The report aims at providing an insight into management and operations in the context of the future growth of retro brand of Converse commonly known as Chuck Taylor All Star Sneakers. In the year 2017, Converse through its intensive development and research produced basketball shoes and recruited the basketball player Chuck Taylor for not only providing useful insights in improving designs but also ensure its promotion (Foreman 2014). Although the company had huge margins of profit created through constant demand for shoes at a price tag of $35, it filed for bankruptcy in the year 2001. The reasons included the dual positioning of the Converse as it targeted both the athletes and the artists thereby offering not only stylish but also performance-oriented shoes. This led to the failure of Converse in achieving market penetration across its actual target segment that is the creative community. The second reason for failure has been the changing of hands during 1990s when it experienced major mismanagement. Nike saw immense potential in the company, took over it in the year 2003, and ensured its revival through unique marketing initiatives.
The case represents one of the most iconic brands developed by Converse in the year 1917 commonly known as Chuck Taylor All Star Sneakers. Converse had been the market leader in the sport shoes but experienced a major setback in the market share during the 1970s due to competition faced from the new players like Nike and Adidas. The Chuck Taylor sneaker had been one of the unique brands but consumers used it for the purpose of casual wear despite it being an athletic shoe. However, Nike that took over the company in the year 2003 identified the brand potential of Converse (Wayne 2013). Nike used distinctive marketing initiatives such as engagement of the consumers and fans over the social media and music sponsorships for reviving the retro brand put forward by Converse. However, the consumers did not accept the addition of a new variant of Converse sneakers. This resulted in the stumbling of the sales growth in the last two quarters of the 2015. However, there was no clear picture about whether the fluctuations resulted due to the poor performance of the newly designed Chuck II brand (Abrams 2014). Hence, Nike promoted continuous innovation in Converse until the end of 2016 and even launched variations in the Chuck II brands known as the Thermo boots. The assumptions include the possible growth strategies of the Chuck Taylor All Star sneakers when the competition in the sneaker market grew and the consumers did not respond positively to the innovations.
Chuck Taylor All Star sneakers manufactured by Converse in the year 1917 have been one of the market leaders in the athletic shoe market. Although marketed as the athletic brand, the consumers even wore sneakers for the casual purposes. It was the attractive colors and the designs that helped in capturing the global markets. In spite of everything, the company was filed for bankruptcy in the year 2001(money.cnn.com 2013). The reason lay in the dual positioning and the change of the hands. Nike acquired the company in 2003 and successfully re launched Converse. This reflected in the sales figures that increased to $2 billion thereby contributing to close to 6.5 percent of the total sales of Nike. Besides, when Nike was also able to report a compound annual growth rate (CAGR) of about 5.3 percent, Converse reported a growth rate that was double the growth of Nike at about 12.7 percent(news.nike.com 2017).
Nike wanted to broaden the market for the Converse with the re launch of a different design of sneakers, known as Chuck Taylor II, as one of the retro brand (Cochrane 2015). The brand however faced a set back as due to in acceptability of the consumers. It was designed to take care of the uncomfortable shoe designs of Chuck Taylor All Star shoes. The new variety of the sneakers did not find acceptance amongst the consumers because not only its innovation was too late but also it was also costlier. The issue lay in whether Converse will be able to regain its market position in the face of immense competition and in-acceptability of its newer designs.
The analysis of the environment of the case study based on the SWOT matrix is as follows:
Strength:
The case revolves around one of the most iconic retro brands of sneakers, Chuck Taylor All Star, manufactured by Converse. Although launched as an athletic shoe these sneakers remained preferred by the consumers’ even as casual wear. The sneakers were available in varied color and trendy features. The sneakers were weightless, had vulcanized sole and were available at an affordable price range (converse.com 2018). The Chuck Taylor All Star Sneakers were priced at $35 and this contributed to 80 percent of the sneaker market share in the United States. The strength of Converse attribute to Nike and the three people who scrutinizes every shoe design. These people included the expert tastemaker Hiroshi Fujiwara, the design giant of footwear Tinker Hatfield and CEO Mark Parker. The sneakers designed also stands out in styling, color and chic designing for both the athlete and the casual wearers.
Weakness:
This referred to those areas where either the brand or the business requires improvement. Converse made one of the earliest sneakers and named it after Chuck Taylor, the famous basketball player who led the designs. The design is considered one the greatest until date. However, the shoe industry began to change since the 1970s with the emergence of new rivals like Nike, Adidas and Reebock. The sneakers faced tough competition from the existing brands there resulting in limited share in the market growth (Barrabi 2016). Besides, after taken over by Nike it might face cannibalization by Nike brand thereby having an overall impact on its brand equity.
Opportunities:
Opportunities refer to the avenues of the environment surrounding the business that allows it in capitalizing the increase in returns. The specific need of the consumer might drive the sales of the Converse sneakers. This is because in earlier days it was enough to possess a single set of shoe for meeting the sports needs. However, it is not the case of the present times since each need has different solution and each of the solution leads to the creation of demand for a newer variety of footwear. This results in the creation of a gamut of opportunities for footwear industry. Besides, the footwear industry is also driven by a flow in the per capital income due to rising number of working professionals. Most of the households have dual income and a greater propensity to spend thereby resulting in greater indulgence towards impulsive buying. This acts as excellent opportunities and can be targeted through right kind of promotional strategy (MacKinney-Valentin 2014). Further, the growth in the online shopping sites also acts as a great platform for the footwear industry thereby contributing to the reduction in their distribution cost.
Threats:
Threats refer to the factors within the environment that is detrimental to the business growth. Converse always faces serious threat from rival brands like Nike, Adidas and Reebock. Again, the presence of counterfeit brands also proves to be challenging for Converse as they not only look similar to the originals but also sold at half the prices thereby causing serious threats to the distribution and the sales of the original brands(Castaño and Eugenia 2014).
The major segments for the organization include:
The types of research that needed to be conducted for the development of the marketing strategy are as follows:
Demographic Segmentation:
To conduct the research for the demographic segmentation it is necessary for identifying the following steps(Dolnicar, Lazarevski and Yanamandram 2013):
The first step would include identification of the key demography who expresses their interest in buying converse products. This is done based on sex, age, income and the marital status.
The second step would include identification of the sub demographics. For instance, age can be divided into infancy, childhood, early childhood, preteens, late teens, adults and the young adults.
The third step includes further filtration where the young adults are classified as the students and the working adults as the professionals
The fourth step includes determination of the income of the individual
Behavioral Segmentation
To conduct the research for the behavioral segmentation it is necessary for identifying the following steps (Hamari and Tuunanen 2014):
Step 1 involves personalization. This helps in understanding how the different group of customer should be targeted through various offers at the appropriate times through proper channels for effectively helping them in advancing towards the successful outcomes.
Step 2 involves being predictive. This involves using the historical patterns of behavior for influencing and predicting the future consumer outcome and behavior
Step 3 involves the importance of prioritization. This involves making smarter decisions on allocating the resources and budget for identification of the higher valued initiatives and customer segments
Step 4 involves performance. This involves monitoring the changes and the growth patterns in key segments of the customer for gauging business health and tracking performance.
Psychographic Segmentation
To conduct the research for the psychographic segmentation it is necessary for identifying the following steps (Gunter and Furnham 2014):
Step 1 involves interviewing the consumers. Interviewing the customers represents one of the best means of finding meaningful data in a quicker manner. Interviews are conducted in two simple manners one is through phone and the other is through surveys.
Step 2 involves using Facebook insights. This provides an access to the tons of data without the need for spending time on interviewing people. Two things are necessary for using this method. This includes, having an email list and business Facebook page and account.
Step 3 involves using the Google analytics. This acts as a key component in portraying the psychographics as well as the demographics.
Geographic Segmentation
To conduct the research for the geographic segmentation it is necessary for identifying the following steps (Cross, Belich and Rudelius 2015):
The first step involves identification whether the product sold in based on the seasons
The second step involves identification of the size and the type of the region
The third step involves the launching of the products based on the response in the newer region
The SMART objectives for the organization are as follows (Hallahan 2015.):
S stands for specific: This involves dwelling deeper into the details. The important thing lies in resolving issues revolving around what, when, who, where, with and how. The more the information achieved, the better the results achieved in achieving the goals. Converse should implement a plan for focusing on key cities across the world like London, New York, Beijing, Sanghai, Tokyo, Los Angeles and many more for direct consumer marketing.
M stands for measurable: For a goal in defining a clear objective, it is necessary to acquire a quantitative means of measurement. It is therefore necessary for involving certain percentages or accurate numbers. Converse should use focus on the data driven on the consumers based on color schemes, colors and patterns depending on the preference of the major cities within the United States.
A stands for achievable: There are many objectives that are not met since they seem impossible. It is therefore necessary to understand that there will be tasks that will be difficult to achieve but there exists no choice but to achieve them. However, for avoiding negations and making the objectives achievable the organization needs to perform a prior analysis of the things done so far. This will help in understanding leap that the organization needs to take. Converse can use the objective in identifying the trends, data and the behavioral patterns of the consumers from the major markets that determines the preferences and trends for the sneakers.
R stands for Relevance: for defining, the realistic and the relevant goals it is necessary for an organization to measure the scope of the potential and those associated with the organization. For Converse here the objectives includes analysis of the collected data with the real time data related to sales so that it helps in the accurate representation of the segmented market.
T stands for Timely: This represents one of the most important factors that determine the achievement of the objectives. It is the therefore necessary to schedule the objective. Converse can use this objective to determine its growth by placing it against a timeline of either six months or two years. This helps in understanding the optimal requirements of the organization in reaching the goal within the mentioned time schedule.
Product: The Chuck Taylor All Star sneakers have been one of the milestone products of converse. In the face of immense competition and in acceptability of any innovative products by the consumers the proposed strategy lies in designing smarter products possessing the capability of connecting to the iPod thereby ensuring a combination with the Apple products that measures the performance of sportsperson. Besides, Converse should also allow the consumers in customizing and designing the products as per the customer requirements that helps in attracting a greater audience.
Price: Converse should employ a value-based pricing strategy for facilitating the profit and the sales of the company. Through this strategy, the company will be able to measure the value each customer is willing to pay for the product. The value helps in determining the maximum price that the customer is ready to pay for the product. The strategy not only helps the company in retaining the maximum amount of buyer surplus but also helps in raising its profits.
Place: Converse should use three channels for selling its products. It should not only include the retailers but also the online and offline stores and e commerce sites. Moreover, the company should try to have manufacturing unit in every country for minimizing the cost of logistics and gaining better efficiency in distribution.
Promotion: Converse should engage the sport stars as the brand ambassadors for creating a greater impact on the customer mind. It should also grab the opportunity of projecting the brand through sponsoring various marathons and international events like the basketball championship. It should also spend some amount of money for displaying the presence of its kits for different basketball clubs. It could also make use of a logo for determining its presence along with promotions through electronic, print and social media. Converse could also include bulk discounts through offline and online stores that would help in attracting million of consumers.
Implementation of the proposed marketing strategy will help in improving the profitability of the business from every aspect of operation within the company. The marketing mix strategy focus the attention of the company on the particular segments of the target market and clear out the product characteristics required for satisfying the customer needs. The focus helps in eliminating the marginal operations that does not contribute to the growth of the business while promoting a streamlined approach in meeting the business of the company.
Customers: The key implication of the proposed strategy lies in its orientation towards meeting the needs of the customer that leads to enhanced customer satisfaction (Djelassi and Decoopman 2013). With the identification of the target market and characteristics of the targeted customers, the organization will be able to focus on the strategies for serving the customers. The impressions of the customer improve with focus and the image of the organization within the market place becomes positive. Thus, the marketing strategy helps in gaining newer customers for building favorable reputation.
Products: The proposed strategy also has implications on the product promotion and design. Once the customers want is known, the organization have to ensure that product features meets the customer demand (Voss and Voss 2013). A proposed strategy focused on the offering of the products that suits the target market not only helps in promoting innovation but quality of the product. The proposed strategy also implies running advertisements for promoting not only the high quality but also the innovative nature of the products.
Performance: Improved customer satisfaction and higher quality innovative products help the company in increasing the profitability and sales (Ahearne, Lam and Kraus 2014). The proposed strategy helps in projecting the increased demand depending on the market studies and allows the organization in planning production for meeting it. The strategy also identifies the price that members agree to pay for revised product. The proposed marketing strategy will help the company in planning increased production at reduced cost through elimination of the expensive features of the product.
Employees: For the employees, the proposed strategy would imply working for an increasingly successful company. It not only gives the employees an enhanced job satisfaction in dealing with customers having positive experience with the products (Goetsch and Davis 2014). Such atmosphere leads to immense employee cooperation and team spirit for achieving the objectives of the company.
Conclusion
On a concluding note, it can be said that the report provides an answer to the questions thereby discussing whether Converse will be able to retain its market position, how it should create the future strategy of growth and focus on the design innovation and market expansion. The report also put forward proposed marketing mix strategy whose implications indicated the future growth of the company.
References:
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