to in terms of coming up with your recommendation? • Family or Extreme/Off-road • Financial – Profit impact • Cannibalization • Growth • Capacity • Strategic or Financial, which one was most important? Why?

  18. Place • Promotion: • Media • Message • What was your media mix? • Message – Membership attributes • POD attributes • Access target market, cost total and/or cost efficiency (CPM), positioning

  19. Wrap – up: • We looked at the Financial and Strategic Perspectives.

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