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TOMS Shoe

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  • A leading cause of disease in developing countries is soil-transmitted diseases, which can penetrate the skin through bare feet. Wearing shoes can help prevent these diseases, and the long-term physical and cognitive harm they cause.Many times children can't attend school barefoot because shoes are a required part of their uniform

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  • 1. One for One One person buys. One person is helped. Group 3 M.M. Binte Min Jin Jeon Kye won Suh June Young Ahn KSIM KAIST Business SchoolStrategic Management Summer Semester 2011
  • 2. C ONTENTS  Company Overview  Business Model  Current Strategy  Strategic Analysis  Issues  Root Cause Analysis  RecommendationsStrategic Management 2 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 3. C OMPANY O VERVIEWCompany  American footwear company based out of Santa Monica, California  Created by Blake Mycoskie in 2006 after traveling toBusiness Argentina and realizing that the children have no shoesStrategy  As of September 2010, TOMS has given over 1 million pairs of new shoes to children in needAnalysis  Extended product-line to eyewear in 2011IssuesCausesRecommend.Strategic Management 3 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 4. B USINESS M ODELCompany  One for OneTM  One person buys. One person helped.Business  TOMS SHOES: With every pair you purchase , TOMS will give a new pair of shoes to a child in need.Strategy  TOMS EYEWEAR: With every pair you purchase , TOMS will give sight to a person in need. (Give prescribed eyeglasses)Analysis  Creating sustainable business by turning customers intoIssues benefactors rather than depending on fundraising support  Viral Marketing with touching storiesCausesRecommend. Purchasing (Fundraising) Help Persons With Volunteers Products Persons Customers who need Satisfaction Touching Stories help Word of Mouth MarketingStrategic Management 4 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 5. C URRENT S TRATEGYCompany  Limitation of One for One BM  Profit margin for Shoe BusinessBusiness  Sales: 300,000 units * avg price $60 = $18 million  Gross margin = 50% / Revenue for SG&A and tax = 30%Strategy  Net Profit = $4 million  Manufacture and donation costs close to $4 millionAnalysis  TOMS Eyewear – The new one for oneIssues  It might have same profit margin as Shoe  Overcome Negative ProfitabilityCauses  Sale for other items such as apparel and stickers  Generate an additional revenue stream for the companyRecommend.  Partners with Non-profit organization  Shoe Drop Tour volunteer opportunities  Aligns with other brands  With Ralph Lauren Rugby to distribute one shoe modelStrategic Management  AT&T “More Bars In More Places” campaign 5 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 6. C URRENT S TRATEGYCompany  Word of Mouth Effect  No traditional advertisingBusiness  Utilize SNS  Movie clip Including touch stories and playful musicStrategy  To explain TOMS’s social mission & To encourage you to get involveAnalysis  Share donation activities through SNS  337 bookmark or sharing services including Facebook, twitterIssuesCausesRecommend.Strategic Management 6 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 7. C URRENT S TRATEGYCompany  Customer Participation  Style Your SoleBusiness  Select a date for your event that works for your guests  Promoting and collect money from your guests including shipping costsStrategy  Need to place your bulk order NO LATER than 2 weeks  Order all plain white canvas TOMS (the easiest to decorate and customize)  Invite local bands or artists to join your eventAnalysisIssuesCauses  For one day without shoesRecommend.  Host event or find & participate in event  Upload pictures wearing Toms or without shoesStrategic Management 7 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 8. F IVE F ORCES A NALYSISCompany Threats of NewBusiness Entrants LOWStrategyAnalysis Bargaining BargainingIssues Power of Competitive Power of Suppliers Rivalry CustomersCauses LOW HIGH HIGH Converse, Birkenstock, Roc China, Argentina ket Dog, UGGS, VansRecommend. Threat of Substitute HIGHStrategic Management 8 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 9. SWOT A NALYSISCompanyBusiness Strengths: Weaknesses: • The message • Young Company Internal • Product material • Limited distributionStrategy • Customizability • Brand awareness • Global Brand • Limited StyleAnalysis • Innovative Options • Very defined target customer (Vegan, wrap boot)Issues Opportunities: Threats:Causes • Large potential market • Older and more established • More people becoming competition with greater ExternalRecommend. active in social causes media exposure • Rise in green marketing • Oversaturation of shoe market • Nontraditional • Overall lack of advertising stance(facebook, twitter, YouTube) in mediaStrategic Management 9 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 10. I SSUESCompany  From Five-Forces and SWOT Analysis  Unisex DesignsBusiness  Preferred by women and kids, not men  Unreasonable PriceStrategy  Compared to material’s quality and Product Life Cycle - ExpensiveAnalysis  Low Brand awareness  No traditional mass marketingIssues  Limited distribution channel  Few offline shops in US & globally online saleCauses  Defined target customer  Targeting only young generationRecommend.  Others  Controversial cognition  Poverty vs. Dignity  An angel? or A wolf in sheep´s clothing?Strategic Management 10 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 11. R OOT C AUSE A NALYSISCompany ISSUES Root Causes Recommendations Designs Many Designs cost (Men’s shoe)Business much Low cost design Five-forces & SWOT Analysis PriceStrategy (compared to the quality Low profit margin of the materials and life (because of charity cost) cycle of the product -Analysis expensive) Various product-line Low-price strategy to many fashion items Brand awarenessIssues (low) Distribution Only on-line channelCauses channel (limited) Increase Brand AwarenessRecommend. Target customer (very defined) No mass marketing Controversial Others Keep cognition Business Model its Business Model (poverty vs. dignity)Strategic Management 11 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 12. R ECOMMENDATIONSCompany  Make various product design!  Develop plans how to make design without costBusiness  Examples about getting low cost design  Fashion Design ContestStrategy  Online – SNS, Offline - Fashion design school  Star DonationAnalysis  Fund Raising, Designed by Stars, Utilization as a model etcIssues Best Design Prize MoneyCausesRecommend. Winner gives the low cost but best designStrategic Management 12 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 13. R ECOMMENDATIONSCompany  Change brand position as a charity brand!  From shoes manufacturing to fashion, charity brandBusiness  New One for One - Make various product lines  Example – School ProjectStrategy School Bag Get much profitAnalysis Bag pack`s price is more expensive than shoes Good product to make collectionIssues Student’s Fashionable item Develop school supplies as wellCauses  Example – Disease ProjectRecommend. Disease Get much profit High demand - household items Soap, Toothpaste, hand washer etc Prevention is better than cure Reduce the possibility of getting diseaseStrategic Management 13 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 14. R ECOMMENDATIONSCompany  Promote Toms brand & business!  Must increase Brand awarenessBusiness  Awareness of TOMS Shoe company research by The Clemetine group  Focus Group interview, March 2010 (Most respondents living in US)StrategyAnalysis It means Marketing efforts are incredibly ineffective!Issues  Utilize traditional mass mediaCauses  Keep strategy not to make commercials  Instead of Ads, Open big global event for interview and reportRecommend.  Example – World travel relay without shoes  Partnership with Unesco & Unicef  Unesco – Open workcamp making shoes for volunteers  Unicef – Utilize Unicef shop & honorary ambassadorsStrategic Management 14 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 15. R ECOMMENDATIONSCompany  Give customer price options!  Keep original business model - One for OneBusiness  Partially add “Two for Two” modelStrategy  Target – someone to want to buy different color or give gift to another  ‘One for One’ recently 49$ → ‘One for Two’ about 90$ (cheaper)Analysis  Partially add “One for Two” or “One for Three”Issues  Target – someone to want to donate more through toms  ‘One for One’ recently 49$ → ‘One for Two’ about 70$ (cheaper)Causes  Record customers name in the hall of fameRecommend. Increase sale volume & Reduce shipping cost Discount Benefit to regular customers Establish donation culture though TomsStrategic Management 15 7/7/2011Prof. Han Earl Kim KSIM, KAIST Business School
  • 16. Thank you