Crocs Marketing Plan

26,091 views

Published on

Fictitious marketing report by students of the University of Applied sciences. The report is named:
Crocs staying ahead of the competition

Published in: Business, Lifestyle

Crocs Marketing Plan

  1. 1. CROCS STAYING AHEAD OF THE COMPETITIONDate of Publication: November 8th 2011 CROCS STAYING AHEAD OF THE COMPETITION Marketing Plan University of Applied Sciences – Amsterdam 2011 Page 1 of 50
  2. 2. CROCS STAYING AHEAD OF THE COMPETITION1. Executive summaryBorn in Boulder, Colorado as a simple, comfortable boat shoe, today Crocs footwear can be foundacross the globe. With distinct collections, Crocs offers colorful, lightweight comfort that lasts longand can be worn during all seasons in a year. All Crocs shoes are uniquely designed andmanufactured using the Croslite technology. Each pair of Crocs has the soft, comfortable, non-marking and odor-resistant qualities that Crocs wearers know and love.For a long time Crocs was able to rely on its trusted success formula. However, Sales are decliningand forces from the environment ask for strategic changes. This marketing plan will cover the launchof a new era for Crocs starting in August 2009 and will cover the period until December 2012.In the short term, changes in Crocs’ brand portfolio and new footwear products should attract newsegments and increase the target market. Rather than entering new markets, Crocs should stick to itscore business of creating quality footwear and use its Croslite material for the new types of footwear.A new fresh and cool brand called Gators will carry sneakers, athletic shoes and casual shoes toattract the teenager segment. Further reorganizing will result in expanding the Crocs product line tocarry 350 styles.By further developing the distribution channels and global infrastructure, Crocs can support thegrowth of the new business, products and retail sales. Crocs aims to increase the number of CrocsFlagship stores in geographic key areas and retail stores selling crocs across the United States. Toaccommodate the increasing use of ecommerce and internet, Crocs should also continue to focus onits online distribution channel.To protect is style and design Crocs should continue using its patents as ammunition to shut downthe countless knockoffs. To prevent legal issues in the future, the degree of design should increasefor the new product lines. Special features and characteristics should make it harder to copy thedesign.All these changes need to be carried through in order to stay ahead of the competition. According toour forecast an investment in promotional Costs with the guidelines mentioned in this marketingplan should after 3 result in a $900 million in revenues and $481 Million in results of operations.In the long term, product development is required to keep up with the environment and evolvingneeds of the customers. We advise the Crocs management to continue evaluating the environmentto search for value-adding acquisitions to the brand portfolio.Page 2 of 50
  3. 3. CROCS STAYING AHEAD OF THE COMPETITION2. Table of Contents1. Executive summary............................................................................................................................. 22. Table of Contents ................................................................................................................................ 33. Problem Statement ............................................................................................................................ 5 3.1 Market analysis & Market segmentation ...................................................................................... 6 Market Segmentation...................................................................................................................... 6 Market analysis................................................................................................................................ 7 3.2 External Environment analysis ...................................................................................................... 8 3.2.1 Demographic .......................................................................................................................... 8 3.2.2 Economic ................................................................................................................................ 8 3.2.3 Social Cultural ......................................................................................................................... 9 3.2.4 Technological .......................................................................................................................... 9 3.2.5 Political/Legal ......................................................................................................................... 9 3.3 Customer Profile.......................................................................................................................... 10 3.4 Competitor analysis ..................................................................................................................... 13 3.3.1 Direct .................................................................................................................................... 13 3.3.2. Indirect ................................................................................................................................ 17 Conclusion ..................................................................................................................................... 18 3.5 Competitive Advantage & Challenges ......................................................................................... 194. Internal analysis ................................................................................................................................ 20 4.1 Company...................................................................................................................................... 20 4.2 Current Marketing Mix ................................................................................................................ 20 4.2.1 Core Costumer value ............................................................................................................ 20 4.2.2 Actual Product ...................................................................................................................... 20 4.2.3 Augmented Product ............................................................................................................. 21 4.3 Product Line and Product Mix ................................................................................................. 21 4.2.3 Price ...................................................................................................................................... 23 4.2.2 Place ..................................................................................................................................... 23 4.2.4 Promotion............................................................................................................................. 24 4.4 Business Portfolio ........................................................................................................................ 25 4.5 Financial Performance ................................................................................................................. 26 4.6 Personnel ..................................................................................................................................... 26Page 3 of 50
  4. 4. CROCS STAYING AHEAD OF THE COMPETITION5. SWOT analysis & Confrontation matrix ............................................................................................ 27 5.1 SWOT Analysis ............................................................................................................................. 27 5.2 Confrontation Matrix................................................................................................................... 286. Segmentation, Target Market, Positioning ...................................................................................... 30 6.1 Customer Needs and Wants ........................................................................................................ 30 6.2 Target Groups & Segmentation................................................................................................... 30 6.5 Positioning Map........................................................................................................................... 327. Strategy............................................................................................................................................. 338. Objectives ......................................................................................................................................... 34 8.1 Short Term ............................................................................................................................... 34 8.2 Long Term (1+ Years) ............................................................................................................... 349. Marketing Mix .................................................................................................................................. 35 9.1 Product ........................................................................................................................................ 35 9.1.1Core Costumer Value............................................................................................................. 35 9.1.2Actual Product ....................................................................................................................... 35 9.1.3 Augmented Product ............................................................................................................. 36 9.2 Product Line and Product Mix ..................................................................................................... 37 9.2.1 Product Line.......................................................................................................................... 37 9.2.2 Product Life Cycle ................................................................................................................. 37 9.2 Place ............................................................................................................................................ 38 9.3 Price ............................................................................................................................................. 39 9.4 Promotion.................................................................................................................................... 4010. Profit & Loss Statement / Budget (3 year) ...................................................................................... 4211. Recommendations to the decision maker ...................................................................................... 4412. Source list ........................................................................................................................................ 4613. Appendices ...................................................................................................................................... 4714. Self Assessment ................................................................................... Error! Bookmark not defined.Page 4 of 50
  5. 5. CROCS STAYING AHEAD OF THE COMPETITION3. Problem StatementIn 2002, Crocs, Inc. was founded. A rapid growth in demand of these ‘one of a kind’ shoes impressedthe whole industry. Most competitors viewed Crocs as an ugly shoe, which in turn would not appealto many customers. But, in various segments the shoe was very attractive due to their low weight,comfort, slip-resistance and functionality. Especially in nursery, catering and boating huge demandarose. Besides the fact that Crocs were used by professionals; after a short period of time, peopleconsidered the anti-slip shoe as a fashion statement. The Croc product succeeded beyond thefounders’ wildest dreams and profit kept coming in.However, after four years the market started to saturate. Competitors and customers thought of theCrocs to be a ‘one trick pony’. Although profits remained very high and market share for Crocs wasfavorably, Crocs needs to prevent an expected decrease in both of these aspects. Croc wants totackle these problems and wants to ensure profits in the future. It faces several intense challenges.First of all, competitors find it easy to imitate the popular Crocs concept. Minor modifications canmake sure that Crocs’ patent is not offended. The imitators are mostly easily accessible and are lessexpensive. How can Crocs make sure to maintain consumers and obtain the ones that havepreviously chosen for the ‘imposter’ Crocs?Second, Crocs faces severe competition from established competitors who run a more efficientdistribution system. Sketchers is one of the main rivals that enhance established distributionchannels. By doing so, they are able to take more in-store display spots. The limited distributionchannel of Crocs can keep a fair amount of customers away. So, in what way is Crocs able to solvethis distribution problem?The third and final challenge is the expansion problem. Crocs are forced to expand their product lineto prevent becoming the above mentioned ‘one trick pony’. What markets need to be targeted, andwhich one will be most profitable? Is it feasible to transfer their core business activities to the other,new products? In conclusion, in what way can Crocs attack the problems/ challenges best?Page 5 of 50
  6. 6. CROCS STAYING AHEAD OF THE COMPETITION3. External / market analysis3.1 Market analysis & Market segmentationMarket SegmentationAccording to the American Apparel and Footwear Association, the shoe market in the U.S. can besegmented by six different product classes: (Packaged Facts, 2009)  Mens athletic footwear  Childrens athletic footwear (Incl sneakers & outdoor/hiking boots) (Incl sneakers & outdoor/hiking boots)  Womens footwear  Mens footwear (Incl. dress & casual footwear) (Incl. dress & casual footwear)  Childrens footwear  Womens athletic footwear (Incl boys, girls, infants, & toddlers) (Incl sneakers & outdoor/hiking boots)Crocs footwear product range is divided into 3 categories: everyday, style and sport. With the initialintroduction of the popular Beach and Cayman models from the everyday category, Crocs started inthe Womens, Mens and Childrens footwear segment. Through its style category, which includesvarious dress shoes, Crocs is present in the Womens Footwear and Mens Footwear segment. Crocsexpanded its Croslite products to include a variety of new styles and products and have extendedproduct reach through the acquisitions of new brands Jibbitz, YOU, Bite and Ocean Minded.With the acquiring of Jibbitz, which produces unique charms specifically suited to fit into Crocs shoes,Crocs expanded into the Children’s footwear market. Though Ocean Minded, which produces sandalsprimarily for the beach, action and adventure market, Crocs deepened its presence in the Womens,Mens and Childrens footwear segment. By way of acquiring Bite, a manufacturer of performanceshoes and sports sandals sold worldwide in five categories, including, golf, adventure, healthylifestyle, travel and watersports, Crocs within the sports category added the Athletic Footwearsegment for Women, Men and Children to its target market. Closing out is YOU by Crocs™, awomens fashion line that combines the comfort of Croslite with fashionable styles, which strengthscrocs position in the Womens Footwear segment.Crocs boasts the footwear as being ideal for casual wear, as well as for professional and recreationaluses such as boating, hiking, hospitality and gardening. Crocs expanded its product line to 25 modelsin 2006, over 250 models in 2007 and over 270 models in 2008, including Ocean Minded, YOU byCrocs™ and Bite footwear models. In addition to footwear products, Crocs markets a line of brandedapparel and other accessory items that are intended to increase awareness of the Crocs brand.ConclusionCrocs Product Line SegmentCrocs Everyday Womens, Mens and Childrens footwearCrocs Style Womens Footwear and Mens FootwearJibbitz Children’s FootwearBite Womens Footwear and Mens Athletic FootwearOcean Minded Womens, Mens and Childrens footwearYOU by Crocs™ Womens FootwearPage 6 of 50
  7. 7. CROCS STAYING AHEAD OF THE COMPETITIONMarket analysisIn 2008 the market for Footwear in the U.S. accounted for $46 billion dollar. According to figures byPackaged Facts, sales of footwear in the United States will drop 14% from the 2008 level of $46.8billion to just $40.1 billion in 2009. However, the drop in 2009 will be greeted by a welcomed eightpercent gain to $43.3 billion in 2010 as consumers return to stores. After 2010, growth rates for salesof footwear in the United States are expected to be about 3% by 2013, reaching $48.4 billion.U.S. Footwear Retail Market Forecast, 2008–2013 60,0 (in billions $) 48,0 46,8 45,6 47,2 43,3 36,0 40,1 24,0 12,0 (Packaged Facts, 2009) 0,0 2008 2009 2010 2011 2012These same numbers can be found back for each individual segment. After a small dip in 2009, theforecast for the United States Footwear Retail market positive with an expected grow. Womenaccount for 50% of the total footwear sales where men are 36% and children 14%. For men, 60% ofshoes purchased are athletic shoes. Dress/casual shoes are more popular among woman with 70%.Athletic shoes are becoming more popular among women and children.U.S. Footwear Retail Market Forecast by Consumer Group & Major Product Category (in millions $) $18.000 $16.000 $14.000 Womens footwear $12.000 Mens athletic footwear $10.000 Womens athletic footwear, $8.000 Mens footwear $6.000 Childrens athletic footwear $4.000 Childrens footwear $2.000 $0 2008 2009 2010 2011 2012 2013Page 7 of 50
  8. 8. CROCS STAYING AHEAD OF THE COMPETITION3.2 External Environment analysis3.2.1 DemographicCrocs didn’t focus on particular demographics or segments. It designed for broad appeal acrossincome brackets, ages, and genders. However, several factors that influence the operations of Crocsare changing.PopulationThe 2010 Census, shown as appendix table 3, from the U.S. Census Bureau reported 308.7 millionpeople in the United States, a 9.7 percent increase from the Census 2000 population of 281.4 million.Throughout this same period, substantial growth of population has been occurred in the South(14.3%) and West (13.8%) regions. The South grew by 14.3 million over the decade to 114.6 millionpeople, while the West increased by 8.7 million to reach 71.9 million people—surpassing thepopulation of the Midwest. (Mackun, Paul & Wilso, Steven (March 2011) 2010 Census Brief)In conclusion, the population has shown growth, which is positive for the Crocs company as thebroad target market now includes more potential customers. The Western region, including Alaska,Arizona, California, Oregon, Utah and Washington, and the Southern United States region, includingOklahoma, Florida, Virginia and Texas, are particular areas with a substantial increase in population.AgeThe population of children, age 3-10 – was forecasted to grow with 1, 5$ million between 2008 and2012. For the same period their buying power should’ve increased with 2.7$ billion. According toPackaged facts this is a strong increase.RaceThe Hispanic or Latino’s account for 37% of all shoe purchases in the U.S., African Americans for 33%and Whites plus others for 30%. Between 2003 and 2007 the market for whites has grown with anaverage of 3.9% while the black community’s expenditures on footwear decreased with average -3.2% per year.3.2.2 EconomicAs result of the 2009 credit crunch, solid majorities of Americans across all income categories arewatching their spending closely and are cutting back. With a recession underway, people are unlikelyto buy multiple pairs in a way they might have a couple of years ago as this would run into hundredsof dollars. Consumer confidence is reflectedAccording to the Average annual expenditures on Footwear of the Consumer Expenditure Survey bythe U.S. Bureau of Labor Statistics, shown in table 5 in the appendices, almost all categories wentdown in expenditures on Footwear, with the exception of the husband and wife consumer witholdest child 6 to 17. They had a minor increase from $493 to $502 dollar on annual base.Other economic factors influencing the operations of crocs are higher fuel and material costs, a weakU.S.dollar and rising labor costs in China.Page 8 of 50
  9. 9. CROCS STAYING AHEAD OF THE COMPETITION3.2.3 Social CulturalCrocs took on some cultural icon status as lifestyle/attitude Brand, where people either love it orthey hate it. One the one hand, Crocs shoes have become all the rage for all ages. Websites such aslittlerubbershoes.com, formerly known as crocfans.com, keep hold of all celebrities that wear crocsand the developments around the crocs company. Crocs, Inc has an advantage over imitators with itscustomer loyalty. These True Friends with high customer loyalty claim that no other shoe can replacetheir crocs. The shoe itself attracts attention and when this attention is expressed the ownerscommunicate their passion and loyalty for the brand.On the other hand, IHateCrocs.com is dedicated to the elimination of Crocs. They believe that Crocsare just a fad of an obviously unfashionable nature. Especially the males and teenagers, who tend toassign big value to design, fashion and style, have rejected to wear crocs.3.2.4 TechnologicalCrocs has created an interactive web site explaining everything about Crocs, from their history tohow they are designed. This is also where customers may also order specific Croc models if they donot feel the need to go out and find them in a store.3.2.5 Political/LegalAs of April 2006, Crocs Inc. had received four patents issued by the U.S. Patent and Trademark office.These patents cover a range of utility aspects of of Crocs footwear, as well as design elements oftheir most popular styles.Despite the patents, the Crocs Company is dealing with multiple imitation brands and products thatharm these patents. Over the past decade, Crocs filed a number of Legal Proceedings to protect theirpatents.On March 31, 2006, Crocs filed a complaint with the International Trade Commission against thefollowing 11 companies alleging infringement on certain of our utility and design patents:  Acme Ex-Im, Inc.  D. Myers & Sons, Inc.  Shaka Holdings, Inc  Collective Licensing  Double Diamond  Inter-Pacific Trading International, LLC Distribution, Ltd. Corporation  Chengs Enterprises, Inc  Effervescent, Inc.  Gen-X Sports, Inc.  Australia  Holey Soles Unlimited, Inc. Holdings, Ltd.The complaint alleges patent and trade dress infringement and seeks an exclusion order banning theimportation of infringing products.In April 2011, Crocs Inc. won this patent ruling that may help the company block U.S. imports ofimitation crocs footwear. The Judge of the U.S. International Trade Commission in Washingtondeclared that the company’s patented design for shoes was infringed by the earlier mentionedparties. With this victory, they overturned the court’s ruling of 2006 that picked the side of the crocscompetitors.Page 9 of 50
  10. 10. CROCS STAYING AHEAD OF THE COMPETITIONOn June 15, 2006, Aspen Licensing International, Inc. filed a complaint against Crocs in the UnitedStates District Court for the District of Massachusetts that Crocs was infringing upon AspenLicensings trademark right by using the name Aspen for one of Crocs products. (Crocs Inc. Annual Report,2010) Similar, In May 2009, Crocs Europe B.V. received a letter from Porsche AG claiming that theCompanys use of the "Cayman" shoe model designator infringes upon their Community TrademarkRegistration of the mark "CAYMAN". For that reason, Croc renamed the product to crocs classic.In 2007 the U.S. Consumer Product Safety Commission requested a voluntary recall of about a millionCroc-like clogs due to a potential choking hazard involving detaching plastic rivets. The samehappened in July, 2009 when 1.4 million Buster Brown & Co.’s Clog Children’s Shoes were recalleddue to choking hazard. All of these factors may be something to adapt to and prepare for as acompany to persuade consumers to go for the safer Crocs products rather than the rather dangerousknockoffs.3.3 Customer ProfileWe established that Crocs does not focus on a particular demographics or segments. The footwear isdesigned for broad appeal across income brackets, ages, and genders. In order to have a betteroverview of what the Crocs customer looks like, we produced a customer profile. Here we define thebenefits Crocs are offering and the type of customer that purchase crocs together with theirmotivation.CrocsProfile Teens & Adults KidsDemo-graphic Age 16 + Years Age 2 - 16 Years Gender Female & Male Gender Boy & Girl Social Class Middle Class and Working Class Occupation Professionals who have to be on their feet all dayPsychographic Brand Ruggedness Lifestyle Like to play outside Personality Brand Ruggedness Personality Behavioral Occasion Work, Camping & Sailing Benefit Convenience, lightweight & Benefit Put on their own Comfort shoes & Easy to clean Attitude Comfort over looksAlthough recent design improvements might have slickened up the look of crocs, the main factorsbehind its success are the light weight and comfort of the shoe. LittleRubberShoes.com came upwith 10 Reasons why to wear Crocs:1. Nothing is softer or more comfortable 6. Ultra-hip, Italian styling with molded foot support2. They are hardly there (less than 6oz.) 7. Slip resistant3. Air ventilation ports keep your feet cool 8. Sterilized in water and bleach4. Non-marking soles 9. Easy to maintain5. Resistant to bacteria and odor 10. Water and sand pass through air vents (LittleRubberShoes.com, 2006)Page 10 of 50
  11. 11. CROCS STAYING AHEAD OF THE COMPETITIONThese characteristics of the Crocs footwear attracted not only boaters, which crocs was originallyintended for, but also gardeners, healthcare workers, waiters, and other professionals who have tobe on their feet all day. Therefore we can conclude that Crocs are worn by the people who likecomfort, hygiene and functionality and are less interested in looks whereas Crocs are for all ages andboth genders. Loyalty to the brand is certainty an essential part of the segment’s personality.Ocean Minded Ocean Minded footwear,Profile apparel, and accessories areDemo-graphic Age All made from recycled and Gender Both Social Class Working Class and Lower Class sustainable materials. The brandPsychographic Lifestyle Environmental Friendly feel that as both a corporation Personality Water-oriented and a group of individuals, it is Green Conscious essential to Live, Protect, and Brand Sincerity Respect the environment. personality Behavioral Occasion Surfing Those who identify themselves Beach going with the ocean minded product Benefit Convenience line are environmental friendly Geographic Climate Humid Subtropical oriented. Surfing, saling or Country Southeastern & West Coast Region playing beach volleyball while enjoying the waves of the bigblue ocean. This is determined by culture and geography, not age or gender. Favoring geographicallocations are California and Florida, since they have the nicest beaches and are very popular amongsurfers.YOUThe YOU brand is aimed at women and is a mix of one of crocs core compatibilities in supremecomfort with some rather unfamiliar factors: fashion and style. The product line of YOU by crocscontains fashionable wedges, heels, flats & boots with. This shoe is intended to reach everyone andnot the typical sail people. The Italian designed YOU by Crocs line features a combination of leather,suede and lamb’s wool, as well as Crocs’s croslite on the soles.ProfileDemo-graphic Age 18 - 50 Gender Female Social Class Working Class and Middle ClassPsychographic Lifestyle Fashion Minded Brand Unexpected Personality Attitude Comfort still important with fashion Behavioral Occasion Work Party Benefit Style, classic & fashionableAs can be concluded for the YOU brand, their customers are women in the age category 18-50 yearswho are not interested in the haute couture from Italy and are willing to suffer serious injury on theirfeet to look good but instead ask for a good combination of comfort and style.Page 11 of 50
  12. 12. CROCS STAYING AHEAD OF THE COMPETITIONBiteAs mentioned before, Bite is a manufacturer of performance shoes and sports sandals. Under thewing of crocs, quality footwear with a Croslite footbed that conforms to foot: loose fit andlightweight design that helps reduce fatigue. Here again, Crocs combined its core compatibility withan acquired company to enter new segments. The sport shoes are predominantly directed towardsgolf. The Bite sandals are being used by professional and amateur marathon runners who want to"feel the ground" but still protect their feet.Profile Sports Outdoor SandalsDemo-graphic Age 30+ Age 30+ Gender Both Gender Both Social Class Middle Class Social Class Working Class and Middle ClassPsychographic Lifestyle Outdoor Sports Lifestyle Enjoy Hiking Healthy Healthy Enjoy Golf Like to travel Personality Adventurous Personality Adventurous Behavioral Occasion Sports activities Occasion Sports activities Benefit Comfort and Benefit Comfort and Convenience Convenience Attitude Comfort main issue Attitude People who are comfortable with who they areEspecially the older audience is interested in the bite footwear. Where to main uses are for playinggolf and hiking other activities where the bite footwear is used are travelling and water sports. Theconsumers are less fashion minded but are not willing to give up comfort and quality.JibbitzJibbitz makes unique, colorful products for kids to personalize their Crocs shoes and accessory items.It’s important what these kids prefer, but the parents take the buying decision. The combination ofcomfort, responsible quality and use of popular images makes Jibbitz a perfect addition for littlechildren to the regular crocs products.ProfileDemo-graphic Age 0 – 9 Years Gender BothPsychographic Personality Creative, Playful Behavioral Occasion Play Benefit ConvenienceThe Jibbitz customers are lesser specified and bounded to certain criteria. Where the main customergroup is children, also mothers like to decorate their crocs to brighten up the look.Page 12 of 50
  13. 13. CROCS STAYING AHEAD OF THE COMPETITION3.4 Competitor analysisAfter looking at what type of competitors crocs is attracting and purchasing the crocs products, we analyze the different competitors direct and indirectly.3.3.1 DirectCrocs - Clogs Crocs Birkenstock – Birkis Timberland Calzuro Clogs Star Bay KlogsPrice Range $30 - $60 $80 - $100 $75 - $90 $50 - $70 $20 - $30 $50 - $60 Weight 12 oz. 13 oz. 20 oz. 15 oz. 14 oz. 14 oz. Colors 16 different 5 different colors 7 different colors 14 different 9 different 8 different colors colors colors colors Materials Croslite Polyurethane Polyurethane Plastic Plastic Polyurethane Primary All Teens and below 45 Both genders 25+ Hospitals Both genders Healthcare Business Segment 20+ Features Non-marking Seamless Anti-Fatigue Flexible and Latex-free and, soles technology detachable strap odor-resistant. Benefit Cushioning, Odor- Removable and UV aging to ensure Fully recyclable Lower price Removable footbed resistant, easy to replaceable cotton- whites and light and 3-ply and 1 year clean, and quick lined, cork/latex dcolors stay true Comfort insoles guarantee to dry. footbed. to form availableEmployees 3700 250 2000 45 25 15 Selling Click & Mortar Click & Mortar Click & Mortar Brick & Mortar Online Click & Mortar LocationPage 13 of 50
  14. 14. CROCS STAYING AHEAD OF THE COMPETITIONOcean Minded Crocs Quicksilver Cobian Reef Olukai Rainbow Sandals Sanuk FlojosPrice Range $20 - $ 40 $15 - $18 $11 - $40 $15 – $65 $60 - $90 $27 – $53 $13 - $46 $17 - $34 Leather, OM Synthetic Suede, leather, Leather, Synthetic Leather, suede, Suede, canvas, Nylon, leather, Foam, Croslite, rubber, blown- plush, rubber, polyutherane, leather, gum nylon terrycloth, Yoga egg crate foam, synthetic, Dri- rubber, suede, squishy foam rubber, rubber, mat, synthetic suede Materials Lex, cork EVA footbed synthetic nylon, nubuck, leather nubuck pigskin, burlap fibers Both genders Both genders Both genders14 Both genders Both Both genders Men (18 – 40) Both genders Primary (4-50) (8 – 35) (4 – 50) (8-35) genders (18 – 45) (5 – 50) Segment (4 – 35) High traction, Durable, non- Anatomically Reflex II EVA, Anatomical- Arch support, High reboud Arch support, molded slip textured correct molded thirst compression non slip soles, EVA footbed, slight heelcup, anatomical footbed, EVA foot bed, quenching molded EVA, Rainbow Trac Yoga Mat molded sole, Features soles, water footbed, patented technology, full leather drop Bottom, footbed, Eco traction based adhesives anatomically drainage 360 * heel in footbed, friendly correct system, sponge airbag, injected neoprene Nubuck, thermo compression EVE, traction molded TPU backer sliced EVA Effortless Comfortable, Durability, For High quality, Lifelong Super Soft and comfort, stylish, comfort, using adventurous unique guarantee comfortable, comfortable, durable and simplicity resilient pro’s, durable materials durability, balance, ‘funky’ low-priced. Benefit light weight materials, environment promises a sandals unique ally guaranteed responsible repair if slipper damages Employees 3700 6200 20 - 49 28 50 50 - 100 5 Selling Click & Mortar Click & Mortar Click & Mortar Click & Mortar Click & Click & Mortar Online Click & Mortar Location MortarPage 14 of 50
  15. 15. CROCS STAYING AHEAD OF THE COMPETITIONYOU by Crocs Crocs Clarks Aerosoles Sketchers Hotter Comfort Concept FitFlop Price $50 - $140 $90 - $180 $40 - $140 $50 - $120 $120 - $190 $60 - $90 Range Colors 8 Colors 9 Colors 8 Colors 8 Colors 7 ColorsMaterials Leather, Suede, Suede, leather Rubber, Leather, Suede, fur, leather, Leather, wool, Suede Leather, Suede Lamb’s Wool, Lubuck sole: rubber Suede wool Crocs plastic resinPrimary Women 20 - 50 Women 25-50 Women 25-50 Women All Women 25-50 Women 30 +SegmentFeatures Shock-absorbing Rubber outsole Wraparound rubber Soft lined leather is Man-made upper flexible innersole provides traction mudguard midsole naturally breathable for Rubber flex exercise for reduced and durability. trim . Shock comfort and freshness all sole muscle fatigue and OrthoLite® footbed absorbing midsole. day long. added stability. provides added Flexible rubber cushion traction outsole Benefit Extra Comfort and High quality and Lightweight, Durable, tone your muscles English Design, Quality Activate leg muscles Flexible sole most comfortably. Breathable and and lose weight and comfort. WaterproofRevenue $ 125 million dollar $227.2 million $ 1.4 billion $7.5 Million $ 80 millionEmployee 3700 12.000 1136 4698 25 50 s Selling Click & Mortar Click & Mortar Click & Mortar Click & Mortar Online Click & Mortar LocationPage 15 of 50
  16. 16. CROCS STAYING AHEAD OF THE COMPETITIONBite – Sandals Crocs Columbia Teva Keen Price Range $90 $40 - $80 $60 - $90 $85 - $100 Products Golf Hiking Grip Trailhead Hiking Water Hydro(water) Boulevard Water Cold weather Comfort Service Sandals/Flipflops Sandals/Flipflops Materials Crosslite Leather/rubber leather leatherPrimary Segment US Global Australia Global Global UK Benefit Crosslite Experience Innovative Though Selling Location Click & Mortar Click & Mortar Click & Mortar Click & MortarJibbitz Jibbitz Zig-A-Roo’s Price Range $1.99 - $3.00 $1.99 Styles 1000 + 52 different styles Selling Location Click and Mortar OnlinePage 16 of 50
  17. 17. CROCS STAYING AHEAD OF THE COMPETITION3.3.2. Indirect$ in 000s Crocs Deckers Outdoor Corp Heelys, Inc. Nike Inc. Wolverine World Wide CROX DECK HLYS NIKE WWWFull time employees 3560 1000 51 34300 4018Sub - Brands Bite UGG Umbro Cat Footwear YOU by Crocs Tsubo Converse Chaco Ocean Minded Teva Patagonia Footwear Sanuk Track ‘n Trail WolverineRevenues USA 298,004 645,993 15,157 7,827,600 779,678Percentage of total revenues in 46% 79% 35% 41% 71%USARetail Revenues 152,300 24% 78,951 10% - 0% n/a n/aWholesale Revenues 404,500 63% 658,560 81% 43,777 100% n/a n/aOnline Revenues 89,000 14% 75,666 9% - 0% n/a n/aRetail store count 182 12 0 338 83 Source: Capital IQ, 2009 10-K for CROX, DECk, HLYS, NIKE, SKX and WWW* Heelys only sells via retail and online. Online revenue data was not made available.Page 17 of 50
  18. 18. CROCS STAYING AHEAD OF THE COMPETITIONConclusionAs we established with the customer profile, Crocs is designed for broad appeal across incomebrackets, ages, and genders. Therefore, to decide on the crocs competitors we had to made use ofbenefit segmentation which requires finding the major benefits people look for in a product class.The principal elements of competition in the footwear industry include brand awareness, productfunctionality, design, quality, pricing, customer service, marketing and distribution.For the traditional Crocs clogs, the first two characteristics that stand out are the weight and colorsoffered. Crocs stand out with 16 different colors offered for their crocs and a weight of only 12ounce. The Price of crocs is not the lowest but on the lower half of all mentioned brands. Crocs is theonly brand that has not specified a target group and aims to reach all customer from 4 to 104 years.Crocs can find itself in the average price range but has the most employees, which indicates theoperational force and size of the company. Most competitors try to recreate the croslite materialwith Polyurethane, however only crocs can offer shoes with this material.For the water orientated Ocean Minded brand, Quicksilver is its main competitor due to their biggersize and larger brand awareness. Quicksilver is also featured in many retail stores and has greaterstore presence. With the exception from Olukai, the sustainable lifestyle flip flop brand is in thehigher price segment and will have to compete on delivering better products than the competitors.Again, the lightweight and durable croslite material distinguishes ocean minded from the rest.YOU by crocs is facing the biggest competition with numerous brands offering shoes for the femalefootwear segment. However, YOU customers will have a strong attitude towards the importance ofcomfort in combination with style. Competition will be on price, quality, brand awareness, brandequity and design. Biggest competitors that have this same emphasis are clarks, sketchers andaerosoles. Sketchers currently has an advantage in established distribution channels, where theSketchers brand has taken the in-store display spots in all major retailers. .Looking at the competitors for the Bite brand, Columbia Sportwear Company has the largest productdiversion of all, it is a experienced company with long established well-selling products. HoweverTeva and Keen only sells shoes and are thus more intense competition for Bite. Teva’s product linecorrespondences the most with Bite’s product line. Keen only has tough and somewhat nicer lookingshoes.For Crocs accessory items, Jibbitz is facing little competition. There are various brand less productson the market but not of decent size to compete fully with crocs. One of the few products sold thatdo have a brand on them are from Zig-A-Roo’s which offers their products mainly on Ebay.Other than the brands named, the market has become filled with more and more “imposter “crocs.These imitators provide more accessible products at a third of the crocs store price. However, strongcustomer loyalty makes state no other shoe can replace their crocs.Page 18 of 50
  19. 19. CROCS STAYING AHEAD OF THE COMPETITION3.5 Competitive Advantage & ChallengesAdvantagesWe believe that crocs unique footwear designs, prices and expanding product offering anddistribution network are positioned well in the marketplace. The main competitive advantage is theCroslite resin material and the strong customer loyalty by crocs fans. The patented Croslitetechnology, which exact formulation is a closely-guarded secret, is lightweight, waterproof, and slipand odor resistant. Their unique appearance, which some call ugly, made them easily identifiable andadded to Crocs appeal.Crocs, Inc also continues to augment its licensing strategy. Since the start of the year, it signed anagreement with Nascar and expanded existing deals with the National Football League (NFL) and theNational Hockey League (NHL). It also signed deals with Nickelodeon and Warner Bros, allowing it tosell shoes featuring Dora the Explorer, SpongeBob SquarePants, Superman and Batman. Bothdomestic and international markets still offer extensive opportunities for growth and could driveoverall demand even if domestic sales fall.ChallengesHowever, Crocs is also facing many challenges including the challenging retail environment,unfavorable weather, increasing competition and a slowdown in sales. Below is a sum up of the mainchallenges Crocs is facing1: 1. Competitors have significantly greater financial resources and spend substantially more on product advertising and sales 2. Competitors have more comprehensive product lines 3. Competitors have established more thorough distribution channels 4. Competitors have more Company-operated retail stores 5. Competitors have longer-standing relationships with retailers and therefore a broader market presence in retail stores 6. Competitors have stronger brand recognitionFurthermore, the unique designs and resulting success of our footwear products have attracted newplayers in the market with imitation products that are similar to crocs, Crocs faces competition fromthese new market entrants.The greater capabilities of the Crocs competitors in these areas may enable them to compete moreeffectively on the basis of price and more quickly develop new products. If Crocs fails to competewith these competitors successfully in the future, their sales and profits will decline.1 Crocs K-10Page 19 of 50
  20. 20. CROCS STAYING AHEAD OF THE COMPETITION4. Internal analysis4.1 CompanyKey FactsCompany: Crocs, Inc. Industry: FootwearFounded: 2002 Sector Consumer GoodsCEO: John McCarvel No. of Employees 3,700Executive VP: Dan Hart Entity Type: IncorporationWebsite www.Crocs.com Ticker Symbol CROX (Nasdaq) Location Niwot, Colorado, USAMissionBring profound comfort, fun and innovation to the world’s feet.4.2 Current Marketing MixThe crocs footwear is a consumer product that can be categorized as a shopping product due to itsplanning and shopping effort required and the comparison in brands that is included in the purchaseof such a product.4.2.1 Core Costumer valueCrocs wanted to solve various problems for customers concerning the shoe industry. First of all, theywanted to provide a comfortable, light weight pair of shoes. Especially nurses and employees whospent most of their day on their feet seek these items. Secondly, the non-slip sole would keep bothworking people, as well as recreational users more safe. At last, Crocs offers a shoe that lasts longand can be worn during all seasons in a year.4.2.2 Actual ProductThe Crocs clogs feel nearly weightless. This is because it is made of Croslite, a closed cell resinmaterial. This particular material enables the shoe to mold to your own feet. The soles are non-marking and slip resistant. The front of the shoe (toe box) includes holes that ensure ventilation. Inorder to keep Crocs attached to your feet, a heel strap is placed at the back of the shoe.Concerning their clogs, they added the brand Ocean Minded. They have translated their corecompetencies in this product, by emphasizing comfort and durability. Ocean Minded consists out ofsandals for men and women.Crocs, Inc. also created a line called YOU by Crocs. This product mainly targets fashionable women.Still, comfort is the key aspect of this item, although style and ‘sexyness’ are elements that are builton strongly. Another item that has been added is Bite. Bite has become a wholly subsidiary of Crocs,Inc. in 2007. The officially patented Croslite technology was put to practise in this shoe as well. Byadding a golf shoe to their product mix, they entered another market (sports).At last, the company decided to produce apparel items as well. It exists out of Jibbitz and t-shirts.Jibbitz are the items that can be placed on the Crocs clogs, as an additional fashion item. T-shirtsinclude several prints with the Crocs logo.Page 20 of 50
  21. 21. CROCS STAYING AHEAD OF THE COMPETITIONProduct attributesQuality Cushioning, Effortless Extra Comfort Croslite Odor- comfort, durable and Flexible sole performance resistant, and light weight easy to clean, and quick to dry.Features Non-marking High traction, Shock-absorbing Croslite Personalize soles molded flexible innersole Crocs anatomical soles, and added water based stability. adhesivesStyle Practical as ‘Ocean lifestyle’, Sexy, sensible Sporty Pro Sports well as adventurous and fashionable Team fashion Entertainment statement Light Up 3DDesign Clog – The more Various designs, Rough xx formed, advanced design mainly classic colourful of flip flops4.2.3 Augmented ProductCrocs introduced a few additional consumer services. If the customer is not satisfied, it can returntheir item within 60 days. Compared to other manufacturers, this number is fairly high. The itemneeds to be in a resalable condition though and can only be returned if unworn. Crocs are alsocovered by a 90 day warranty, which means that if one of the items is damaged before the end ofthis period, they offer a new, similar product. Customer service also replaces broken straps andrivets.When you return an item because it wasnt quite right using our return process on a purchase donethrough the crocs online channel, youll receive a $5 credit toward your next purchase at crocs.comand Crocs will ship it to you for free.4.3 Product Line and Product MixInitially, Crocs started by introducing original clogs. The wide public that thinks of Crocs, mainlyconsiders these vitally coloured shoes. However, through the years, the company has expanded invarious directions. Apparel, accesscories and gear were all introduced to utilize the new, successfultechnology called Croslite. In this way, we imposed product line stretching. The new items arenoticeably different.The Crocs product range is divided into three categories: everyday, style and sport. Our everydayproduct range is composed of fully molded products, which are closest to our core products andtargeted widely to several distribution channels. Our style product range consists of morefashionable silhouettes targeted towards higher-end department stores. Our sport product rangeincludes sport inspired products that offer a Crocs point of view for active end uses like boating,walking, and hiking.Page 21 of 50
  22. 22. CROCS STAYING AHEAD OF THE COMPETITIONProduct Mix Crocs Footwear Apparel Everyday Style Sports Jibbitz YOU by Clogs Bite T-Shirts Crocs Ocean MindedProduct life cycleCrocsAt the moment, Crocs is situated in the maturity phase. Competition has come to a peak, and mostformer potential customers have purchased the product. The market starts to saturate, but profitsare kept high. Crocs are probably a fashion, currently very popular but is starting to decline slowlyOcean Minded, YOU by Crocs and BiteItems have been added in late 2007, which means it is still in the introductory phase. A lot ofinvestments (with the help of Crocs’ profit) are realised to promote and familiarise customers withthese fairly new products. Soon or a later, these items (especially YOU by Crocs) need to generateenough profit, which means they enter the growth phase.JibbitzJibbitz is an additional item that can be purchased to decorate the Crocs shoes. It is not responsiblefor a lot of profit, but is more of an optional product that enhances the demand of the Crocs shoes.Summary of Key Revenue Drivers 2007 2008 2009Unit sales ‐ footwear 46,900 35,300 36,800Avg selling price n/a $ 18.35 $ 16.60Sales ‐ Jibbitz (in $000s) $ 67,500 $ 47,200 $ 25,200Product mix percentagesClassic models 25% 16%Core products* 57% 33%New footwear 15% 17% Source: Crocs 10‐K, FY08/FY09*Includes Beach. Crocs Classic, Athens, Mary Jane, Girls Mary Jane, Mammoth and Kids MammothPage 22 of 50
  23. 23. CROCS STAYING AHEAD OF THE COMPETITION4.2.3 PriceCroc inc. uses a Value-based pricing, which is setting a price based on buyers’ perceptions of valuerather than on the seller’s cost. Assess customer Set target price Determine Design product to needs and value to match costs that can deliver desired perceptions customer be incurred value at target price perceived valueMany shoe makers will push the base selling price of trendy shoes upwards. Crocs, however, wantstheir product to be accessible to many people, so the base price point for their shoes is $30. Peopledesire the simple and advantages of the Croc shoes and are therefore willing to pay the 30 dollars.However, the problem is that there are a lot of imitations crocs offered in stores. Where the ‘’real’’Crocs cost around 30 dollars, these imitations cost around 5 dollars.Crocs does not ‘’utilize incentives to retailers that offer sales promotions’’, thus Crocs does not saleits shoes for a cheaper price than 30 dollars. Idea behind this decision is that crocs wants to maintainits image as a premium mix of quality and comfort. (Sun, Leo (2011) Crocs (CROX) Collapses andShares Crash 35%) Crocs lowered their cost eliminating the standard box packaging for individualpairs of shoes. They were also decreased by the reduction of stock-keeping units (fewer styles, sizes,etc) and by the use of inexpensive plastic resin material compared to leather and other fabrics4.2.2 PlaceCrocs bypass the traditional distribution models of competitors and instead adopt a distributionmodel with similarities to Just-in-time-management. Rather than having retailers order largequantities months in advance, Crocs has allowed retailers to order as few as 24 pairs of shoes. Thisstrategy prevented the problem of overstocking and having to sell Crocs on clearance. This way,Crocs is able to fulfill customer needs by delivering current popular styles and colors quickly tocustomers. Crocs is currently sold by over 11,000 retail stores.Croc uses a Vertical marketing system (VMS) to act as a unified system and deliver products to thecustomers. Croc integrates successive stages of production and distribution under single ownership.Thus, Crocs owns the entire production process. With this concept, Croc is not relying on others inorder to produce the Croc shoe which allows Crocs to take their company to the next level.With this being said, the past has shown problems with the addition the online webshop for crocsfootwear. Other retailers, not under the Croc flagship, feel disadvantaged and in response to Crocsonline distribution decide to sell the lower-priced alternatives or products of crocs their competitorsinstead.Distribution ChannelsCrocs customers are located in many countries worldwide, however the majority of sales are in theUSA. The competition is heating up with new brands entering the footwear industry one of them isSketchers. Sketchers uses another type of retailers, while Crocs uses the more specialty productretailers, Sketches and its “Cali Gear” captured all the major retailers and has easily taken the in-store display in these stores. Although Crocs achieved a lot of success in expanding its product linesPage 23 of 50
  24. 24. CROCS STAYING AHEAD OF THE COMPETITIONto attract more and a wider range of customer, compared to their competitor it is not enough. CaliGear captured more distribution channels while Crocs seems to be holding to selective distribution totheir specialty product retailers. To show how Crocs delivers its products to customers, we havedrawn up the following distribution channel overview.The general location, use and approximate size of Croc’s principal properties are given in table 6 ofthe appendix. Manufacturing of the crocs is predominantly separated over factories in Leon, Mexicoand Shenzen, China. From these locations, the shoes are shipped to a warehouse in the UnitedStates. From Aurora, Ontario and Bolder, warehouses of 264,000, 399,000 and 16,000 square feetrespectively, the products are distributed to regional retailers, crocs stores and the customerorderings at the crocs webshop.4.2.4 PromotionAdvertisingEspecially magazines were targeted thoroughly. Fashion magazines such as Vanity Fair and Curveincluded ads with the quote ‘Ugly can be beautiful’, aiming on the critics that defined Crocs to be themost ugly shoes in the world. And of course, with the imminent role of the internet, onlinepromotion increased. They mainly focused on making people aware of Crocs and create specialdiscount tools that would be attractive for customers (discussed in Sales Promotion). Crocs is alsodoing sponsorships (Pro Beach Volleyball), folk/rock campus tours and segment licensing deals(Disney, NBA, MLB, NFL, NHL).Sales PromotionAfter a short period of time, Crocs introduced coupons and various discount codes that allowedcustomers to buy the shoes for a more attractive price. It refers to consumer promotions. Thesecodes and coupons were placed on their own website. By downloading or copying the codes,discount is granted.Page 24 of 50
  25. 25. CROCS STAYING AHEAD OF THE COMPETITIONHowever, Crocs avoids margin squeezes often associated with retail price incentives. Crocs does notutilize incentives to retailers, discourages retailers from using price concessions to help clear outinventory build-ups Also events and shows were introduced (event marketing). Crocs published thenames of cities where special Crocs events would take place.Public RelationsCrocs also used this promotional tool to inform and persuade potential customers. They wanted tocreate favorable publicity for their brand. They released several news items during their growthphase. In 2007, for example, Crocs announced a Charm Giveaway in celebration of the new DVD ofPirates of the Caribbean. Free Jibbitz were offered; Crocs received a lot of attention.Also, they created the ‘breast cancer awareness month’. During this month, each sold pair of Crocswould automatically donate five dollars to the Cancer Research Foundation.4.4 Business PortfolioBelow is the portfolio analysis using the Boston Consulting Group (BCG) approach.Crocs Clogs and Jibbitz are the cashcows for the Crocs, Inc company with high relative market sharebut low relative growth. These SBU’s produce a lot of cash that can be used to support the growingOcean Minded and YOU brands. Bite in its current state is low-growth and low-share. YOU brand hasa high potential, however is facing a lot of competition in the female footwear market and thereforehas a relatively low market share. Ocean minded is also potentially if becoming a cash cow, but willtogether with YOU need large cash investments to grow.Page 25 of 50
  26. 26. CROCS STAYING AHEAD OF THE COMPETITION4.5 Financial PerformanceSince Crocs is on the Stock market (NASDAQ) it is obligated to share its financial performance withtheir shareholders. Year 2008 2009 Total Revenue 721.589 645.767 Cost Total revenue 487.623 - 344.806 - Gross Profit 233.966 300.961 Expenses 422.248 352.810 Operating income 188.282 51.184 Income from continuing 3.206 + 9.771 + operations Net Income 185,076 42.078Numbers In millions of US dollars (Income Statement CROCS Inc. (CROX) (2011), Yahoo! Finance)You can see in the table that Crocs suffered a loss of almost 200 million dollars, in 2009 the loss was‘’only’’ 45 million dollars, and the prediction is with all the changes Crocs wants to enhance thatCrocs will start making profit again in 2010.4.6 PersonnelAs of December 31, 2009, crocs employed approximately 3,560 persons, compared to 3,700 as ofDecember 31, 2008. This included 2,030 employees in the U.S. and Canada, 220 employees inMexico, 890 employees in Asia, 30 employees in South America, and 390 employees in Europe.Globally, as of December 31, 2009, Crocs Inc. had 2,061 persons employed in our consumer-directchannels. While croc’s headcount in the consumer-direct channels grew to accommodate ourbusiness, we reduced our non-consumer-direct headcount by approximately 300 persons since 2008,primarily due to consolidation of our company-operated distribution centers and other reductions instaffing. As of December 31, 2009, none of our employees were represented by a union.ManagementName Position Age Current/Previous EmploymentJohn McCarvel Chief Executive Officer, President 54 Flextronics, Singapore Technology Assembly Test Services Ltd.Dan Hart Executive Vice President, Chief 52 Océ North America, Invensys Controls, Legal and Administrative Officer Dictaphone CorporationBoard of DirectorsName Position Age Current/Previous EmploymentThomas Smach Director - Chairman 48 Riverwood Capital; FlextronicsStephen Cannon Director 57 Constantine Cannon; Circuit CityRaymond Croghan Director 59 Croghan & AssociatesRonald Frasch Director 60 Saks Fifth Avenue; EscadaPeter Jacobi Director 65 Levi StraussDoreen Wright Director 54 Yankee Candle, American ExpressPage 26 of 50
  27. 27. CROCS STAYING AHEAD OF THE COMPETITION5. SWOT analysis & Confrontation matrix5.1 SWOT AnalysisStrengths  Niche market value the “original” Crocs and would hesitate to switch to competitors.  Just in time inventory management, where retailers could order only several weeks in advance and order low amounts to deliver currently popular styles and colors quickly to customers.  Has control over manufacturing and timing, not depending on other companies.  Crocs avoid margin squeezes often associated with retail price incentives.  Well known brand, linked to brightly-color, lightweight shoes  High customer loyalty (True Friends) with Crocs Brand  Patent on most of Crocs footwear as well as design elements of their more popular styles in all areas of the world.  Lifestyle / Attitude BrandWeaknesses  Risk investors are taking on a concept that may or may not be a fad  Crocs does not utilize incentives to retailers, discourages retailers from using price concessions to help clear out inventory build-ups  Relatively limited distribution channel  Seasonal Usage  Company financial performance is highly concentrated and dependent on footwear salesOpportunities  Add more segments to strategy beyond working class  Expand to include a wide range of products in addition to shoes  In the future offer customization of crocs, including accessories  In various current job segments, companies and institutes are willing to invest in croc gear  11 Complaints with the U.S ITC and U.S FDC over patents to get rid of knockoffs  An increase of 9.7 percent in U.S. population over last decade.  Sales of footwear in the United States expected to grow  Athletic shoes are becoming more popular among women and children.Threats  Competitors can easily copy the basic elements of Crocs’ products with only minor modification  As competition heats up, retailers could potentially opt for lower-priced alternatives to crocs in response to Crocs online distribution.  Market has become filled with more and more “imposter “crocs.  Imitators provide more accessible products  Competitors have established more thorough distribution channels  Bad Publicity around Safety Issues  Anti-Crocs sentiment in the marketPage 27 of 50
  28. 28. CROCS STAYING AHEAD OF THE COMPETITION5.2 Confrontation Matrix Opportunities Threats Expand Adress New Customization Imitation Retailers drop Bad Publicity Product Line Segments of crocs Crocs Crocs Just in Time Management + + ++ 0 + 0 Strengths High Customer Loyality ++ 0 + ++ + + Patent on design and style + 0 + ++ 0 - Limited Distribution Channels -- - - -- - 0 Weaknesses Seasonal Product ++ 0 0 - 0 - No incentives to retailers - 0 - -- -- 0Strategy: Attack Defend Strengthen Reduce RiskPage 28 of 50
  29. 29. CROCS STAYING AHEAD OF THE COMPETITIONConclusionFrom the confrontation matrix can be concluded that to expand its product lines, it can make greatuse of its current customers high customer loyalty, which are very likely to carry the new product.However, the limited distribution channels are discouraging Crocs with successfully expand itsproduct line. In order to achieve its goal of either expanding beyond or within its current productrange, it has to consider changing its distribution policy. New products can also be the solution to theseasonal issue of the crocs product. If Crocs can develop a more winter proof profiled shoe, they canfill in the gap and compete on an all year bases.Just in time Management gives Crocs the opportunity of granting customers with the opportunity ofcustomizing their own footwear to their own preference. It has to exploit this opportunity todifferentiate itself from the competitor brands.Crocs’ policy to prohibit incentives to retailers is increasing the risk of retailers dropping the Crocsproduct and switch to the imitator brands. On the other hand, Crocs loyal customers and its patentsare obstructing current users to switch and new competitors from entering the market. To defend itsintellectual property on design and style and keep out imitator brands, Crocs has to keep seeking anexclusion order, banning the importation of infringing products to the United States.Page 29 of 50
  30. 30. CROCS STAYING AHEAD OF THE COMPETITION6. Segmentation, Target Market, Positioning6.1 Customer Needs and WantsNeedsCustomers need footwear to protect their feet from harm, or to keep their feet warm and cozy andaway from the wet.WantsCustomers want lightweight, comfortable, slip-resistant and functional shoe. When they have to beon their feet all day, being it for work or recreation, customers need comfort that prevents themfrom pain issues at the end of the day.DemandCustomers demand high quality footwear that is easy to maintain with an ultra-hip sense of styling.6.2 Target Groups & SegmentationThe geographic country region all the products target is United States which consisted of apopulation of almost 323 million inhabitants in 2009. Crocs Clogs can remain with anundifferentiated marketing strategy, where the other parts of the product mix are dedicated for acertain segment and will lean more towards a concentrated marketing strategy.Crocs Clogs Man & Woman KidsDemographic Age 12 + Years 3-12 Years Occupation Professionals who have to be on their feet all dayPsychographic Social class Middle Class and Working Class Lifestyle Like to play outsideBehavioral Occasions Walking a lot Benefits Convenience, lightweight & Put on own shoes , easy to clean Comfort and water resistant Attitude Relieved that this products existsPage 30 of 50
  31. 31. CROCS STAYING AHEAD OF THE COMPETITIONOther Product Lines Crocs You by Crocs Jibbitz GatorsGeographic Region Coast, wild life All All All parks and national parksDemographic Age 18+ Years 20+ Years 3-20 Years 13-23 Years Gender All Women All AllPsychographic Social class Working Class and Working Class and All Students Lower Class Middle Class Lifestyle Environmental Popular, Fashion Wearing Fashion Friendly minded Personality Adventurous Sportive, fashion Fashion minded Creative, Playful Green Conscious sensitive Attitude Comfort with Comfort still Popularity green conscious important with Creative mind sensitive fashionBehavioral Occasions Surfing Supporting team Shopping Beach going Showing your School and Parties Going out Outdoor Activities preferences Benefits Nice shoes but Brighten up and Comfortable good Fashionably and benefits of all the personalize crocs looking shoes for stylish Croc features clogs a reasonable pricePage 31 of 50
  32. 32. CROCS STAYING AHEAD OF THE COMPETITION6.5 Positioning MapThe value proposition for all brands within crocs brand portfolio crocs should be as more for thesame, extra features such as comfort, convenience, easy maintenance and non-marking soles thatcustomers are used to with the Crocs Clogs for the price of regular footwear. Positioning Map 12 10 8 (Scale 1- 10) Crocs Cl ogs Benefit 6 Crocs New YOU 4 Ocea n Mi nded 2 Ga tors 0 Ji bbitz 0 2 4 6 8 10 12 Price (Scale 1 - 10)The positioning map shows all brands of Crocs and a rate on a scale from 1 to 10. Benefit means,benefit gained from purchase compared with competitors, for example Jibbitz has 1 competitor thatoffer less than 1/20th of Jibbitz styles. Therefore Jibbitz is awarded a 9. Crocs clogs may be cheap buttheir main competitors are counterfeit brands. Therefore Clogs score low on price. Ocean mindedscores high on benefit because croslite is a very convenient material in this segment, though theprice is relatively the same as the competitors.In conclusion, in order to reach the customers and show them the competitors’ advantage of thenew Crocs products, the highlight for the marketing strategy should be on:  Croslite resin material that stands for lightweight, quality and safe shoes that last long.  Crocs unique appearance which makes them easily identifiable  High Comfort footwear  Fashion Design and Classic DesignPage 32 of 50
  33. 33. CROCS STAYING AHEAD OF THE COMPETITION7. StrategyThroughout its successful introduction of the Crocs Clogs, Crocs hold on to their core values ofundifferentiated marketing strategy, rejecting retailer incentives and exclusive distribution tomaintain its image as a premium mix of quality and comfort. However, in order to stay ahead ofcompetitors the new corporate level strategy should be to shift this emphasis away and look towardsthe future. In the first place, Crocs should continue using its patents as ammunition to shut down theinevitably countless knockoffs and also protect its intellectual property when introducing newproducts into the market.More of the strategic planning should include the redesigning of the Crocs, Inc business portfolio andproduct mix to expand its target market. Rather than one shoe for all segments, Crocs should have atleast one matching shoe offering for each segment. Moreover, the Crocs management shouldevaluate the environment in search for value-adding acquisitions to the brand portfolio.First of all, we advise to add the products of the Bite Brand under the name of Ocean Minded toassemble the environment minded products and extend the ocean minded philosophy to areas suchas the woods, mountains and other present- day environment issues.Secondly, to attract the teenager segment we advise to create a new brand with the name AngryCroc. The Colorado based company must find the right extension that can get their core customers togrow and their noncustomers to enter the market.Finally, all footwear for women other than the clogs should be stationed under the YOU brand.Experience has learned that the Crocs brand has a bad perception with design and fashion. To attractthe female footwear market more effectively the YOU brand should be separated with the crocbrands as much as possible.As Business-level strategy, we advise to redesign parts of the Crocs product lines, to create a betterfit with the market segments. Crocs needs to expand its product line though both line filling and linestretching. Product development is required without losing touch with Crocs core compatibilities ofcomfort, functionality and durability.To keep up with the in-store presence of other competitors in the market, Crocs is required toexpand its number of marketing intermediaries, enlarge its number of crocs stores and intensify itsselective distribution policy. The company’s need for the rapid store expansion is required tomerchandise the full breadth and depth of the new product lines.Included in the operational strategy is that only the Crocs Clogs can remain with an undifferentiatedmarketing strategy, where he other parts of the product mix are dedicated for a certain segment andwill lean more towards an concentrated marketing strategy.For crocs, the product concept applies where innovation by the Research and Development unit onproduct quality and improvements are important to build profitable relationships with the targetconsumers. On the long term, continues product development is required to keep up with theenvironment and evolving needs of the customers and merchants.Page 33 of 50
  34. 34. CROCS STAYING AHEAD OF THE COMPETITION8. ObjectivesAll the strategies are designed to achieve certain SMART formulated short- and long term objectives.All of the goals set fall under the wing of the company’s strategy.8.1 Short Term 1. Crocs retail store count should reach 200 by the end of November 2010 2. Increase in the number of retail stores selling crocs to 15,000 by the end of December 2010 3. Expand product line to carry 150 styles by the end of December 2010 4. Crocs Gators brand should have reached the commercialization phase and have at least 10 different shoe offerings on the market by the end of December 2010.8.2 Long Term (1+ Years) 1. Over the year 2011, Crocs should have 350,000 units of footwear sold 2. The value of a Crocs stock on the Nasdaq stock exchange should exceed $18 by the beginning of January 2011 3. Expand product line to carry 350 styles by the end of December 2012 4. Over the year 2012 Crocs should have a positive net income balance of 125 Million 5. Market share of YOU by crocs should exceed 10% in the domestic female footwear market by the end of December 2012Page 34 of 50
  35. 35. CROCS STAYING AHEAD OF THE COMPETITION9. Marketing Mix9.1 ProductWe advise Crocs to stay within its core compatibilities and core business to stay ahead of thecompetition rather than diversification. Such a decision would require huge investments in researchand development. Money that is better spend for expanding crocs current product mix.9.1.1Core Costumer ValueCrocs shoes are based upon principles if comfort, lightweight, quality and safe shoes that last long.We strive to keep this principle intact despite the extension of our brand and product lines. We’veadded the costumer value of fashion to YOU and Gators because this value this is a very importantvalue for most people buying shoes. Together with the existing Croc values we have the ultimateshoes.9.1.2Actual Product GatorsProducts  Clogs  Flip Flops  High Heels  Casual  Accessories  Casual  Hiking Boots  Boots Shoes Shoes  Outdoor  Casual  Athletic  Loafers Sandals Shoes Shoes  Water Sports  SneakersQuality Cushioning, Effortless Extra Comfort Comfort and Odor- comfort, durable and Flexible durable resistant, and light weight sole easy to clean, and quick to dry.Features Non-marking High traction, Shock- Shock- Personalize soles molded absorbing absorbing Crocs anatomical soles, flexible flexible water based innersole and innersole and adhesives added crosslite stability. fashionable featuresStyle Practical as ‘Ocean lifestyle’, Sexy, sensible Though, cool Pro Sports Team well as adventurous and and fashionable Entertainment fashion fashionable Light Up statement 3DDesign Clog – The more Various Modest and xx formed, advanced design designs, Outstanding colourful of flip flops mainly classicCrocsThe first Crocs were the famous Clogs, the Bright color shoes with all those special features rapidlystarted taking over the shoe business. It was a one type fits all gender and age. To bring this productPage 35 of 50
  36. 36. CROCS STAYING AHEAD OF THE COMPETITIONto the next level we think that you should be able to ‘’customize’’ your crocs on the Internet, colormaterial accessories and other features.Crocs image is very strong, and a lot of people are fans, but you just can’t wear clogs to any occasion.Therefore we extend this product line with casual shoes and loafers. Now people’s feet can enjoy thevalues of crocs in almost every occasion.The holes in the Clogs can be used to put Jibbitz in them. Keeping up with changing fads is importantfor Jibbitz because the shoes are for kids from 0 to 8. In this age category fads change rapidly. Thetype of Jibbitz charms should keep with modern happenings and innovate to stay attractive to themarket.YOU by CrocsFocused on women from 25 to 50, the YOU by Crocs carry all the Crocs women’s footwear other thanthe clogs. With You crocs is approaching the group that spends and buys the most shoes in the entireshoe market. Currently YOU only has sold high heels. We want to stretch this product line in width tohigh heels, boots and casual shoes. The focus shifts to women from 20 years old. You by Crocs carrythe basic values of Crocs core costumer value, with fashion and beauty added. To add these last twovalues we explicitly separate YOU from Crocs clogs and Jibbitz.Ocean mindedWhat used to be Bite and Ocean minded now merged into one brand, Ocean minded. Earth, Grass,Mountains and Water are being combined in this brand. This results in a product line of Hiking boots,Flip Flops, Water Sport Shoes and Golf Shoes. Colors used by Ocean minded are usually natural colorsand the material is though. Ocean minded focuses primarily on men, fathers and sons who seek thewild adventure.Gators by CrocsGators is created to follow YOU in the fashion market. Gators are made for teens from 13-23 which isa new consumer group for the Crocs company. These shoes are bright colored modest fashionmodels relatable to the popular Nike Air Max and the bright colored Adidas shoes. We use a marketpenetration strategy because Gators is a new product, this means that in contradiction with theother Croc brands we sell out on exclusivity and incentives. This should not affect or harm the Crocsbrand image because it’s both age, and psychographic different oriented.9.1.3 Augmented ProductWhen Crocs first launched their products they introduced a few additional consumer services. If thecustomer is dissatisfied with the product, he or she can return their item within 60 days. The shoeneeds to be in a resalable condition though. Crocs are also covered by a 90-day warranty. Whichmeans that if one of the shoes is damaged before the end of this period, they offer a new, similarproduct. Customer service also replaces broken straps and rivets.This is the warranty that Crocs offers on their products at the moment, we want to keep the samewarranty etc. on the new products. This to separate ourselves from our competitors and to be loyalto our customers.Page 36 of 50
  37. 37. CROCS STAYING AHEAD OF THE COMPETITION9.2 Product Line and Product Mix9.2.1 Product Line Crocs Footwear Apparel Everyday Style Sports Jibbitz Crocs Style YOU by Ocean Crocs Minded Crocs Clogs Gators by CrocsBroadly Crocs new product mix does not vary much from the original. Ocean minded and Bitemerged so Ocean minded shifted to the sports category. The new brand Gators was added to Stylefootwear. Crocs new casual shoes are added to everyday’s footwear since it are comfortable durableshoes for suitable for almost every occasion.9.2.2 Product Life CycleCrocs ClogsThe Clogs by Crocs are in the maturity phase, we use this concept as a cash cow to financially andbrand awareness wise contribute to our other products and brands.Ocean Minded, Crocs, Jibbitz and YOUThese brands products are already in a growth phase, though addition of new product to thesebrands partly brings them back to the introduction phase. These particular products need extraattention and promotion.GatorsThis is a whole new Brand in a whole new segment. The product line of this brand is still in adeveloping phase and can therefore not be profitable yet. With support of the other brands thisbrand can develop fast into a Star since it now still is a Question Mark. However to achieve this, a lotof promotion effort has to be put into creating brand awareness for the Gators Brand.Page 37 of 50

×