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TOMS Shoe
One for One Toms' business model is that for every pair of shoes or glasses purchased, the company donates one pair to a child in need. The company was created in 2006 and has since donated over 1 million pairs of shoes. It has expanded its product line to include eyewear.
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TOMS Shoe
- 1. One for One One person buys. One person is helped. Group 3 M.M. Binte Min Jin Jeon Kye won Suh June Young Ahn KSIM KAIST Business School Strategic Management Summer Semester 2011
- 3. C ONTENTS Company Overview Business Model Current Strategy Strategic Analysis Issues Root Cause Analysis Recommendations Strategic Management 2 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 4. C OMPANY OVERVIEW Company American footwear company based out of Santa Monica, California Created by Blake Mycoskie in 2006 after traveling to Business Argentina and realizing that the children have no shoes Strategy As of September 2010, TOMS has given over 1 million pairs of new shoes to children in need Analysis Extended product-line to eyewear in 2011 Issues Causes Recommend. Strategic Management 3 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 5. B USINESS MODEL Company One for OneTM One person buys. One person helped. Business TOMS SHOES: With every pair you purchase , TOMS will give a new pair of shoes to a child in need. Strategy TOMS EYEWEAR: With every pair you purchase , TOMS will give sight to a person in need. (Give prescribed eyeglasses) Analysis Creating sustainable business by turning customers into Issues benefactors rather than depending on fundraising support Viral Marketing with touching stories Causes Recommend. Purchasing (Fundraising) Help Persons With Volunteers Products Persons Customers who need Satisfaction Touching Stories help Word of Mouth Marketing Strategic Management 4 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 6. C URRENT STRATEGY Company Limitation of One for One BM Profit margin for Shoe Business Business Sales: 300,000 units * avg price $60 = $18 million Gross margin = 50% / Revenue for SG&A and tax = 30% Strategy Net Profit = $4 million Manufacture and donation costs close to $4 million Analysis TOMS Eyewear – The new one for one Issues It might have same profit margin as Shoe Overcome Negative Profitability Causes Sale for other items such as apparel and stickers Generate an additional revenue stream for the company Recommend. Partners with Non-profit organization Shoe Drop Tour volunteer opportunities Aligns with other brands With Ralph Lauren Rugby to distribute one shoe model Strategic Management AT&T “More Bars In More Places” campaign 5 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 7. C URRENT STRATEGY Company Word of Mouth Effect No traditional advertising Business Utilize SNS Movie clip Including touch stories and playful music Strategy To explain TOMS’s social mission & To encourage you to get involve Analysis Share donation activities through SNS 337 bookmark or sharing services including Facebook, twitter Issues Causes Recommend. Strategic Management 6 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 8. C URRENT STRATEGY Company Customer Participation Style Your Sole Business Select a date for your event that works for your guests Promoting and collect money from your guests including shipping costs Strategy Need to place your bulk order NO LATER than 2 weeks Order all plain white canvas TOMS (the easiest to decorate and customize) Invite local bands or artists to join your event Analysis Issues Causes For one day without shoes Recommend. Host event or find & participate in event Upload pictures wearing Toms or without shoes Strategic Management 7 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 9. F IVE FORCES A NALYSIS Company Threats of New Business Entrants LOW Strategy Analysis Bargaining Bargaining Issues Power of Competitive Power of Suppliers Rivalry Customers Causes LOW HIGH HIGH Converse, Birkenstock, Roc China, Argentina ket Dog, UGGS, Vans Recommend. Threat of Substitute HIGH Strategic Management 8 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 10. SWOT A NALYSIS Company Business Strengths: Weaknesses: • The message • Young Company Internal • Product material • Limited distribution Strategy • Customizability • Brand awareness • Global Brand • Limited Style Analysis • Innovative Options • Very defined target customer (Vegan, wrap boot) Issues Opportunities: Threats: Causes • Large potential market • Older and more established • More people becoming competition with greater External Recommend. active in social causes media exposure • Rise in green marketing • Oversaturation of shoe market • Nontraditional • Overall lack of advertising stance(facebook, twitter, YouTube) in media Strategic Management 9 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 11. I SSUES Company From Five-Forces and SWOT Analysis Unisex Designs Business Preferred by women and kids, not men Unreasonable Price Strategy Compared to material’s quality and Product Life Cycle - Expensive Analysis Low Brand awareness No traditional mass marketing Issues Limited distribution channel Few offline shops in US & globally online sale Causes Defined target customer Targeting only young generation Recommend. Others Controversial cognition Poverty vs. Dignity An angel? or A wolf in sheep´s clothing? Strategic Management 10 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 12. R OOT CAUSE A NALYSIS Company ISSUES Root Causes Recommendations Designs Many Designs cost (Men’s shoe) Business much Low cost design Five-forces & SWOT Analysis Price Strategy (compared to the quality Low profit margin of the materials and life (because of charity cost) cycle of the product - Analysis expensive) Various product-line Low-price strategy to many fashion items Brand awareness Issues (low) Distribution Only on-line channel Causes channel (limited) Increase Brand Awareness Recommend. Target customer (very defined) No mass marketing Controversial Others Keep cognition Business Model its Business Model (poverty vs. dignity) Strategic Management 11 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 13. R ECOMMENDATIONS Company Make various product design! Develop plans how to make design without cost Business Examples about getting low cost design Fashion Design Contest Strategy Online – SNS, Offline - Fashion design school Star Donation Analysis Fund Raising, Designed by Stars, Utilization as a model etc Issues Best Design Prize Money Causes Recommend. Winner gives the low cost but best design Strategic Management 12 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 14. R ECOMMENDATIONS Company Change brand position as a charity brand! From shoes manufacturing to fashion, charity brand Business New One for One - Make various product lines Example – School Project Strategy School Bag Get much profit Analysis Bag pack`s price is more expensive than shoes Good product to make collection Issues Student’s Fashionable item Develop school supplies as well Causes Example – Disease Project Recommend. Disease Get much profit High demand - household items Soap, Toothpaste, hand washer etc Prevention is better than cure Reduce the possibility of getting disease Strategic Management 13 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 15. R ECOMMENDATIONS Company Promote Toms brand & business! Must increase Brand awareness Business Awareness of TOMS Shoe company research by The Clemetine group Focus Group interview, March 2010 (Most respondents living in US) Strategy Analysis It means Marketing efforts are incredibly ineffective! Issues Utilize traditional mass media Causes Keep strategy not to make commercials Instead of Ads, Open big global event for interview and report Recommend. Example – World travel relay without shoes Partnership with Unesco & Unicef Unesco – Open workcamp making shoes for volunteers Unicef – Utilize Unicef shop & honorary ambassadors Strategic Management 14 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 16. R ECOMMENDATIONS Company Give customer price options! Keep original business model - One for One Business Partially add “Two for Two” model Strategy Target – someone to want to buy different color or give gift to another ‘One for One’ recently 49$ → ‘One for Two’ about 90$ (cheaper) Analysis Partially add “One for Two” or “One for Three” Issues Target – someone to want to donate more through toms ‘One for One’ recently 49$ → ‘One for Two’ about 70$ (cheaper) Causes Record customers name in the hall of fame Recommend. Increase sale volume & Reduce shipping cost Discount Benefit to regular customers Establish donation culture though Toms Strategic Management 15 7/7/2011 Prof. Han Earl Kim KSIM, KAIST Business School
- 17.
Editor's Notes
- #4 A leading cause of disease in developing countries is soil-transmitted diseases, which can penetrate the skin through bare feet. Wearing shoes can help prevent these diseases, and the long-term physical and cognitive harm they cause.Many times children can't attend school barefoot because shoes are a required part of their uniform