Average Sketchers Show Store Sales

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					                                                Project Report

Part 1: Assessment of External Environment for Nike

a. Firm’s Direct Competitors1

                    Company Name                                               Sales Revenues
Nike                                                     $150 billion2
Adidas                                                   $7.4 billion3
Puma                                                     $1.5991 billion4
Reebok                                                   $3.4853 billion
Sketchers                                                $221.8 million5
Saucony                                                  $133.2 million6
K-Swiss                                                  $121.6 million7

Asics                                                    $111.1 million8
Keds                                                     $696 million9
L.A Gear                                                 $580 million10
Asics                                                    $465 million11

1   The Running Network: http://www.runningnetwork.com/news/stateofsport1July04.html
4 4 http://about.puma.com/news.jsp?year=04&id=19&lang=eng, accessed 17 Oct. 2004.
5 Skipressworld:http://www.skipressworld.com/us/en/daily_news/2003/11/
6 Saucony, Inc: http://www.saucony.com/article_detail.aspx?articleID=1
7 Skipressworld:http://www.skipressworld.com/us/en/daily_news/2003/11/
8 Asics: http://www.asicstiger.com/aboutus/pressroom/fall04/040721_asics_second_quarter.htm
9 http://www.forbes.com/2001/08/06/062.html, accessed      17 Oct. 2004.
10 Breeze Technology, Inc., http://www.businessplans.org/Breeze/breeze03.html, , accessed 18 Oct.

11 Gardner Sydney, Customer Service, GBMI and Pony International, Personal interview, 19 Oct. 2004

Reebok Channel Structure:
                                                  Aurora, Ont.


       Specialty Sport                 Online                                     Independent
           Retailers                  Retailers                                    Retailers


Market segments served

Reebok Caters to two main types of consumers, the Performance Conscious Consumer and the Fashion
Conscious Consumer. Their marketing scheme changes from time-to-time depending on the particular
demand for the current campaign year. The main groups targeted are as follows:

Performance Conscious Consumers (Athletes)1
          Runners
          Aerobic
          Dancers
          Tennis Players
          Basketball Players
          Step Exercisers
          Golfers
Fashion Conscious Consumers (Non-Athletes)2
          Comfort and Style


        Conscious Walkers
        Children

Split of Functions between firm and Channel Members:

Physical Movement of Goods
Reebok uses many different currier systems depending on the size and relationship with a particular client.
Some of these include UPS, Fed Ex, and Sometimes even Canada Post. The contact we spoke with from
Athletes World receives their shipments through UPS.1 However not every retailer we spoke to gets their
goods from Canada. Stores such as Champs, Athletes World, and Footlocker have buyers in the United
States that choose their product line from a National Shoe Exposé and each retail outlet receives
shipment due to their demand.

        Management trains all staff
        Staff gets a manual on the merchandise and they get tested on the info that they learn.
        Staff gets trained on greeting, how to set up a shoe displays, how the shoes should look
         (appearance, how to tie laces, etc…)
        Staff has to be knowledgeable about their shoes (especially top selling shoes)

        Head office calls UPS and places an order of what shoes need to be delivered to what store.
        UPS picks up the shoes from a factory (warehouse) where Reebok and other running shoes are
        UPS delivers shoes to Athletes world.

Reebok handles all of its major warehousing tasks through their main office located in Aurora, Ontario. 4

Selling Function to Retailers
Reebok sends out catalogs to its retailers in which they can review and make potential orders.1

  Lisa – Reebok Customer Service Rep (1-800-668-1800), Oct 19th 2004
  April – Athletes World, Pickering Town Center, Oct 16th 2004
  April – Athletes World, Pickering Town Center, Oct 16th 2004
  April – Athletes World, Pickering Town Center, Oct 16th 2004

Retailing Functions
The individual retailers handle these functions. Reebok may give some guidance when it comes to a new
promotion; however it’s only a guide to the retailers.

Advertising Functions
Reebok hires Advertising firms to handle the creative side of advertising.2

Customer Service/Return Policy
If you still have the receipt you should return the item to the retail shop where it was purchased. If there
is no proof of purchase available – you would call the Reebok Consumer Relations Team at 1-800-668-
1800 so that they could arrange for the product to be returned for inspection.3

Financing Offered to Retailers
Reebok sets up an account with its clients, which includes shipping and handling costs. The clients are
then invoiced and billed.4

Consumer Promotions – See the Last 12 months of Promotions

In Store Merchandising
Reebok sends out merchandisers to its retail stores to help out with its retail stores in house setup for
their big promotions. At other times they send pictures of their set up and the staff will set it up
accordingly. 5

  Lisa – Reebok Customer Service Rep (1-800-668-1800), Oct 19th 2004
  April – Athletes World, Pickering Town Center, Oct 16th 2004
  Lisa – Reebok Customer Service Rep (1-800-668-1800), Oct 19th 2004
  April – Athletes World, Pickering Town Center, Oct 16th 2004

                               Reebok’s Differences and Similarities to Nike


        Both Nike and Reebok use a lot of athletes to endorse their shoes.
        If customers had a problem with their shoes they can send them back to the manufacturer (if the
         retailers cannot help them).
        Both company’s websites have general information on the companies.
        Nike and Reebok are always used as sponsors to support different sporting events.
        Reebok and Nike both compete for the same target market.
        Both companies spend large amounts of money investing it in marketing programs, technology
         research and development.


        Reebok uses music artists that are currently on billboards top ten list to endorse their products as
         well as design shoes for them. Hip Hop artists such as Jay-Z, 50 Cents, Eve, Fabolous and
         Canadian rapper Choclair.
        Reebok has formed a partnership with the Indy Racing League.
        Reebok does not sell as many women’s training shoes as Nike does.
        Reebok’s focuses on more diversification where as Nike focuses on product development.

                                      Last 12 Months of Promotions

Three new lines introduced and promoted by hip hop artists in both Music Videos and Commercials:
50 Cent’s – G 6, By G-Unit
*NEW* Pharrell Williams – Ice Cream Footwear

JULY 2004 - Reebok and Jay-Z team up with Beyonce, Tyra Banks, Joy Bryant, Fergie, and Queen Latifah
to design custom kicks for charity. All of these artists were involved with the fundraiser for charity where
consumers could bid for shoes designed by their favorite celebrities with bids starting a $100 US. In
addition to receiving the shoe, the winning bidder took home the celebrity's sketch of the designed shoe
accompanied with an authentic autograph.1

AUGUST 2004 – Pharrell Williams launches a new line of clothing with Reebok called the “Billionaires
Boys Club”2

SEPTEMBER 2004 – Reebok launched nationwide Ad campaign to promote the famed Chivas Rayadas
Del Guadalajara Soccer Team3


                             The Channel Structures for Adidas

                                 (Adidas-Salomon AG)

                            (Adidas-Salomon Canada Limited)


       Specialty Sporting    Upscale Department Stores    Independent Chains
         Good Stores



Market Segments

Adidas targets two main types of consumers: Performance Conscious and Style Conscious
consumers. Performance conscious consumers would be any kind of professional or recreational
athletes, who are interested in speed or comfort. Style conscious consumers would be mostly young
people, who pay a lot of attention to fashion. This target market doesn’t typically pay attention to the
speed or comfort; these kids are more interested in trendy colors and shapes.

Split of Functions
Physical Movement of goods

All shipments that come out of Adidas-Salomon are done through UPS trucking company. Ups
ships the Adidas merchandise to all retail chains that carry the Adidas brand name.1


Adidas-Salomon Canada Limited handles its warehousing tasks at head office located in Vaughan,

Selling function to retailers

Adidas-Salomon gives out product catalogs to all of their retailers. The retailers will have the choice
of which shoes they would want to purchase for their store.3

Retailing Functions

All retailing functions are handled by only the retailers. Adidas-Salomon provides the retailers with
the price range for Adidas merchandise.4

Advertising Functions

An outside firm advertising firm handles all the advertising for Adidas-Salomon.5

Training of Retailers

Sales Representatives from Adidas-Salomon give retailers a brief training session to teach the retailers
about Adidas merchandise. They don’t actually teach the retailers how to sell the product, but
explain the benefits and features that Adidas provides their customers.6

Customer Service

    Foot Locker Head Office-Customer Service Representative via telephone(416-446-2020)
    2004 Canadian Business Directory
    Foot Locker Head Office-Customer Service Representative via telephone(416-446-2020)
    Adidas-Salomon Canada Limited-Facts from the Officer of Finance, Mr. Bob Adam
    Adidas-Salomon Canada Limited-Facts from the Officer of Finance, Mr. Bob Adam
    Foot Locker Head Office-Customer Service Representative via telephone(416-446-2020)

Customers can visit the Adidas-Salomon website and email experts at the head office about any
particular concerns, suggestions or opinions. Adidas-Salomon customers are able to choose the
brand on which he/she may have an interest in. There are three message categories for the customer
to choose from which are, general information, sponsorship and promotional requests and warranty
information.1 Customers are able exchange or get a full refund on the item purchased. Customers
will receive the refund on the original method of payment. To be able to receive a full refund or
exchange, the item has to be unworn and returned with the original receipt. It must be returned or
exchange within 30 days from the original date of purchase.2 Any repairs that customer may have
with an Adidas shoe, will be sent back to Adidas, where they will fixed the shoe.3

Financing offered to retailers

Adidas-Salomon would not disclose any information on financing. A quick discussion was
conducted with Adidas-Salomon’s Officer of Finance, Mr. Bob Adam. The only information
disclosed was that an account is set up for all the retailers, which will include an invoice and billing
for the shipping of the products.4
Consumer promotions

In 2004, Adidas has many athletes endorsing their product such as:
     Laila Ali(Boxer)
     Kevin Garnett (Basketball Player)
     The Bryan Brothers (Tennis Player)
     Justine Henin-Hardenne (Tennis Player)
     Run-DMC (Rap Artist)

These athletes and celebrities have appeared in varies advertisements throughout the year of 2004 to
promote Adidas merchandising.5

In regards to any in-store sales, Adidas has not had any sales or promotion on Adidas merchandise.
Retail stores such as Foot Locker have had discount on Adidas shoes and other major shoe brands.6

In-store Merchandising

All in-store merchandising is handled by the retailers. Adidas-Salomon ask there retailers to position
their product with the popular brands, such as Nike, Puma Reebok, etc. Adidas-Salomon wants the
retailer to place the product in visible reach and view for the customers. If there are any special
promotions on a new shoe from Adidas, they ask the retailers to position the shoe in the front of the
store with banners and poster of the shoe throughout the store.7
    Foot Locker Head Office-Customer Service Representative via telephone(416-446-2020)
    Adidas-Salomon Canada Limited-Facts from the Officer of Finance, Mr. Bob Adam
    Foot Locker Head Office-Customer Service Representative via telephone(416-446-2020)
    Foot Locker Head Office-Customer Service Representative via telephone(416-446-2020)

Adidas’s similarities and differences to Nike


        Both companies concentrate on using innovation to improve the quality and performance of
         their shoes. Adidas is using Ultraride technologies with a first ever full-length foamless
         midsole, which provides consistent cushioning from first step to the last. Nike is using FIT
         technologies that manage temperature and moisture to help athletes train and compete in
         any conditions.
        Both companies develop various programs to help the environment. Adidas is concentrating
         on controlling and monitoring hazardous or restricted substances by eliminating PVC-
         containing materials from products, reducing VOCs (Volatile Organic Compounds) used to
         apply as a layer like paints, cements and glues. Nike is concentrating on developing a reuse-a-
         shoe program and using organic cotton to eliminate the content of synthetic fertilizers and
        Adidas and Nike are both using famous athletes to endorse their products. Adidas is using
         such athletes as David Beckham and Ian Thorpe. Nike is using such athletes as Tiger Woods
         and Andre Agassi.
        Both Nike and Adidas get involved in sponsoring various events such as Olympic Games in
         Athens, Sixth Annual Walk and Bike and Nike’s Sixth Annual Community Involvement Day.


        Adidas established a first ever partnership with a high-end fashion designer Stella McCarney,
         who will be launching the first true sport performance design collection for women.
        Unlike Nike, Adidas deriving almost all its sales from its Original Classic style line of shoes,
         where Nike is making all its money from its Athletic Ware.
        Adidas is attracting more fashion conscious youth not only with its shoes but also a wide
         variety of accessories such as bags, clothes, perfume, hats and so on.

Split of functions between firm and Channel members:

Physical movement of goods
Athletes World receives its merchandise once every two months from their Bata Head Office
Distribution Center located in Vaughan. UPS trucking company delivers the merchandise to the
actual store. In order to deliver the product to the retailer’s Head Office, Adidas usually ships the
product to the Central Distribution Center location, where the various companies are able to pick the
merchandise from.

     The store employees are trained according to the store’s Training Manual
     The employees are tested on various levels of product knowledge by filling out a number of
        training modules
     The complete training lasts for about 4 weeks


       The Bata Head Office’s Distribution Center places an order with UPS trucking company
       The UPS picks up the merchandise from the Central Warehouse location
       The UPS delivers the merchandise to the Athletes World stores

The central warehouse location used by Distribution department of Bata Head Office is in Bradford,

Selling Functions to retailers
The Bata Head Office conducts line reviews 4 times a year, where Adidas sales representative meets
up with the Bata’s own team of buyers and negotiates the terms for sale, variety of styles and quantity
of the new or existing Adidas shoes, which the Athletes World stores request for or already carry.

Retailing Functions
The Bata Head Office handles various retailing functions. After negotiating a deal with Adidas about
the products requested, The Bata Head Office makes the decisions that have to do with in-store
promotions and training.

Last 12 months of promotions
In the last 12 months, Adidas didn’t organize any type of promotions, except for a couple of $10/$20
off sales, which were decided upon by the Bata group, after closing a purchase deal with Adidas. One
of the reasons for advertising a sale would be the fact that Adidas classics style shoes tend to sell very
well, but the Adidas brand does not sell well at all in comparison with other shoe brands in the store.

The contacts were:
Meaghan Wattie (The manager of the Athletes World store at Sherway Gardens)
Brent Symonds (Vice President of Distribution at the Bata’s Head Office)
Ted Varty (The Adidas’s Sales representative)

                  Channel Structures




Specialty Sport       Department       Independent
    Stores              Stores            Chains


                                      Puma’s Market Segments Served

     Currently, puma’s market is worldwide. Their segments served are footwear, apparel, and accessories.

However, within the footwear industry Puma’s market segments in North America are focused on the

youth. They will segment sporting goods stores, department stores (most stores that carry Diesel

footwear seek out Puma to enhance their merchandise), and urban retailers. More specifically, Puma is

segmenting their markets to alternative and urban individuals, the fashion/athletic market, and to a more

controlled distribution.1

Split of Functions between firm and Channel Members:

Physical Movement of Goods

The companies that are under the regional accounts (buyer) have to pay for part of the shipping for Puma

products. There are options to shipping. Shipping can be request 6 to 8 weeks in advanced. Footwear and

is ordered based on season. Many of the stores that carry Puma, the footwear are transported from the

states to head office and then to specialty stores such as champs, footlocker, athletes world, etc. Trucks,

rail, ships, and air are all responsible for the transportation of puma footwear. As well UPS, Speedy and

Purolator deliver products to there retail chains in-between the wholesaler and the retailer. Trucks are

the central transportation method of puma because they are the main transporters to ensure just in time

delivery. It is necessary that stores order Puma in advance because there can be border delays from the

U.S to Canada mainly because of the September 11th incident. Fees have to be paid especially when there

are delays on the American side. Many companies that carry the brand have devices to keep track of

inventory for Puma.

    “Hal Plotkin,”http://www.halplotkin.com/cnbcs049.htm>Nov 1 1999

Financing offered to Retailers

Regional discounts are offered to small businesses. Strategic discounts are offered to the bigger

businesses like Footlocker, Athletes World, Sports Chek and etc.

Ex. 100 units = 1% off, 200 units = 2% off.1

Training for employees

For puma Footwear, many companies offer the four step program and trainee programs where employees

will learn things such as customer service skills, product skills, as well as many will be rained for

management skills. Many employees will learn the basic skills of selling and closing a sale. 2 Individuals

will have to have knowledge of the puma products as well as know the basic features and benefits of the

product.3 Though Puma does not send a direct representative for the company, all the training programs

are done internally either by employees from head office for the retailer or by managers from the retail

store.4 Many employees of the retail chains will have the opportunity to meet with Head office staff and

ask any questions or concerns they might have on any Puma products. Many members of head office for

the retail store will come in and educate the staff about store procedures, as well as the right way to sell

products to customers. (Told by district manager at Champs Canada, Travis)5

Training for Retailers and Functions

Training for retailers is many mainly based on the ability of the retailers to be able to do personal selling as

well as customer service functions. The retailers are not specifically trained but are able to handle

management responsibilities in more than one department for a specific location that carries the Puma

brand. Retailers should have basic knowledge of how to operate a computer because many functions

  Spoke with representative from Puma Canada-October 17th,2004
  Interview with Travis-District Manager of Champs Canada-October 15th, 2004
  Interview with Melissa Lewis-Sales Associate Footlocker Canada-October 16th
  Interview with Travis-District Manager at Champs Canada-October 15th
  Interview with Melissa Lewis-Sales Associate Footlocker Canada-October 16th

such as monitor and holding inventory will have to be done.1 The retailers as told by Travis, should have

a strong background in different areas to be able to retail to stores or individual franchises.2 The basic

background involves tasks in: accounting, human resource issues, merchandising, etc. Lastly retailers will

be trained how to provide assortments, and break bulking.3

Customer Service for End Users

Some stores that carry Puma have a worry free guarantee within 14 days of purchase; it actually depends

on the retail chain because other stores can be up to 30days. If you have a damaged or defective item you

can return the item to the store nearest you, with original receipt and unworn product, or call the hotline

of the store and tell them exactly what’s wrong with the product. The store will happily refund the shoes

for you as long as they haven’t been worn. Once you wear them the store automatically considers them to

be yours. The store will refund your shoes if there is something wrong with them, give you back your

money, then examine and test the defective product and that’s only if it’s a manufactured defect. 4 If

there is something wrong wit the product the company will gather all its defective products from Puma

and then send them back to head office to see if they can be reimbursed from Puma. For exchanges it’s

the same 14 or even up to 30 days and as longs as the shoes have not been worn, you can get a straight

exchange for the same items that you purchased. If the customer has a valid complaint (such as defects)

the company will exchange or refund the shoe with the exact pair. If they want to send there written

complaints they will have to send a letter to the store they purchased their shoes from to the head office

of the store. 5

Selling Function to Retailers

Many Retailers buy products at wholesale prices from the manufacturers. The wholesales will buy Puma

products in large quantities but will sell to the retailer in smaller amounts than what they bought. By doing

   Interview with Travis-District Manager at Champs Canada-October 15
    Interview with Travis-District manager at Champs Canada, October 15th 2004
   Interview with Melissa Lewis-Sales Associate Foot Locker Canada-October 16th, 2004

this saves the retailer some money because they won’t have to hold so much stock. The retailer buys what

they feel are the best products to sell in their stores from the manufacturer. The wholesaler will help the

retailer invest in any purchases that the retailer has made from them.1 Many retailers, if they pay direct

cash for the products they choose from the wholesaler will have to pay lower prices on the preferred

products, as well as if the retailer purchases the products in bulk form. There are also different methods

for retailers to buy from wholesalers such as looking at the items that are made available from the

wholesalers through catalogues.2


At this time there is not a warehouse for specifically Puma shoes.3 There are a few outlet stores for a

variety of shoes that carry puma in the stores located in Mississauga as well as Calgary and Alberta. Puma

operates flagship retail concept stores in London, Paris, New York, Tokyo, San Francisco, and many

companies in Germany. There is though, the first Canadian Puma concept store, which is located on

2532 Yonge Street, Puma, offers a wide selection of their shoes.4 The company for the store orders all

their products from the states and has them shipped here on their selected transportation method. There

are about 30 warehouses around Europe and about 12 in the Middle East.5

Advertising Functions

There are many advertising functions that Puma employs for it products. The company wants Pumas

image for the dedication of sports to reach the entire market place and to be recognized for the leading

shoes in sports. The company advertises shoes especially in the Olympic. The company advertises in

magazines such as Vibe and the source. Puma also has commercials with athletes such boxer Oscar De

La Hoya and Tennis star Serena Williams. Posters for the shoes are also posted in the retail stores. 6

   Spoke with Representative from Puma Canada Annette-October 14th, 2004
   Spoke with Melissa Lewis-Sales Associate footlocker Canada-October 17th,2004
   Interview with Travis-District Manger of Champs Canada-October 15th, 2004
t+from+puma&hl=en or http://about.puma.com/downloads/112.pdf and www.puma.com

In-store Merchandising

The retail chains are informed by head office that there will be retail merchandisers coming in to set up

the specific area for Puma. 70% of the time, head office will contact the manager of the retail store and

inform the staff how the visual layout should look by providing them with detailed pictures. They are also

informed to place the shoes in order either based on price, and style. 1

Customer Promotions

There are promotions that run throughout the retail chains for puma throughout specified seasons from

Head office. Such promotions that many retail chains run are buy one and get the second pair of shoes ½

price. Save up to 30% off, employee appreciation where the employees have a chance to save up to 30%

off and this is for employees only, and family and friends days where employees bring them and they

receive 30% off if you have the 30% off card. This is not always available on Puma brand shoes, and

many times they exclude puma from these promotions, because Puma shoes are expensive and there is a

high demand for them.    2

                                Puma’s Differences and Similarities to Nike


        Much like the classic Nike shoes, to a great extent Puma was and still is known as the classic shoe

         with its 1986 suede detailing. Even back then it was considered a classic and the look is

         remaining consistent in today’s Puma footwear.

        In attempts to grow awareness and endorse their athletic products, Puma brings in an NBA

         basketball player, Vince Carter to help position their brand. Nike is well known for continuously

         bringing all star endorsers to boost their company sales. 3

  Spoke with Melissa Lewis-Sales Associate Footlocker Canada-October 17th,2004
  Interview and spoke with Melissa Lewis-Sales Associate Footlocker Canada-October 16th and 17th
   Lefton, Terry. “Puma sets real-athlete push via Carter TV Spot.” Brandweek Vol.40, Issue 34 (Aug 13
1999): p.5

       Both companies are highly regarded and recognized, consequently resulting in targeting the same



       What sets Puma apart from Nike is that the company tries to concentrate on young people who

        are not just athletes, but people who have a sense of style.

       The image of Puma shoes appeals to alternative people and skaters. The look has an urbanized,

        retro style than the casual Nike shoes.

       Unlike Nike’s consistency in recognition and sales revenue in the world-wide market, Puma has

        just recently regained their strength after falling off the marketplace for over a decade.

       Puma sets itself apart from the competition by creating a strategic alliance with New Regency.

        This allows Puma rights to be an event sponsor to the Women’s Tennis Association events,

        therefore helping Puma increase exposure to their company. 2

       Nike’s market segment diversification is much larger and extensive than Puma’s, having the most

        comprehensive range of products.

1 Geiger Andrew, “Puma Claws Carter for Breach of Endorsement Contract,” Awards $13.5 million
in damages, injunction for breach,
http://www.sportslawnews.com/archive/Articles%202000/CarterPuma.htm, accessed 17 Sept.
2 Tedeschi, Mark. “The SGB interview.” Sporting Goods Business Vol.34 Issue 8 (Jun 11, 2001) p.44

  Leand, Judy, “Pony Footwear is ready to Gallop.” Sporting Goods Business Vol. 36 (Jul 2003):

                                       Last 12 Months of Promotions

Consumer Promotions

Within the last 12 months, promotions for Puma where mainly dealt with, within the store. Promotions

would vary depending on the size, and popularity of the footwear. An example of the promotions would

be in-store merchandising, which would include Puma shoes shelved inside coolers that are inside igloos.

The effect was to demonstrate that the shoe was “cool.” 1 More simply, retailers will put together an

outfit in order to merchandise or sell the shoe.2

Trade Promotions

In regards to trade promotions between manufactures and retailers, Puma does very little to promote their

products, nor do they need to. After interviewing several management employees from different sporting

goods stores, each indicated in their own words that very little needed to be done to sell Puma products.3

“Their big fashion name and they sell fairly well. Pumas are trendy and really big right now.”4

                                                                        Richard Tyrell, Joggers Manager.

1Spethmann Betsy, Delia’s Deal Strengthens Alloy, 1 Oct. 2003,
http://promomagazine.com/deals/marketing_delias_deal_strengthens/, accessed 17 Sept. 2004.
Leand, Judy, “Cool Cats.” Sporting Goods Business Vol. 34 (Jun 11, 2001): p.44
  Blanchard Ashley, Manager, Athlete’s World, Personal interview, 17 Oct. 2004
  Walsh Russ, Regional Manager, Footlocker, Personal interview, 14 Oct. 2004
  Blanchard Ashley, Manager, Athlete’s World, Personal interview, 17 Oct. 2004
  Tyrell Richard, Manager, Joggers, Personal interview, 15 Oct. 2004.

                                              Puma Interviews

Contact Name: Richard Tyrrell

Position: Manager

1.   What firm does your sales rep work for?               A. It arrives in a Speedy truck.
A. Joggers
                                                           7.   Who provided sales training for you?
2.   Who gives you your merchandising                      A. No, there’s no need. Basically everything is
     materials for this product?                           the same and we know how to sell them.
A. The shoes all come from head office.                    8.   Is there any special education or training
     They do the ordering and we receive the                    provided by the manufacturer in order to
     products.                                                  sell new products successfully?
                                                           A. No.
3.   What kind of relationship do you have
     with your vendors?                                    9.   Are their any incentives to sell this
A. We really don’t have a relationship with                     product (store/regional)
     our vendors, compared to other vendors;               A. No.
     the reps don’t come in the store and talk
     to us.                                                10. How well does Puma sell in comparison
                                                                to Nike?
4.   What kind of retailer support does Puma               A. Because they are more of a causal shoe it
     offer?                                                     varies.
A. Through us, not much.
                                                           11. What is the age range that comes in to
5.   How far in advance are shoes ordered?                      buy Pumas?
A. They buy everything a year ahead of time.               A. I would say, 15-23, but also younger to
6.   What truck does it arrive on?

12. What types of promotions have been set                   product sells out at full price and the
    up within the last 12 months?                            store carries enough to all be bought out.
A. Their big fashion name and they sell fairly
    well. Pumas are trendy and really big right    Refund Policy: 30 days with a receipt.
    now. We never have promotions. The
Contact Name: Russ Walsh

Position: Regional Manager

      1.   What firm does your sales rep work
           for?                                              6.     What truck does it arrive on?
      A.   Footlocker (*Foot Locker, Inc.,                   A. It arrives in a Purolator truck.
           Nike’s largest retail channel member)
                                                       7.         Who provided sales training for you?
      2.   Who gives you your merchandising            A.There is a four step training program.
           materials for this product?                            Basically, everything is done internally,
      A. Head office does all the ordering.                       there’s no puma person to actually train
                                                                  the employees one on one. We go

      3.   What kind of relationship do you                       through stages of training.

           have with your vendors?
                                                       8.         Is there any special education or training
      A. It’s a give and take relationship; we
                                                                  provided by the manufacturer in order to
           see them as partners and have an
                                                                  sell new products successfully?
           open partnership with them. They
                                                       A.         If anything, the company will send us
           will take products back that do not
                                                                  product knowledge information every
           perform well and if they have
                                                                  once in a while.
           something new that is selling very
           well, they will offer us the product
                                                       9.         Are their any incentives to sell this
           with quotas.
                                                                    product (store/regional)
                                                       A.         No.
      4.   What kind of retailer support does
           Puma offer?                                 10.        How well does Puma sell in comparison
      A. N/A                                                      to Nike?
                                                       A.         I would say very well, if you were to
      5.   How far in advance are shoes                           compare them by category, head-to-head.
           ordered?                                               About a 50 to 50 ratio.
      A. Head office is in control of all those
           functions, it’s the marketing               11.        What is the age range that comes in to
           manager’s job to do the ordering.                        buy Pumas?

    A. Anywhere from 14-35.
                                                  Refund Policy: “worry free guarantee” Full
  12.   What types of promotions have been        Refund 60 days with receipt.
        set up within the last 12 months?
  A.    We don’t really have promotions for

Contact Name: Ashley Blanchard

Position: Manager

                                                               A. No one does, usual training is
    1) What firm does your sales rep work                          done on higher end
        for?                                                       merchandise, not Puma. Puma
    A. Athlete’s World                                             is a more casual shoe, more
    2) Who gives you your merchandising
        materials for this product?                   8) Is there any special education or
               A. Head office.                            training provided by the manufacturer
                                                          in order to sell new products
    3) What kind of relationship do you have              successfully?
        with your vendors?                                     A. No.
               A. Basically, the buyers buy
                   Pumas, and then its goes to        9) Are their any incentives to sell this
                   the distribution centers.              product (store/regional)
                                                               A. No, we will display an outfit
    4) What kind of retailer support does                          with the shoes to help sell
        Puma offer?                                                them.
               A. There’s no retailer support.
                                                      10) How well does Puma sell in
    5) How far in advance are shoes ordered?              comparison to Nike?
               A. They order a year in advance.                A. I would say 20:80.

    6) What truck does it arrive on?                  11) What is the age range that comes in to
               A. They come in a UPS truck.               buy Pumas?
                                                               A. Anywhere from the age of 16-
    7) Who provided sales training for you?                        40.

                                                              Refund Policy: 90 days unworn. 90 day
       12) What types of promotions have been                 manufacture guarantee. Full refund with
           set up within the last 12 months?                  receipt, exchange without a receipt.
           A. They don’t really have promotions;
               if anything $10-20 off to get rid of
               any old inventory.


          “Now that the kids are moving out and debts are under control, the dominant generation is
bursting from its cocoon.” North Americans are beginning to leave their cozy homes and see more of life.
The 10 million baby boomers and 7 million echo kids have been having a great impact on social trends
concerning Nike. They are emerging from their cocoons and watching less television and emphasizing
more on exercising and spending time at restaurants, movie theatres and engaging in other social activities.
While the baby boomers were focused more on their family values, their concerns were targeting work,
income, and spending quality time with members within the family. As their children have moved out, this
large aging population has been interacting with others at social outings, moved into urbanized areas, and
have become large money spenders. The echo kids are carrying on this new social trend of moving away
from family oriented experiences to enjoying and exploring more of life’s common activities. Now,
running shoes have become walking shoes, and the treadmill is being purchased to replace visits to the
fitness center66. Nike can benefit from these new social trends. Since many individuals are going out more
often, they obviously want to wear comfortable shoes and Nike can fulfill that need. This target market
seems to be more focused on health and keeping fit. Walking, running, being part of sporting events is
part of staying or becoming healthy. So Nike can begin to target not only the younger but older
generations also. However, the younger population is more fascinated with fashion trends and going out
so Nike’s attention should be towards this group too. In an American Express survey of 1,300 U.S.
consumers, 22% said that kids spend more on clothing than anything else. Most of these consumers said
they developed their own personal style, but they also look to friends, magazines and newspapers, siblings
and sports figures, MTV and musical artists and TV shows. “Where it used to be parents who made the
purchasing decisions and had the ultimate say in what was being bought, now it’s driven by what kids
want, largely because of media influences.” “Kids are more aware of the rights they have, and we as
parents are giving them more say than we used to.67” The newer generations are more independent these
days when making purchase decisions. This affects Nike because they need to have more celebrity
endorsements in order to maintain the percentage of this market segment. The new generation is
manipulated by celebrities, their peers, and others who they look up to. Nike has had basketball players
and tennis players to capture the attention of today’s youth; so far, it has had a great impact on today’s
social trends.


         There have been many issues concerning child labor law in North America and the Middle East.
In North America, children under the age of 16 are not allowed to work in any industrial, commercial, or
service sector. However, in the Middle East, there is a low standard of living with a high number of
populations. Majority of the population is under the age of 18 and these children have no choice but to


leave school and attend the working environment. For example, children 13 years and older are allowed to
work in certain industries in Thailand. These children are exploited with low wages, excessive work hours,
and hazardous working conditions. Western countries are determined to build trading barriers to any
products that have been produced by child labor. However, developing countries will not end child labor;
instead they will result in underground industry of child workers68. Nike has had a major problem with
sweatshops and child labor. They were known to produce goods through using children in the Middle
East. Although these families needed income, a higher standard of living, and a source of food and
nutrition, Nike is affected by using this as an advantage. By having sweatshops, this has lowered their
image in North America. Amnesty International recently blamed third world environmental and human
rights abuses on "globalization" due to millions of products being produced, such as running shoes69.
Although, politics in the Middle East allows child labor in some countries for specific industries, it may
seem as though Nike is permitted to use this to their advantage. However, there will be trading barriers
which discontinue the privilege of products produced in developing countries to be imported into
developed countries. The political environment definitely affects Nike now because they need to have
individuals of the appropriate age to manufacture goods, have new factories, pay their employees at an
average rate, and build their image. If they continue to have workers in the East to manufacture their
goods, then eventually people will want to fight to boycott the company and their products.


         The Canadian economy has had its ups and downs. For example, it managed to create 43,000
(0.3%) net new jobs in September 2004. The labor force increased more than 0.1% in September and the
unemployment rate is now at 7.1% compared to 7.2% a few months ago70. This may have an impact on
Nike if they choose to have a factory in Canada. There would be more opportunities for Canadians and
much more productivity. If Nike is able to hire a number of individuals, this can drastically reduce the
unemployment rate. Statistics Canada shows a change in consumer price index and other major
components. Higher prices for women's clothing and footwear (+1.7%) slowed the fall in the CPI in
August of 2004. There was a percentage change between July and August which amounts to 0.9% for
clothing and footwear71. Although there was a slowdown, Nike seems to still have an opportunity because
women are increasing their purchase amounts for these specific goods. If Nike increases their prices
though, there is a higher probability that consumers will not purchase their products as much as they used
to. Canada’s economy has just been given a boost and it would be difficult to maintain that if prices go up.
Also, consumer spending is changing to 1.3% compared to 6.4% growth in the first quarter of 2004.
Canadians’ personal disposable income rose 8% from 6.6%. Their spending behavior has slowed down
compared to their disposable income. Real Consumer Spending and Household show that the disposable
income in millions is $745,344 which is an 8% increase for the second quarter of 2004. Although,
consumers are saving more and show an increase in their personal disposable income, their spending
behavior is still going at a slower pace. As for consumer prices for clothing and footwear, the percentage
change from 2003 to August 2004 were -0.7% to -1.0%72. Nike will have to look at this as a threat for
now. This specific trend means that Nike might have to become more price sensitive for the next few
months since Canada has recently recovered their downfall. Conversely, an increase in disposable income
is an opportunity for Nike because consumers have more to spend. If Nike maintains a lower price for
their shoes for the next 6 months, then eventually, they can increase their prices by 5-10%.



         Nike’s primary competitors are Puma, Reebok, and Adidas. These brands have been around for
decades and do not seem to be exiting the market. Once again, Nike is having trouble in the Middle East
with their sales while competitors’ products are flowing smoothly. According to the Sporting Goods
Manufacturers Association (SGMA), global sneaker sales are estimated to be worth over $15 billion
annually. The five dominant categories are running shoes, basketball, cross-training, walking and
casual/retro. In 2002, Nike held a 34.1% international market share while Adidas had a share of 16.5%73.
Nike seems to be so involved in the NBA but the Middle East is not interested in it. In the Middle East,
consumers perceive Nike as an American brand while Adidas is seen as a comfortable brand that fits in.
The Middle East has a huge youth demographic, with a very high percentage of the population under 14
years old: 42 percent in Saudi Arabia and Oman, for example, compared to just 21 percent in the United
States. Average ages in the Middle East are 19 years in Oman, 18 in Saudi Arabia and 25 in Kuwait. By
comparison, the average age in the United States is 3674. So, there is a large market but Nike is allowing
Adidas, Reebok, and Puma to gain more market share in those areas. Nike and Adidas are continuing to
have their rival competition in the East while Reebok, Puma, and other companies are focused more on
style, comfort, and brand strategies. Based on these facts, Nike should be focusing more on how to satisfy
and gain market share in the East to be at the same level as their competition. In addition to Adidas
current success with there image in the East and their newest technology, rumors say that they will buy
Reebok75. If this occurs then Nike will be facing fierce competition because Adidas will be taking control
in the current and future market and footwear industry.


          Technology has become more advanced in today’s world compared to a decade ago. It not only
has improved electronics but it has also helped to improve our everyday tangible products, such as
running shoes. Who would ever guess that technology can be used in athletic footwear? It is assumed that
it can be used in machinery to produce products but chips in shoes are extremely innovative. Nike's Air
technology, which used a gas-filled bag of air inserted in the sole of the shoe to cushion the impact of
running, first appeared in 197976. Athletic shoes have become increasingly specialized since that time and
prices have grown in accordance to new technology. LeBron James, Tracy McGrady, and Allen Iverson
have the latest running shoes reserved for them which will be changing the footwear industry. Adidas is
distributing these new pair of shoes at a price of $250 and it contains a computer microchip and operating
system. Basically, this can analyze a runner’s step and begins making cushioning adjustments in the heel of
the shoe. Adidas officials claim the shoe can take up to 20,000 readings and make 10,000 calculations per
second77. Nike will definitely be behind Adidas new trend. Running shoes and other athletic pairs are
purchased based on comfort, reliability, durability, etc. This new pair will be able to push Nike into
second place of the entire market. The fact that these new shoes will adjust on its own, it will make it
difficult for Nike to produce a new product to compete against it.




Leand, Judy. “Pony Footwear is ready to Gallop.” Sporting Goods Business Vol.36 (Jul 2003): p.12
Lefton, Terry. “Puma sets real-athlete push via Carter TV Spot.” Brandweek Vol.40, Issue 34 (Aug 13
1999): p.5
Tedeschi, Mark. “The SGB interview.” Sporting Goods Business Vol.31 Issue 11 (Jun 10, 1998) p.36
Leand, Judy. “Cool Cats.” Sporting Goods Business Vol.34 (Jun 11 2001): p.44

Blanchard Ashley, Manager, Athlete’s World, Personal interview, 17 Oct. 2004
Walsh Russ, Regional Manager, Footlocker, Personal interview, 14 Oct. 2004
Blanchard Ashley, Manager, Athlete’s World, Personal interview, 17 Oct. 2004
Tyrell Richard, Manager, Joggers, Personal interview, 15 Oct. 2004.
Gardner Sydney, Customer Service, GBMI and Pony International, Personal interview, 19 Oct. 2004

http://about.puma.com/news.jsp?year=04&id=19&lang=eng, accessed 17 Oct. 2004.
Running Strong Through 2nd Quarter, http://shoeexpo.com/archives.html, accessed 18 Oct. 2004
Wells Melanie, Sole Survivor’s, 8 Jun. 2001, http://www.forbes.com/2001/08/06/062.html, accessed
17 Oct. 2004.
Breeze Technology, Inc., http://www.businessplans.org/Breeze/breeze03.html, , accessed 18
Oct. 2004


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