MARK 671 Consumer Behaviour Case Study

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A case presented in Winter 2009 on the subject of the consumer behavior of the athletic shoe market.

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  • Fast-forwarding viewers actually pay more attention during commercials than those watching commercials at regular speed. Fast-forwarded advertisements still create brand memory, even with a 95% reduction in frames and complete loss of audio. Fast-forwarded commercials can positively affect brand attitude, behavioral intent and even actual choice behavior. The attention of fast-forwarding viewers is heavily limited to the center of the screen. To grab their attention, advertisers must place simple, eye-catching brand information dead center.
  • MARK 671 Consumer Behaviour Case Study

    1. 1. ATHLETIC FOOTWEAR Consumer Market Analysis Prepared by: Mark Bundang Sofia Del Rio Derek Anthony Rossi For: Consumer Behavior April 02, 2009
    2. 2. Agenda <ul><li>Market Background </li></ul><ul><li>Consumer Behavior Model </li></ul><ul><ul><li>Internal Influences </li></ul></ul><ul><ul><li>External Influences </li></ul></ul><ul><ul><li>Overall Marketing Efforts in the Industry </li></ul></ul><ul><ul><li>Consumer Decision Model </li></ul></ul><ul><li>Marketing Strategies </li></ul>
    3. 3. Agenda <ul><li>Market Background </li></ul><ul><li>Consumer Behavior Model </li></ul><ul><ul><li>Internal Influences </li></ul></ul><ul><ul><li>External Influences </li></ul></ul><ul><ul><li>Overall Marketing Efforts in the Industry </li></ul></ul><ul><ul><li>Consumer Decision Model </li></ul></ul><ul><li>Marketing Strategies </li></ul>
    4. 4. US Market On average, every man, woman, and child in the United States purchases more than four pairs of shoes each year , a level of consumption that establishes the US as the world's largest importer of footwear. The US accounts for about 40% of all footwear imports. In 1998, Americans spent approximately $38 billion to purchase more than 1.1 billion pairs of shoes . Athletic footwear makes up about 35% of the US footwear market.
    5. 5. US Market 1999 Global Imports of Shoes into US $43.3 Billion * In US dollars Imports account for about 90% of shoes sold in the US. The US market for athletic shoes alone is approximately $17 billion . Thin-soled sneakers are a $2 billion industry.
    6. 6. Athletic Footwear Athletic footwear includes… Aerobic Dance Baseball/Softball Basketball Cross Training Hiking Running Other Sports <ul><li>Running shoes : roughly $5 billion market in the U.S. alone for the year 2007. </li></ul><ul><li>Historically a growth category whereas sales of shoes for sports like baseball or football are simply a matter of taking market share from another company. </li></ul><ul><li>However, fashion-themed sneakers overtook running shoes as the top-selling category in the athletic-footwear market in July 2007 for the first time.* </li></ul>*Source: market-research firm NPD Group
    7. 7. Key Players Global share of the branded footwear market is Adidas = 34%, vs. Nike = 38%. US athletic-footwear market (2004), Nike = 36%, Adidas = 8.9%, Reebok* = 12.2%.** i.e. Nike dominates the US Market. * Germany's Adidas-Salomon agreed to buy Reebok International for $3.78 billion. ** Source: Sporting Goods Manufacturers Association International
    8. 8. Agenda <ul><li>Market Background </li></ul><ul><li>Consumer Behavior Model </li></ul><ul><ul><li>Internal Influences </li></ul></ul><ul><ul><li>External Influences </li></ul></ul><ul><ul><li>Overall Marketing Efforts in the Industry </li></ul></ul><ul><ul><li>Consumer Decision Model </li></ul></ul><ul><li>Marketing Strategies </li></ul>
    9. 9. What’s the Story? <ul><li>Athletic footwear is big business in North America, particularly in the United States. </li></ul><ul><li>If you walk into a Foot Locker or a Sports Experts, you would not be surprised to find shoes ranging from $60 to $250 in price. </li></ul><ul><li>What motivates consumers to buy at the low end ? What about the high end ? </li></ul><ul><li>What is the consumer perception of the big brands? </li></ul>
    10. 10. Internal Influences Runners as a Lifestyle <ul><li>http://www.researchwikis.com/Footwear_Marketing_Research-_U.S._Survey_2008 </li></ul>% of respondents Base: All respondents (1070) Reasons for Choice of Running Shoe n = 1070 (Ages 20 to 70) Males = 598 Females = 472
    11. 11. Purchasing Behaviour Runners as a Lifestyle <ul><li>http://www.researchwikis.com/Footwear_Marketing_Research-_U.S._Survey_2008 </li></ul>72% of respondents spend $80-100 (low-to-mid range) for a pair of running shoes. There were no age differences in the price paid for shoes. n = 1070 (Ages 20 to 70) Males = 598 Females = 472 % of respondents
    12. 12. Internal Influences Runners as a Lifestyle <ul><li>Article on CBC.ca from October 2007 </li></ul><ul><li>Runners want less expensive quality shoe </li></ul><ul><li>British Journal of Sports Medicine, a study was conducted — </li></ul><ul><ul><li>looked at nine different pairs of shoes </li></ul></ul><ul><ul><li>found that the low- and medium-cost shoes &quot; provided the same (if not better) cushioning of plantar pressure as high-cost running shoes .“ </li></ul></ul><ul><ul><li>They didn't reveal the brands they looked at — but they weren't exactly cheap, ranging from about $80 Cdn to $150 Cdn , which is nowhere near the fanciest of the fancy. </li></ul></ul><ul><li>For some consumers, a perception exists where </li></ul>Paying higher prices for athletic footwear is not necessary to get a quality shoe. Article on CBC.ca from October 2007 Runners want less expensive quality shoe
    13. 13. Internal Influences Runners as a Lifestyle <ul><li>Article on CBC.ca from October 2007 </li></ul><ul><li>Runners want less expensive quality shoe </li></ul><ul><li>There has been something of a backlash. For instance, there's a growing movement of barefoot runners . </li></ul><ul><li>Nike has jumped on the barefoot bandwagon with its line of Nike Free shoes , which the company claims is the closest thing to running barefoot. It's also trying to take advantage of the demand for less-expensive shoes by teaming up with a discount shoe retailer in the U.S. to sell a cheaper runner. </li></ul><ul><li>Last year, NBA star Stephon Marbury launched a line of inexpensive basketball shoes. All cost under $15 US . He claimed they were as good as anything you'd pay $150 for . </li></ul>Article on CBC.ca from October 2007 Runners want less expensive quality shoe
    14. 14. Runners <ul><li>It would appear that runners value comfort in their running shoes above all else. </li></ul><ul><li>Runners believe that they can obtain shoes that provide this comfort at a low-to-mid range price. </li></ul><ul><li>In fact, some runners seem to have taken a dislike to high-priced footwear… so much so that they would rather run barefoot! </li></ul><ul><li>But if this attitude exists, why are Foot Locker and Sports Experts still stocked full of high-priced brand shoes? </li></ul>
    15. 15. External Influences Typical Target Markets Why can stores afford to carry high-priced brand-name Athletic Footwear? Because… People who get into recreational long-distance running tend to be in that demographic that advertisers and corporations love — THE AFFLUENT well-educated, professional and with a fair bit of disposable income. TODDLERS and TEENS Everyday fashion statement. Likely to have more than one pair of runners in the closet, for example <ul><li>“ prized pair” </li></ul><ul><li>“ classic sport” </li></ul><ul><li>“ utility pair” </li></ul>
    16. 16. External Influences Perceptions and Positioning of Some Big Name Brands <ul><li>Perceived to have good quality products that offer comfort </li></ul><ul><li>Seen as a stylish or hip brand </li></ul><ul><li>both stylish and good quality/comfort and is a favorite brand because of its fashion status , colors, and combinations </li></ul><ul><li>Focused on sport </li></ul><ul><li>Focused on lifestyle </li></ul><ul><li>Concentrating on upper-end performance shoes </li></ul><ul><li>Covers the middle-priced market </li></ul>
    17. 17. Industry Marketing Efforts Product Place Promotion Price Marketing Mix
    18. 18. Industry Marketing Efforts Nike Product Place Promotion Price
    19. 19. Industry Marketing Efforts Nike Product Price <ul><li>Women’s running shoes from $40 to $165 </li></ul><ul><li>Men’s running shoes from $60 to $165 </li></ul>
    20. 20. Industry Marketing Efforts Nike + = Innovation Product <ul><li>The $29 Nike Plus iPod kit , which was launched in mid-2006, allows runners to put a tiny sensor at the bottom of a $100 Nike Plus running shoe. </li></ul><ul><li>Those who are serious about the “running” culture can now track their progress. </li></ul>
    21. 21. Industry Marketing Efforts Nike Canada 6 Factory Stores 1 Retail store + Intermediaries (Sports Experts, Foot Locker, Inter Sport, etc) Place US 254 Stores + Intermediaries (Sports Experts, Foot Locker, Inter Sport, etc)
    22. 22. Industry Marketing Efforts Nike Promotion Nike is putting on the World’s Largest Running Event (10k event). By combining our digital running world with the physical, the Nike+ Human Race is open to anyone, anywhere. Nike is hosting race events in 25 cities around the world, but by logging into nikeplus.com , every city and every road can become a race-day course. The following top athletes will be joining the sea of runners on race day:   Lance Armstrong in the US Yuna Kim in Korea Dirk Nowitzki in Munich Just as Nike’s products have evolved, so has Nike’s approach to marketing. The 2002 “Secret Tournament” campaign was Nike’s first truly integrated, global marketing effort. Departing from the traditional “big athlete, big ad, big product” formula, Nike created a multi-faceted consumer experience in support of the World Cup.
    23. 23. Industry Marketing Efforts Nike http://nikeplus.nike.com/ ACHIEVEMENT COMMUNITY AND BELONGING Promotion <ul><li>The site puts the runner and his/her achievements at the heart of this innovation. </li></ul><ul><li>About 500,000 runners from more than 160 countries have signed on, and some 30 million miles (48 million km) have been uploaded. The site graphs distances for each jog and can tell runners how fast they were going at each point along the way. A map function lets them view popular routes in their neighborhoods. </li></ul>
    24. 24. Industry Marketing Efforts New Balance Product Place Promotion Price
    25. 25. Industry Marketing Efforts New Balance Product Price Running shoes from $55 to $140
    26. 26. Industry Marketing Efforts New Balance Promotion Place Canada 12 stores US 137 stores
    27. 27. Industry Marketing Efforts Asics Product Place Promotion Price
    28. 28. Industry Marketing Efforts Asics Product
    29. 29. Industry Marketing Efforts Asics Promotion ASICS does not sell directly to consumers Place Price Running shoes Suggested US retail price from $80 to $180
    30. 30. Industry Marketing Efforts Asics Promotion
    31. 31. Industry Marketing Efforts Adidas Product Place Promotion Price
    32. 32. Industry Marketing Efforts Adidas Product Price Women’s from $60 to $125 Men’s from $60 to $200
    33. 33. Industry Marketing Efforts Adidas Place
    34. 34. Industry Marketing Efforts Adidas Place
    35. 35. Industry Marketing Efforts Adidas Promotion <ul><li>Adidas is pumping big bucks into soccer , the only category in which it leads Nike. </li></ul><ul><li>Adidas is concentrating on upper-end performance shoes, while Reebok covers the middle-priced market. </li></ul>
    36. 36. Big Brands Offer More <ul><li>The big brands manage to target a market that needs more than just comfort . </li></ul><ul><li>The big brands satisfy other needs such as status, achievement, community and belonging . </li></ul><ul><li>The big brands offer an “ experience ”. </li></ul><ul><li>The big brands are everywhere . </li></ul>
    37. 37. Consumer Decision Model <ul><li>To further explore how athletic footwear consumers decide on which products to purchase, a survey was conducted. </li></ul><ul><li>This survey was designed to explore the various stages in the Consumer Decision Model : recognition, search, evaluation, purchase, post-purchase evaluation . </li></ul><ul><li>41 people were given a survey that took 5 - 10 minutes to complete on average. </li></ul><ul><li>All individuals who participated in this survey were required to have purchased athletic footwear within the last year. </li></ul>
    38. 38. Primary Research Demographics Q.101, Q.105 Base: All respondents (41) % of respondents Age Gender % of respondents Primary Research Slide
    39. 39. Consumer Decision Model Recognition of Need Q.105 Base: All respondents (41) Reasons for Purchasing Athletic Footwear For exercise/gym (37%) Wanted/needed new shoes (22%) Old ones worn out (24%) Aesthetics/looks (10%) <ul><li>Comfort </li></ul><ul><li>Shoes were on discount </li></ul><ul><li>Needed shoes for work </li></ul><ul><li>(5%) </li></ul>Primary Research Slide % of respondents
    40. 40. Consumer Decision Model Pre-Purchase Search Q.200 Information Sources Base: All respondents (41) % of respondents Primary Research Slide Internet Salespeople Friends Information from product advertisements Magazine Relatives Consumer Reports Co-workers Neighbours Direct-mail brochures Newspaper Other
    41. 41. Consumer Decision Model Evaluation Prior to Purchase Q.205 Importance of Product Attributes Top 2 Box (Scale 1 – 5) Base: All respondents (39) % of respondents Primary Research Slide Consistent with secondary research
    42. 42. Consumer Decision Model Evaluation Prior to Purchase Q.300 Evaluation of Alternatives Base: All respondents (40) % of respondents Primary Research Slide Choose the one that scores highest on most important attribute Choose the best of good/bad balance Choose the one that excels in at least one feature Choose the one with no bad features
    43. 43. Consumer Decision Model Prior to purchase activity - Conclusions <ul><li>RECOGNITION: </li></ul><ul><ul><li>Needs arise from desire to exercise , replacement of old shoes, or just plain want new ones . </li></ul></ul><ul><li>SEARCH: </li></ul><ul><ul><li>Best sources of information are the Internet , salespeople , and friends . </li></ul></ul><ul><li>EVALUATION: </li></ul><ul><ul><li>Overall, comfort is the characteristic that all athletic footwear must have. </li></ul></ul><ul><ul><li>Most likely to choose the shoe that scores highest on most important attribute , or </li></ul></ul><ul><ul><li>Most likely to choose the shoe that best balances the good and the bad . </li></ul></ul>
    44. 44. Consumer Decision Model Purchasing Behaviour Q.400, Q.401 Base: All respondents (41) Purchasing Choice Priorities % of respondents Primary Research Slide % of respondents Brand choice is the indicator of quality, comfort, etc. 32% Payment and store options are not really an issue 27% Brand loyalty prevails 15% I don't want to go to too many stores to shop 15% Price/cost 5% Store choice was important in my last purchase only 2% Store loyalty 2% No specific reason 17%
    45. 45. Consumer Decision Model Purchasing Behaviour Q.400, Q405, Q.610 Base: All respondents (41) Store as Purchasing Priority In-store Influence on Decision Making Primary Research Slide (18) (23) % of respondents % of respondents
    46. 46. Consumer Decision Model Purchase Activity - Conclusions <ul><li>PURCHASE: </li></ul><ul><ul><li>Purchasing choices : brand choice is very important as it is the primary indicator of quality, comfort, etc. Store option is less of an influential factor, and payment option is almost a non factor. </li></ul></ul><ul><ul><li>In-Store Influence : results indicate that those respondents that made alternative or unplanned purchases showed a slightly higher tendency toward store choice as the leading factor in athletic footwear purchases as compared to those who made planned purchases. </li></ul></ul>
    47. 47. Consumer Decision Model Post-purchase Evaluation Q.210, Q.500 Brand Awareness Base: All respondents (41) % of respondents Brand Selected During Last Purchase % of respondents Primary Research Slide * * At least 10 different brands Base: All respondents (40) (14) § (5) § (4) § (3) § (2) § (9) § (3) § § Actual # of respondents who purchased the brand OTHER BRANDS OTHER BRANDS
    48. 48. Consumer Decision Model Post-purchase Evaluation Q.505 Reasons for Purchasing the Particular Brand Base: All respondents (40) Primary Research Slide % of respondents (14) § (5) § (4) § (3) § (2) § (9) § (3) § § Actual # of respondents who purchased the brand % of respondents OTHER BRANDS Brand loyalty/trust 37% Comfort 37% Aesthetics/looks 37% Price 24% Quality 15% Most durable 7% Utility 5% No specific reason 2%
    49. 49. Consumer Decision Model Post-purchase Evaluation Q.205, Q.510 Primary Research Slide Base: All respondents (39) % of respondents [Top 2 Box (4,5)] Scale 1 to 5 Brands with Highest Satisfaction on Attribute
    50. 50. Consumer Decision Model Post-purchase Evaluation Q.515, Q.520 Base: All respondents (40) Likelihood to Purchase Brand Again Reason % of respondents Primary Research Slide % of respondents Brand loyalty/trust/satisfaction 61% Utility 15% Comfort 12% Aesthetics/looks 10% Price 5% Quality 5% Want to try new things 2% No specific reason 7%
    51. 51. Consumer Decision Model Post-purchase Activity - Conclusions <ul><li>POST-PURCHASE EVALUATION: </li></ul><ul><ul><li>Brand : considered less important than comfort, durability, price, and aesthetics. However, brand is a very important indicator to the purchaser that a particular product possesses the aforementioned qualities. </li></ul></ul><ul><ul><li>Brand loyalty/trust (along with comfort and aesthetics) is the primary reason behind the purchases made by the respondents of this survey (37%). In fact, brand loyalty/satisfaction is the primary driving force behind the likelihood of a repeat purchase (61%). </li></ul></ul>
    52. 52. Consumer Decision Model Post-purchase Activity - Conclusions <ul><li>POST-PURCHASE EVALUATION: </li></ul><ul><ul><li>Unprompted, Nike is by far the brand that respondents are most aware of (98%), followed by Adidas (80%) and Reebok (71%). However, Nike is the first mention amongst most respondents (66%), while Adidas (7%) and Reebok (10%) are nowhere near that mark. </li></ul></ul><ul><ul><li>Not surprisingly, Nike was the brand purchased most by respondents in this survey. Unlike the other brands, Nike consistently demonstrated high satisfaction ratings on the three most important product attributes (comfort, aesthetics, durability). This is consistent with our secondary research. </li></ul></ul>
    53. 53. Agenda <ul><li>Market Background </li></ul><ul><li>Consumer Behavior Model </li></ul><ul><ul><li>Internal Influences </li></ul></ul><ul><ul><li>External Influences </li></ul></ul><ul><ul><li>Overall Marketing Efforts in the Industry </li></ul></ul><ul><ul><li>Consumer Decision Model </li></ul></ul><ul><li>Marketing Strategies </li></ul>
    54. 54. Marketing Strategies MARKETING STRATEGY Segmenting the Market and Targeting the Right Customers Positioning the Product Developing the Marketing Mix Finding Ways to Satisfy and Retain Customers
    55. 55. Marketing Strategies Segmenting the Market and Targeting the Right Customers In Canada, there are approx 6.9 million in the Gen Y segment. In the U.S., there are 70.4 million youths . Gen Y ≥ 3 times Gen X . More health conscious and likely to be loyal to the brand for a longer period. Can apply a differentiated marketing strategy as the Gen Y can be further segmented based on age and gender. Target Market: 20-34 years old (Current Gen Y)
    56. 56. Marketing Strategies Positioning the Product Benefits to emphasize to customer Comfort Aesthetic Appeal <ul><li>Quality </li></ul><ul><li>Benefits of high end leading brands </li></ul><ul><li>Lower Price Points </li></ul>Point of Difference Balance of High End Benefits and Price
    57. 57. Marketing Strategies Developing the Marketing Mix Product Place Promotion Price <ul><li>Main emphasis on comfort based on finding in primary and secondary research. However style is important as this is the consumer’s first impression of the product. </li></ul><ul><li>Product performance is important as 37% of those polled in primary data purchased running shoes for exercise purposes. Furthermore 65% of those polled were extremely likely to repurchase product again. </li></ul><ul><li>-Specialty retailers </li></ul><ul><li>Department store </li></ul><ul><li>Brand development is another important aspect as most people purchase based on brand when compared to store and payment options. Consumers are very brand loyal. Build strong brand recognition. </li></ul>$80-$120 Based on research & demand by target market
    58. 58. Marketing Strategies Developing the Marketing Mix Promotion <ul><li>Researchers used eye-tracker technology to observe viewing behavior as subjects fast-forwarded through TV commercials . Here are some of their (somewhat astounding) findings: </li></ul><ul><li>Fast-forwarding viewers actually pay more attention </li></ul><ul><li>Fast-forwarded advertisements still create brand memory </li></ul><ul><li>Fast-forwarded commercials can positively affect brand attitude </li></ul><ul><li>The attention of fast-forwarding viewers is heavily limited to the center of the screen. </li></ul>Source: Marketing Profs Vol. 2, No. 2    January 14, 2009
    59. 59. Marketing Strategies Developing the Marketing Mix Promotion Sponsoring Tracking team
    60. 60. Marketing Strategies Developing the Marketing Mix Promotion Product placement in Movies
    61. 61. Marketing Strategies Developing the Marketing Mix Promotion <ul><li>In-game advertising has reached a point where ads can  improve the gaming experience. </li></ul><ul><li>44% of online gamers. </li></ul><ul><li>40% of gamers in general, are women. </li></ul><ul><li>Over half are between 18 and 49. </li></ul><ul><li>“ Extreme gamers&quot; devote 45 hours a week to games. </li></ul><ul><li>82% of them respond positively to contextual in-game ads. </li></ul><ul><li>Surveys also say gamers are more influential consumers than their less playful peers. </li></ul>Source: Marketing Profs Vol. 1, No. 26    November 13, 2008 Product placement in Video Games
    62. 62. Marketing Strategies Developing the Marketing Mix Promotion
    63. 63. Marketing Strategies Finding Ways to Satisfy and Retain Customers Success in the Long Term <ul><li>Properly trained employees </li></ul><ul><li>Viral marketing </li></ul><ul><li>Customer experience must be positive in every way </li></ul><ul><li>Handling of customer complaints is crucial </li></ul><ul><li>Generic 1800 number concept </li></ul><ul><li>Website can contain a complaint section where customers can voice their displeasure which will be responded to </li></ul>Creating word-of-mouth advertising Reducing negative word-of-mouth communication
    64. 64. Thank you for your Time! Any Questions?
    65. 65. Appendix
    66. 66. Primary Research Characteristics of Last Athletic Footwear Purchase S.10, S.15 Base: All respondents (41) % of respondents Cost of Purchase Location of Purchase % of respondents Primary Research Slide $0-$20 $21-$40 $41-$60 $61-$80 $81-$100 $101-$120 >$120
    67. 67. Consumer Decision Model Purchasing Behaviour Q.400, Q405, Q.610 Base: All respondents (41) Purchasing Frequency Store as Purchasing Priority In-store Influence on Decision Making Primary Research Slide (18) (23) % of respondents % of respondents % of respondents
    68. 68. Consumer Decision Model Post-purchase Evaluation Q.505 Reasons for Purchasing the Particular Brand Base: All respondents (40) Primary Research Slide Because they are a good brand, fashionable and very comfortable; Comfort and Quality; Trusted brand - worked well in the past I like it and it was cheap; Fit me, had a nice look (colours and style) were comfortable and not too expensive I know it's reliable since I was a kid Best price quality relationship Great jogging shoes Their design are different
    69. 69. Consumer Decision Model – Purchasing Behaviour Q.400, Q.401, Q405, Q.610 Base: All respondents (41) % of respondents Purchasing Frequency Purchasing Choice Priorities In-store Influence on Decision Making % of respondents % of respondents Overall summary slide
    70. 70. Consumer Decision Model – Post-purchase Evaluation Q.205, Q.510 Base: All respondents (41) Extremely Satisfied Neutral Importance Scale 1-5 TOP 2 BOX 97% 82% 77% 64% 46% 31% % of respondents Customer Satisfaction with each Brand Purchased Overall summary slide (14) (5) (4) (3) (3) (2) Other Brands (9)

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