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Product and Problem Statement
New Balance is a US privately owned multi-national company that designs and produces athletic footwear, apparel, and accessories for fitness and multiple athletic activities such as team sports, running, training, tennis, light walking, as well as casual and lifestyle wear. Formed in 1906, the company has more than 100 years of experience in its industry. It is viewed as one of the largest privately-owned apparel and athletic footwear business in the United States and across the world (New Balance, 2012). The company makes its products in the US, China, and the UK. It is indeed the only major shoe company to have production in the United States (Kozar & Hiller, 2013).
It produces 25% of its products in the United States while the rest of the commodities are produced in China and the United Kingdom (Yang, 2015). The company has more than 4100 employees. It attained revenues of $3.3 billion as of 2014. The company is headquartered in Boston, Massachusetts.
The apparel and athletic footwear industry are highly competitive. It is dominated by other major corporations such as Nike, Adidas, and Puma among others. Therefore, organizations such as New Balance need to be innovative in designing and marketing their products. Innovativeness is the key driver in the industry. Companies must strive to ensure that their products meet clients expectations while at the same time adhering to safety requirements (Kozar & Hiller, 2013). In recognition of the above requirements, the company is keen on innovating and introducing new products that meet the current demands and safety requirements of many sportspeople while at the same time ensuring that it remains competitive and successful in its operations.
For instance, the introduction of the Mens 611 running shoes is an important addition to the companys product portfolio that targets male athletes in both armature and professional sporting activities. However, the product has had mixed results and reception in the market. Therefore, it is important to implement a good marketing plan, which will drive the new product to achieve the success that the company envisions.
Justification of the Marketing Plan
The marketing plan provides important guidelines that allow a companys marketing efforts to translate into sales that can bring success to the organization (Kozar & Hiller, 2013). A good marketing plan considers many factors such as competition, pricing, positioning, and branding, analysis of the target market, market research (trends), marketing strategies, and monitoring and evaluation of marketing efforts (Franklin, 2011).
The current marketing plan focuses on identifying the strategies and approaches that can be used by New Balance to move the Mens 611 running shoes in its markets across the world. The marketing plan will help the company to identify external environmental factors, competition trends, and customer preferences that will guarantee the success of New Balances product.
Situation Analysis
External Environment Analysis
The external environmental factors in a business environment are important in determining the competitiveness of an organization and its products. In the apparel and athletic footwear industry, external environment factors play an important role in determining the competitiveness of New Balance Mens 611 running shoes. The following PEST analysis provides an external environmental analysis for the company:
Table 1. PEST analysis.
Competitor Analysis
Competitor analysis provides an important tool for comparing an organization or a business with its competitors in the market (Kozar & Hiller, 2013). For instance, New Balance operates in an industry that is dominated by multi-national corporations such as Adidas, Nike, and Puma among others (Cui, 2014). The analysis will use Adidas and Nike as the major competitors of New Balance to provide important insights into the competition, thus proving recommendations that New Balance can use to market its shoes.
Firstly, Nike and Adidas are the worlds largest athletic shoe companies. In this case, they have significant financial strength that can allow them to produce and market their products with ease and competitively. For instance, Nike had an annual income of $25 billion as of 2013 while Adidas attained $15 billion in the same period. Compared to New Balances $3.3 billion, it is evident that the company is not financially competitive as compared to its major competitors (Yang, 2015).
Secondly, Nike and Adidas have a higher brand identity and recognition and hence their bigger success. For instance, the companies are major sponsors of many sports people and teams across the world (Kozar & Hiller, 2013).
Although New Balance sponsors various teams and sports persons, its efforts are concentrated on low tier team and personalities since major apparel makers in the industry such as Nike and Adidas among others already have taken the major teams. Thirdly, New Balance makes a substantial number of its products in costly manufacturing areas such as the UK and the USA as compared to Nike and Adidas whose products are made in China where there are cheaper labor and lower manufacturing costs (Yang, 2015). In essence, the lower manufacturing costs in offshore locations such as China allow Adidas and Nike to have cheaper products as compared to New Balance whose high manufacturing costs have forced its products to be among the most expensive.
Lastly, the financial muscles and brand identity of Nike and Adidas have allowed the companies to run major marketing campaigns that New Balance cannot manage. Such marketing campaigns have allowed the two companies to dominate in nearly all areas of sporting activities to the disadvantage of smaller organizations such as New Balance.
Customer Environment Analysis
Customer Analysis
Mens 611 running shoes target both professional and armature athletes. However, their pricing means that they are majorly accessible to those who can afford the more-than-$60-a-pair price tag on them. In essence, due to the pricing, the shoes target professional athletes, thus attracting steep competition from other companies in the sector (Kozar & Hiller, 2013). Therefore, it is a highly competitive target for the company and thus the need for major marketing strategies and approaches that will allow the shoes to be a success in the market.
Internal Environment Analysis
As a private organization, New Balances internal operations are highly protected since the company does not have the obligations that are imposed on publicly owned companies (Yang, 2015). However, the companys considerable financial successes are important indicators of the appropriateness of its management team. Its lean number of employees is appropriate for its size, thus showing that the company operates to maximize profits while reducing the expenses (Kozar & Hiller, 2013). However, the fact that the company still has manufacturing operations in the United States and the UK shows poor decision-making in the quest of maximizing profits. Such operations are to blame for the high cost of its products that have limited the companys ability to reach mass markets and brand identity.
Company Analysis
A company analysis is very important in determining the financial and competitive position of a business. For instance, company analysis of New Balance reveals that the businesss profitability has been on a rising trend from 2010 when it had revenues of $1.8 billion to $ 3.3 billion in 2014. Appendix 1 shows the companys financial records.
SWOT Analysis
Strengths
Firstly, New Balance has an extended product line by providing shoes in different designs and sizes. Additionally, the users and the customers of New Balance have a privileged opportunity to select a suitable width of the shoes to comply with their needs (New Balance: Shoe, 2015). This novelty provides exceptional characteristics to New Balances products by making them highly flexible and adaptable to the customers needs. In turn, a company has been operating on the market for several years (Sisodia, Sheth, & Wolfe, 2003). In this instance, this factor increases the companys expertise and has a beneficial influence on its operation and financial performance.
Another aspect is the ability of the corporation to introduce innovative solutions to remain competitive on the market. For instance, New Balance has recently introduced a first 3D printing running shoe (New Balance, 2015).
This novelty attracted high attention to the company and contributed to the formation of the new trends in the shoe industry. Additionally, the presence of this matter emphasizes the perception of being highly focused on the delivery of high-quality shoes to customers. Being ecologically friendly can also be considered as being beneficial due to the growing popularity of this trend in the business world. In this case, New Balance pays vehement attention to the environment by eliminating the effect of the waste on the surroundings (New Balance: Environmental, 2015).
Weaknesses
Firstly, New Balance does not pay enough attention to product development and design from aesthetic perception (Sisodia, Sheth, & Wolfe, 2003). It is an essential attribute of this industry due to the necessity to satisfy consumers needs and desires. In this case, New Balance loses its points to Nike and Adidas, as they are the core competitors in the sports apparel. Another matter is the high production costs due to the focus of production in the USA and the UK (Yang, 2015).
It remains evident that these countries tend to have expensive labor due to the advanced living standards and favorable conditions for development. This aspect can be considered as a drawback since the company is not able to maximize profits with the cost-leadership strategy. In turn, this weakness highlights the lack of well-developed New Balances image in China and other Asian countries (Yang, 2015).
Furthermore, the company has an insignificant brand identity while comparing its presence and functions with the operations of Nike and Adidas. Consequently, the lack of significant brand recognition and identity and the inability to maximize the costs with the assistance of the cost-leadership contribute to the lack of sufficiently developed marketing campaigns. This aspect has to be considered while forming a future marketing strategy.
Opportunities
One of the opportunities is the ability to develop new product lines and diversify existing services and merchandise. In this instance, the introduction of New Balance Mens 611 running shoes will contribute to the sufficient development of the product lines by focusing on the demands and needs of the customers. In this instance, the current trends could be considered as the primary drivers and aspects, which have to be taken into account while designing a new product line.
Additionally, the growing popularity of social networks can be considered as an opportunity for New Balance, as modern people tend to spend significant time on the Internet (Tuten, 2008). The enhancement of the companys image in social networks will influence social recognition dramatically. In turn, the participation and sponsorship of various events will have an advantageous effect on the organizational performance and become a driver for the companys success in the future.
Threats
It remains evident that the intensity of the competition defines the presence of threats from the external environment. In this instance, the shorts apparel market can be considered as highly competitive and diversified due to the presence of global players such as Nike, Adidas, and Puma (Sisodia, Sheth, & Wolfe, 2003). Additionally, small competitors are also present due to the high interest in the industry.
Furthermore, the threat of substitutes remains on the high level, as the customers can find similar products with slightly different features easily due to the presence of a wide range of manufacturers in the industry. This aspect also poses a threat to New Balance, as the company does not have the diversified products and do not propose exceptional features to the customers. This risk can affect the companys revenues and organizational performance dramatically.
Table 2. SWOT Analysis.
Conclusion
From the analysis above, it is evident that the company operates in a highly competitive market that is dominated by other major players such as Adidas and Nike. As such, the entry of New Balance Mens 611 running shoes into a highly competitive region requires the company to put in place measures, which will address its competitive weaknesses that have been identified in the analysis. For instance, it is highly recommendable for the company to reduce production costs that have affected the companys ability to price its new products competitively. Once this recommendation is implemented, the company will be assured of beating its competitors as discussed above.
References
Cui, L. (2014). Analysis of sports shoes design under the guidance of the green design concept. Applied Mechanics and Materials, 3(440), 379-382. Web.
Franklin, D. (2011). League parity: Bringing back unlicensed competition in the sports fan apparel market. Chi.-Kent, 86(2), 987-990. Web.
Kozar, J., & Hiller, C. (2013). Socially and environmentally responsible apparel consumption: knowledge, attitudes, and behaviors. Social responsibility journal, 9(2), 315-324. Web.
New Balance. (2012). New Balance responsible leadership report. Boston, MT: New Balance. Web.
New Balance. (2015). First 3D printed running shoe. Web.
New Balance: Environmental sustainability. (2015). Web.
New Balance: Shoe width/sizing. (2015). Web.
Sisodia, J., Sheth, R., & Wolfe, D. (2003). Firms of endearment: How world-class companies profit from passion and profit. Upper Saddle River, NJ: Wharton School Publishing. Web.
Tuten, T. (2008). Advertising 2.0: Social media marketing in a web 2.0 world. Westport, CT: Praeger. Web.
Yang, T. (2015). Localization of New Balance brand marketing strategy for Chinese markets. New York, NY: MacMillan. Web.
Appendix 1: Financial and Histogram Charts
Financial Performance 2010-2014.
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