MBA Marketing Analysis and Planning

MBA Marketing Analysis and Planning The report analyzes the market for Converses Chucks All Star range of footwear in the United States of America and includes a look at other competitive brands for comparison. Graphs depicting market data in terms of net sales in US dollars have been included to support the findings. The report segments the market for Chucks on basis of demographic, psychographic and behavioral factors and then moves on to highlight the target market for the canvas shoe. Also included is the market position of Chucks relative to its competitors. The report describes the products marketing mix and its influence on the market position and customers buying behavior. Also, the approach has been criticized in terms of current and future opportunities. Finally, the report draws a conclusion of the market Introduction to Converse and Chucks All Star It all began in 1908, when Marquis M. Converse launched the Converse Rubber shoe Company in Malden, Massachusetts. The company started as a manufacturer of rubber shoes, which offered winterized rubber soled footwear for men, women, and children. By the year 1910 the Converse Shoe Company was producing 4,000 shoes daily, but it was not until 1912, that it first began producing athletic shoes for tennis. In 1917, the company revolutionized basketball by introducing the worlds first canvas high-top performance basketball shoes, that it named the All Star. Five years later, a semi-professional basketball player, Charles Chuck Taylor officially joined Converse as Americas first sports player endorser; Chucks signature was added two years later in the All Star patch and for the next four decades, Chucks, as they became known, were the shoes to have, particularly on the basketball court. The involvement of America in World War II (1941) took Converse into a new phase and it began manufacturing boots and ponchos. Converse designed the A6 Flying Boot for the U.S. Army Air Corps and even post the war these shoes remained the government issued athletic shoes for military training. For its war efforts Converse received a number of honors from the Army, Navy, and U.S. Treasury. Converse shoes became the number one footwear among the teenagers, who wore them as a symbol of youth rebellion in the 50ÂÂ ´s and for the same reason they continued to be popular in the 70ÂÂ ´s and 80ÂÂ ´s. But it was in the late 80ÂÂ ´s that Converses popularity started to decline. A series of unfortunate events and bad decisions lead Converse to file for bankruptcy in 2001. In June, 2003 Nike bought Converse out for $305 million and has ever since invested more than four million dollars into its advertising. Today, Converse has over 1,000 different types of Chucks selling in the market to individuals and organizations, all with the same goal WEAR A SHOE THAT MAKES A STATEMENT. As mentioned in the mission statement of the company: Our MISSION is to deliver personal service to our customers knowing that soon we will become friends. Our hope is that we provide the same shoes that our owners father wore for cross country in 1965, and his grandfather wore to play stickball in the streets of Philadelphia in the 30s. This report is an outcome of an analysis of marketing strategies used by Converse in the United States of America. The main purpose of the report is to indicate the market segmentation and target customer base of Converses most famous range of shoes, the Chucks or Converse All Star, in the U.S. The report further analyzes the position of Converse in the footwear industry in comparison to its competitors; the positive and negative aspects of the positioning strategies. It further discusses the product, pricing, promotional and distribution strategies and their influence on the buying behavior. Market Segmentation, Target Market and Positioning of Chucks Converse claims to be the first shoe company to launch footwear with Self Expression and till date Chucks enjoy the status of being the most popular shoes with this advantage. Despite this fact, Converse prefers to focus only on certain preference clusters and chooses target marketing over traditional mass marketing. The market for the Chucks All Stars has primarily been segmented according to demographic factors, namely, age and income. Furthermore, the company also divides the market on basis of psychographic factors like lifestyle and personality. Behavioral factors, like attitude and user status, have also been used to segment the market further. The product goes beyond segmenting the market on basis of gender, by offering shoes for both men and women, and also unisex shoes. The market for the Chucks has been segmented on basis of the following factors: Demographic Under this factor the U.S. population is primarily categorized on basis of age, discretionary income and generation. The age groups have been split into four parts, namely: under 13, 13 to 19, 20 to 35 and above 35. *Further, the income groups have been divided into: 0 income (students), $ 1 to $ 30,000 (young entry-level professionals) and above $ 30,000 (upper middle class). The generations have been segmented into baby boomers (those born between 1946 and 1964), Generation X (those born between 1964 and 1984) and Generation Y (those born after 1984). Psychographic For this factor the market has been categorized on basis of lifestyle and personality. The population of the U.S. has been segmented on basis of lifestyle into seven groups, namely: Resigned Rigid, authoritarian, chauvinistic (older) Mainstream Domestic, conformist, conventional (Part of the mass, favoring big brands) Aspirer Materialistic, acquisitive, image conscious, attractive more important than quality of contents (Younger, clerical/sales type occupation) Succeeder Strong goal orientation, confidence, work ethic (Top management) Explorer Energy-autonomy, adventurous (Younger students) Reformer Freedom from restriction, intolerant of bad taste ( Higher education) Behavioral The market has been segmented on basis of loyalty status into Hard-core loyals, split loyals, shifting loyals and switchers. Also, attitudes of the American populace have been used to factor the market into: upbeat enjoyers, insecures and financial positives. Converse has analyzed web users online activities to figure out who is most likely to be interested in its product, which enables them to place ads on whatever sites those consumers are visiting. For example, behavioral segments important to the footwear industry, such as fashion-interested, outdoor sports enthusiast or soccer mom, would be based on where the user has gone and/or what they have done on various web pages. Share of U.S. Footwear Retail Sales by Consumer Group and Major Product Category, 2008 (%) Target Market With respect to the segments classified above, the Chucks have been made to target two age groups: the Teens, ranging from 13 to 19 years of age and the entry-level professionals ranging from the age of 20 to 35. The Chucks are designed for both male as well as the female consumers with different variations and patterns for both. The product also offers a unisex range to its consumers. Chucks marketing strategy also targets the zero, mid and upper range income groups. The marketing focus lies mainly on the younger generation, Generation X (Gen X) and Generation Y (The Echo Boomers), who fall in the Aspirer, Explorer or Reformer category based on lifestyles. *The shoes became very popular with rock musicians, and younger generations wore them for their distinctive looks, colors, and comfort and as an alternative to the high priced high performance shoes made by Nike and other companies. They were considered a leisure shoe and also were purchased because they were fashionable.* People from inner-directed hierarchy of stages, particularly I-am-me and Experimental lifestyles are being targeted. Product Positioning of Chucks relative to its competitors Converse once stood for athletic footwear. Now the brand has developed into a fashion statement for the retro-modern sub-culture prevalent in todays generation and is marketed as a Classic shoe for the new generation. Converse has obtained a good position in the buyers mind through better product attributes, price, quality and image, offering the product in a different way than the competitors do. The company offers the product in a variety of colors and styles at an affordable price with high branding, which ultimately helps to position the Chucks, in the buyers perspective, as trendy yet simple shoes. Converse has adopted the Cultural Symbol Approach to position Chucks in the market by associating the product with the basketball legend Chuck H. Taylor and appending his signature with the brand logo. The brand value of Converse is such that owning a pair of Chucks is equivalent to owning a piece of history, which apparently is a value offered by none other in the market. The Product User Approach for positioning the Chucks relative to its competitors. Another advantage Converse enjoys over its competitors is the association of the brand with music. The shoe became associated with puck rock and counter culture after being worn by the bands The Ramones and Blondie, who communicated with both strong music and fashion statements. The Ramones used the shoe as part of their street image with black leather jacket and blue jeans whereas Blondie gave the shoe a glossier menswear revamp creating an alternative suiting look as band members wore red and black colored Chucks with tight black pants, black jackets, shirts and ties on the cover of their Parallel Lines LP. Adopting the Product User Approach to position the Chucks Converse have also collaborated with designer John Varvatos and worked on several innovative marketing and charitable projects. They also released a collection of Converse shoes inspired by Kurt Cobain featuring artwork sourced from Cobains journals. Cobain was often seen wearing Converse and was wearing Chucks when he ki lled himself. The Converse Cobain collection has earned a mixed response from Nirvana fans who have noted that Cobain was particularly concerned about corporate appropriation of counter culture value. The unique selling proposition (USP) of Converse All Star is their simple design, wearing which the consumers declare the ownership of the old-school essence. The classic 2-ply canvas and rubber sole has been the only design that Converse shoes have revolved around and always will. Apart from the image value provided by Chucks, the product also provides its consumers with a diversity of patterns and colors to choose from, a most attractive attribute for the youth. Moreover, Chucks also come in low ankle height design and high boots to suit the style of every individual. The Chucks also compliment almost all outfits for both the genders. Be it under skinny jeans, or a short skirt, Chucks can give a trendy look to all. The big broad colored laces in the shoes can easily be arranged by youngsters in different ways to give a new look on every arrangement. It has also been a fad amongst youngsters to paint the shoes highlighting their individualism. *Therefore, Chucks are more than just shoes. Marketing Mix and Market Position of Chucks This section describes the way Converse uses the tactical marketing tools for marketing Chucks in the United States. This section will cover the product attributes, pricing, distribution channels and promotional activities of Chuck Taylor All Star. Product The benefits provided by Chucks can be classified into three groups: The core benefits of the product comprise of the fact that Chucks are classic kicks that fit any look. They provide a perceived look of self-expression, free-spirit and creativity for every owner. Also, Chucks are easy to care for and teens prefer them because of the low maintenance feature that comes from a simple canvas and rubber design. The actual benefit of the shoe is its exquisite quality for a reasonable price. The Chucks use 2 ply canvas and a sturdy rubber toe-guard, which looks trendy and at the same time protects your feet. Although Chucks are not designed for athletics, they feel pretty comfortable and have a relatively simple design. Another special quality is their ability to transcend cultures; they appeal to punks, rebels, athletes, and kids. Another benefit of chucks is that they come in an unimaginable range of colors and also are packaged in color-themed shoe boxes, making it more appealing to the target consumer base. One of the most important features of chucks is that they provide the consumer with a variety of choices in terms of designs and patterns. The consumer can choose from hi-top, low-top, X-Hi and Slip-On. Above all, Converse is a recognized brand in the market of canvas shoes. Because of this, even after Nike took over Converse, they carried on the range with the same brand name. Augmented benefits include, the consumers being offered with an option to buy a customizable shoe with user-generated content, allowing users to design and select colors for the entire shoe. Consumers are able to create unique custom canvas shoes by uploading their own designs, patterns, illustrations, images and text, and then preview their shoes instantly. Users can also embellish their shoe designs with preset colors and patterns. The shoes are embellished and assembled from scratch within 24 to 48 hours, which enables consumers to receive their shoes in one to two weeks. Apart from all these benefits offered by Chucks, they also come in limited editions for those who want an exclusive shoe. Converse keeps coming up web exclusive offers to increase sales and make consumers revisit the site frequently. The sales and purchase agreement of Converse also offers an easy return within 30 days if the consumer happens to be unsatisfied with his online purchase. If purchased at high-end retailer, satisfaction guarantee Price Converses Chucks are priced quite reasonably relative to its competitors. On one hand, where brands like Sketchers, Vans, Levis, Adidas and Lee Cooper, offer the same quality and style for a high price, Converse All-Stars dont usually cost more than $35-60. Chucks are positioned to suit practically every pocket. Consumers can also avail the Just Reduced and Last Chance offers on particular shoes while purchasing online. The company usually provides discount coupons or vouchers on in-store purchases which can be utilized at the time of the next buy. Place/Distribution Converse has 53 outlets in the Unites States located in all major cities like California, Florida and Texas. (www.converse.com) Apart from exclusive Converse Stores, the product is also distributed to major retailers and is sold to the consumer through a variety of channels. According to data from BIGresearch, in the years 2006-2008 BIGresearch, nearly 18% of adult consumers have no preference for a particular branded outlet, 12% of consumers shop most often at Wal-Mart and Payless for footwear. Chucks can also be bought online from Converses official website www.converse.com. Promotion Apart from competing in price, Converse has to fight for market share through strategies like strengthening brand image and product proliferation. The brand image of Converse is created by extensive marketing campaigns and celebrity endorsements. The product has had a collection of classic advertisements after Nike invested a sum of $4 million post its takeover of Converse. The figure below shoes the growth in the sales of Converse after Nike pushed its promotion. Nike, Inc. Net Sales of Cole Haan, Converse Other Products and Percent of Total Net Sales, 2005-2009 (in millions $) Source: Nike, Inc. annual reports and press releases. Chucks have been marketed by famous personalities like Chuck H. Taylor, The Ramones and Will Smith from the field of sports, music and entertainment respectively. Converse has been actively building up a presence within the hip, indie/alternative music youth culture for the better part of the past decade, in particular emphasizing its retro-tinged Chuck Taylor All Star brand. Previously, the company has tapped musicians like Tokyo Police Club and Matt Kim to design shoes and sponsored collaborative singles from blog-hyped acts, including a recent release from Best Coast, Kid Cudi, and Vampire Weekends Rostam Batmanglij. The company also sponsors rock concerts, a kind of event associated with the target market. Since Converse is more like a community, a part of its advertising is done by its existing consumers through Word of Mouth (WOM) and internet blogs. Influence of Marketing Mix on Buying Behavior for Chucks Though the marketing mix needs to be updated on a regular basis to suit the variable needs of the existing customer base and to foray into newer markets, Converse has always promoted Chucks as an affordable trendy shoe for youngsters. With its classic customizable range of kicks, Chucks directly meets the need of creativity and self-expression for the youth. Also, the association of the brand with music since decades is a strong attraction to the followers of punk rock. Colors, styles, fashions, and what is likely to be hot are important criteria in the design of fashion footwear, and Chucks meet them all. Moreover, Converse is a renowned brand for canvas shoes and this brand familiarity influences the buyers decision to purchase Chuck Taylors each time he walks into a store with the intent of buying a pair of shoes. Chucks are reasonably priced and therefore are more likely, than its competitors, to be purchased. The frequent discounts and offers that Converse comes up with play a significant role in attracting the customers. The vouchers earned on in-store purchases work to persuade the customers to shop at Converse again. With several factory stores in the important cities of the country, Converse has made the purchase of Chucks quite convenient for its customers. Comforters are also lured by the option of website purchases and the availability of the shoe in ubiquitous retailers like Wal-Mart and Payless. The association that Converse has made with the celebrities from all spheres of life, sports to music to media, has helped it make a positive impression on minds of the targeted younger generation. The followers of indie/punk rock also relate with Converse much more than with any other brand, owing to Converses sponsorships of music events. Also, since Converse is a recognized brand, customers tend to buy Chucks since influencers or the reference groups possess the shoe. Conclusion Converse is a recognized brand in the fashion footwear industry, which positions its Shoe, Chucks All Star, as a shoe of self-expression. The product is reasonably priced and targets the younger generation of students and young professionals. With a variety of designs and colors, high quality standards and relatively low pricing, Chucks are amongst the most preferred shoes in the target market. Converse promotes Chucks through a number of distribution channels and celebrity endorsements. Overall with its marketing activities Chucks has been a successful brand. The only area in which Chucks are lagging is the athletic footwear segment which is huge market to be forayed in.