Crocs Marketing Plan

CROCS STAYING AHEAD OF THE COMPETITION

Date of Publication: November 8th 2011


Marketing Plan

University of Applied Sciences – Amsterdam
2011
Page 1 of 50


1. Executive summary

Born in Boulder, Colorado as a simple, comfortable boat shoe, today Crocs footwear can be found
across the globe. With distinct collections, Crocs offers colorful, lightweight comfort that lasts long
and can be worn during all seasons in a year. All Crocs shoes are uniquely designed and
manufactured 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 declining
and forces from the environment ask for strategic changes. This marketing plan will cover the launch
of 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 new
segments and increase the target market. Rather than entering new markets, Crocs should stick to its
core 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 to
attract the teenager segment. Further reorganizing will result in expanding the Crocs product line to
carry 350 styles.

By further developing the distribution channels and global infrastructure, Crocs can support the
growth of the new business, products and retail sales. Crocs aims to increase the number of Crocs
Flagship stores in geographic key areas and retail stores selling crocs across the United States. To
accommodate the increasing use of ecommerce and internet, Crocs should also continue to focus on
its online distribution channel.

To protect is style and design Crocs should continue using its patents as ammunition to shut down
the countless knockoffs. To prevent legal issues in the future, the degree of design should increase
for the new product lines. Special features and characteristics should make it harder to copy the
design.

All these changes need to be carried through in order to stay ahead of the competition. According to
our forecast an investment in promotional Costs with the guidelines mentioned in this marketing
plan 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 evolving
needs of the customers. We advise the Crocs management to continue evaluating the environment
to search for value-adding acquisitions to the brand portfolio.

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2. Table of Contents

1. Executive summary............................................................................................................................. 2
2. Table of Contents ................................................................................................................................ 3
3. 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 ......................................................................................... 19
4. 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 ..................................................................................................................................... 26

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5. SWOT analysis & Confrontation matrix ............................................................................................ 27
5.1 SWOT Analysis ............................................................................................................................. 27
5.2 Confrontation Matrix................................................................................................................... 28
6. Segmentation, Target Market, Positioning ...................................................................................... 30
6.1 Customer Needs and Wants ........................................................................................................ 30
6.2 Target Groups & Segmentation................................................................................................... 30
6.5 Positioning Map........................................................................................................................... 32
7. Strategy............................................................................................................................................. 33
8. Objectives ......................................................................................................................................... 34
8.1 Short Term ............................................................................................................................... 34
8.2 Long Term (1+ Years) ............................................................................................................... 34
9. 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.................................................................................................................................... 40
10. Profit & Loss Statement / Budget (3 year) ...................................................................................... 42
11. Recommendations to the decision maker ...................................................................................... 44
12. Source list ........................................................................................................................................ 46
13. Appendices ...................................................................................................................................... 47
14. Self Assessment ................................................................................... Error! Bookmark not defined.

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3. Problem Statement

In 2002, Crocs, Inc. was founded. A rapid growth in demand of these ‘one of a kind’ shoes impressed
the whole industry. Most competitors viewed Crocs as an ugly shoe, which in turn would not appeal
to 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 demand
arose. Besides the fact that Crocs were used by professionals; after a short period of time, people
considered the anti-slip shoe as a fashion statement. The Croc product succeeded beyond the
founders’ wildest dreams and profit kept coming in.

However, after four years the market started to saturate. Competitors and customers thought of the
Crocs to be a ‘one trick pony’. Although profits remained very high and market share for Crocs was
favorably, Crocs needs to prevent an expected decrease in both of these aspects. Croc wants to
tackle 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 can
make sure that Crocs’ patent is not offended. The imitators are mostly easily accessible and are less
expensive. How can Crocs make sure to maintain consumers and obtain the ones that have
previously chosen for the ‘imposter’ Crocs?

Second, Crocs faces severe competition from established competitors who run a more efficient
distribution system. Sketchers is one of the main rivals that enhance established distribution
channels. By doing so, they are able to take more in-store display spots. The limited distribution
channel of Crocs can keep a fair amount of customers away. So, in what way is Crocs able to solve
this distribution problem?

The third and final challenge is the expansion problem. Crocs are forced to expand their product line
to prevent becoming the above mentioned ‘one trick pony’. What markets need to be targeted, and
which 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?

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3. External / market analysis
3.1 Market analysis & Market segmentation
Market Segmentation
According to the American Apparel and Footwear Association, the shoe market in the U.S. can be
segmented by six different product classes: (Packaged Facts, 2009)

 Men's athletic footwear  Children's athletic footwear
(Incl sneakers & outdoor/hiking boots) (Incl sneakers & outdoor/hiking boots)

 Women's footwear  Men's footwear
(Incl. dress & casual footwear) (Incl. dress & casual footwear)

 Children's footwear  Women's 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 initial
introduction of the popular Beach and Cayman models from the everyday category, Crocs started in
the Women's, Men's and Children's footwear segment. Through its style category, which includes
various dress shoes, Crocs is present in the Women's Footwear and Men's Footwear segment. Crocs
expanded its Croslite products to include a variety of new styles and products and have extended
product 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 sandals
primarily for the beach, action and adventure market, Crocs deepened its presence in the Women's,
Men's and Children's footwear segment. By way of acquiring Bite, a manufacturer of performance
shoes and sports sandals sold worldwide in five categories, including, golf, adventure, healthy
lifestyle, travel and watersports, Crocs within the sports category added the Athletic Footwear
segment for Women, Men and Children to its target market. Closing out is YOU by Crocs™, a
women's fashion line that combines the comfort of Croslite with fashionable styles, which strengths
crocs position in the Women's Footwear segment.

Crocs boasts the footwear as being ideal for casual wear, as well as for professional and recreational
uses such as boating, hiking, hospitality and gardening. Crocs expanded its product line to 25 models
in 2006, over 250 models in 2007 and over 270 models in 2008, including Ocean Minded, YOU by
Crocs™ and Bite footwear models. In addition to footwear products, Crocs markets a line of branded
apparel and other accessory items that are intended to increase awareness of the Crocs brand.

Conclusion

Crocs Product Line Segment
Crocs Everyday Women's, Men's and Children's footwear
Crocs Style Women's Footwear and Men's Footwear
Jibbitz Children’s Footwear
Bite Women's Footwear and Men's Athletic Footwear
Ocean Minded Women's, Men's and Children's footwear
YOU by Crocs™ Women's Footwear

Page 6 of 50


Market analysis
In 2008 the market for Footwear in the U.S. accounted for $46 billion dollar. According to figures by
Packaged Facts, sales of footwear in the United States will drop 14% from the 2008 level of $46.8
billion to just $40.1 billion in 2009. However, the drop in 2009 will be greeted by a welcomed eight
percent gain to $43.3 billion in 2010 as consumers return to stores. After 2010, growth rates for sales
of 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 2012

These same numbers can be found back for each individual segment. After a small dip in 2009, the
forecast for the United States Footwear Retail market positive with an expected grow. Women
account for 50% of the total footwear sales where men are 36% and children 14%. For men, 60% of
shoes 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
Women's footwear
$12.000
Men's athletic footwear
$10.000
Women's athletic footwear,
$8.000
Men's footwear
$6.000
Children's athletic footwear
$4.000 Children's footwear
$2.000
$0
2008 2009 2010 2011 2012 2013

Page 7 of 50


3.2 External Environment analysis
3.2.1 Demographic
Crocs didn’t focus on particular demographics or segments. It designed for broad appeal across
income brackets, ages, and genders. However, several factors that influence the operations of Crocs
are changing.

Population

The 2010 Census, shown as appendix table 3, from the U.S. Census Bureau reported 308.7 million
people 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 million
people, while the West increased by 8.7 million to reach 71.9 million people—surpassing the
population 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 the
broad target market now includes more potential customers. The Western region, including Alaska,
Arizona, California, Oregon, Utah and Washington, and the Southern United States region, including
Oklahoma, Florida, Virginia and Texas, are particular areas with a substantial increase in population.

Age

The population of children, age 3-10 – was forecasted to grow with 1, 5$ million between 2008 and
2012. For the same period their buying power should’ve increased with 2.7$ billion. According to
Packaged facts this is a strong increase.

Race

The 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 an
average of 3.9% while the black community’s expenditures on footwear decreased with average -
3.2% per year.

3.2.2 Economic
As result of the 2009 credit crunch, solid majorities of Americans across all income categories are
watching their spending closely and are cutting back. With a recession underway, people are unlikely
to buy multiple pairs in a way they might have a couple of years ago as this would run into hundreds
of dollars. Consumer confidence is reflected

According to the Average annual expenditures on Footwear of the Consumer Expenditure Survey by
the U.S. Bureau of Labor Statistics, shown in table 5 in the appendices, almost all categories went
down in expenditures on Footwear, with the exception of the husband and wife consumer with
oldest 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 weak
U.S.dollar and rising labor costs in China.

Page 8 of 50


3.2.3 Social Cultural
Crocs took on some cultural icon status as lifestyle/attitude Brand, where people either love it or
they hate it. One the one hand, Crocs shoes have become all the rage for all ages. Websites such as
littlerubbershoes.com, formerly known as crocfans.com, keep hold of all celebrities that wear crocs
and the developments around the crocs company. Crocs, Inc has an advantage over imitators with its
customer loyalty. These True Friends with high customer loyalty claim that no other shoe can replace
their crocs. The shoe itself attracts attention and when this attention is expressed the owners
communicate their passion and loyalty for the brand.

On the other hand, IHateCrocs.com is dedicated to the elimination of Crocs. They believe that Crocs
are just a fad of an obviously unfashionable nature. Especially the males and teenagers, who tend to
assign big value to design, fashion and style, have rejected to wear crocs.

3.2.4 Technological
Crocs has created an interactive web site explaining everything about Crocs, from their history to
how they are designed. This is also where customers may also order specific Croc models if they do
not feel the need to go out and find them in a store.

3.2.5 Political/Legal
As 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 of
their most popular styles.

Despite the patents, the Crocs Company is dealing with multiple imitation brands and products that
harm these patents. Over the past decade, Crocs filed a number of Legal Proceedings to protect their
patents.

On March 31, 2006, Crocs filed a complaint with the International Trade Commission against the
following 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

 Cheng's 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 the
importation of infringing products.

In April 2011, Crocs Inc. won this patent ruling that may help the company block U.S. imports of
imitation crocs footwear. The Judge of the U.S. International Trade Commission in Washington
declared that the company’s patented design for shoes was infringed by the earlier mentioned
parties. With this victory, they overturned the court’s ruling of 2006 that picked the side of the crocs
competitors.

Page 9 of 50


On June 15, 2006, Aspen Licensing International, Inc. filed a complaint against Crocs in the United
States District Court for the District of Massachusetts that Crocs was infringing upon Aspen
Licensing's 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 the
Company's use of the "Cayman" shoe model designator infringes upon their Community Trademark
Registration 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 million
Croc-like clogs due to a potential choking hazard involving detaching plastic rivets. The same
happened in July, 2009 when 1.4 million Buster Brown & Co.’s Clog Children’s Shoes were recalled
due to choking hazard. All of these factors may be something to adapt to and prepare for as a
company to persuade consumers to go for the safer Crocs products rather than the rather dangerous
knockoffs.

3.3 Customer Profile
We established that Crocs does not focus on a particular demographics or segments. The footwear is
designed for broad appeal across income brackets, ages, and genders. In order to have a better
overview of what the Crocs customer looks like, we produced a customer profile. Here we define the
benefits Crocs are offering and the type of customer that purchase crocs together with their
motivation.

Crocs

Profile Teens & Adults Kids
Demo-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 day
Psychographic 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 looks

Although recent design improvements might have slickened up the look of crocs, the main factors
behind its success are the light weight and comfort of the shoe. LittleRubberShoes.com came up
with 10 Reasons why to wear Crocs:

1. Nothing is softer or more comfortable 6. Ultra-hip, Italian styling with molded foot support
2. They are hardly there (less than 6oz.) 7. Slip resistant
3. Air ventilation ports keep your feet cool 8. Sterilized in water and bleach
4. Non-marking soles 9. Easy to maintain
5. Resistant to bacteria and odor 10. Water and sand pass through air vents
(LittleRubberShoes.com, 2006)

Page 10 of 50


These characteristics of the Crocs footwear attracted not only boaters, which crocs was originally
intended for, but also gardeners, healthcare workers, waiters, and other professionals who have to
be on their feet all day. Therefore we can conclude that Crocs are worn by the people who like
comfort, hygiene and functionality and are less interested in looks whereas Crocs are for all ages and
both genders. Loyalty to the brand is certainty an essential part of the segment’s personality.

Ocean Minded
Ocean Minded footwear,
Profile apparel, and accessories are
Demo-graphic Age All
made from recycled and
Gender Both
Social Class Working Class and Lower Class sustainable materials. The brand
Psychographic 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 big
blue ocean. This is determined by culture and geography, not age or gender. Favoring geographical
locations are California and Florida, since they have the nicest beaches and are very popular among
surfers.

YOU
The YOU brand is aimed at women and is a mix of one of crocs core compatibilities in supreme
comfort with some rather unfamiliar factors: fashion and style. The product line of YOU by crocs
contains fashionable wedges, heels, flats & boots with. This shoe is intended to reach everyone and
not 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.

Profile
Demo-graphic Age 18 - 50
Gender Female
Social Class Working Class and Middle Class
Psychographic Lifestyle Fashion Minded
Brand
Unexpected
Personality
Attitude Comfort still important with fashion
Behavioral Occasion Work
Party
Benefit Style, classic & fashionable
As can be concluded for the YOU brand, their customers are women in the age category 18-50 years
who are not interested in the haute couture from Italy and are willing to suffer serious injury on their
feet to look good but instead ask for a good combination of comfort and style.

Page 11 of 50


Bite

As mentioned before, Bite is a manufacturer of performance shoes and sports sandals. Under the
wing of crocs, quality footwear with a Croslite footbed that conforms to foot: loose fit and
lightweight design that helps reduce fatigue. Here again, Crocs combined its core compatibility with
an acquired company to enter new segments. The sport shoes are predominantly directed towards
golf. 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 Sandals
Demo-graphic Age 30+ Age 30+
Gender Both Gender Both
Social Class Middle Class Social Class Working Class and Middle Class
Psychographic 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 are

Especially the older audience is interested in the bite footwear. Where to main uses are for playing
golf and hiking other activities where the bite footwear is used are travelling and water sports. The
consumers are less fashion minded but are not willing to give up comfort and quality.

Jibbitz
Jibbitz 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 of
comfort, responsible quality and use of popular images makes Jibbitz a perfect addition for little
children to the regular crocs products.

Profile
Demo-graphic Age 0 – 9 Years
Gender Both
Psychographic Personality Creative, Playful
Behavioral Occasion Play
Benefit Convenience

The Jibbitz customers are lesser specified and bounded to certain criteria. Where the main customer
group is children, also mothers like to decorate their crocs to brighten up the look.

Page 12 of 50


3.4 Competitor analysis
After 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 Direct
Crocs - Clogs

Crocs Birkenstock – Birkis Timberland Calzuro Clogs Star Bay Klogs

Price 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 available

Employees 3700 250 2000 45 25 15
Selling Click & Mortar Click & Mortar Click & Mortar Brick & Mortar Online Click & Mortar
Location

Page 13 of 50


Ocean Minded

Crocs Quicksilver Cobian Reef Olukai Rainbow Sandals Sanuk Flojos

Price 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 Mortar

Page 14 of 50


YOU 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 Colors
Materials Leather, Suede, Suede, leather Rubber, Leather, Suede, fur, leather, Leather, wool, Suede Leather, Suede
Lamb’s Wool, Lubuck sole: rubber Suede wool
Crocs plastic resin

Primary Women 20 - 50 Women 25-50 Women 25-50 Women All Women 25-50 Women 30 +
Segment
Features 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.
Waterproof

Revenue $ 125 million dollar $227.2 million $ 1.4 billion $7.5 Million $ 80 million
Employee 3700 12.000 1136 4698 25 50
s
Selling Click & Mortar Click & Mortar Click & Mortar Click & Mortar Online Click & Mortar
Location

Page 15 of 50


Bite – 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 leather

Primary Segment US Global Australia Global
Global UK
Benefit Crosslite Experience Innovative Though

Selling Location Click & Mortar Click & Mortar Click & Mortar Click & Mortar

Jibbitz

Jibbitz Zig-A-Roo’s

Price Range $1.99 - $3.00 $1.99
Styles 1000 + 52 different styles
Selling Location Click and Mortar Online

Page 16 of 50


3.3.2. Indirect

$ in 000s Crocs Deckers Outdoor Corp Heelys, Inc. Nike Inc. Wolverine World Wide

CROX DECK HLYS NIKE WWW
Full time employees 3560 1000 51 34300 4018
Sub - Brands Bite UGG Umbro Cat Footwear
YOU by Crocs Tsubo Converse Chaco
Ocean Minded Teva Patagonia Footwear
Sanuk Track ‘n Trail
Wolverine
Revenues USA 298,004 645,993 15,157 7,827,600 779,678
Percentage of total revenues in 46% 79% 35% 41% 71%
USA
Retail Revenues 152,300 24% 78,951 10% - 0% n/a n/a
Wholesale Revenues 404,500 63% 658,560 81% 43,777 100% n/a n/a
Online Revenues 89,000 14% 75,666 9% - 0% n/a n/a

Retail 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.

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Conclusion
As we established with the customer profile, Crocs is designed for broad appeal across income
brackets, ages, and genders. Therefore, to decide on the crocs competitors we had to made use of
benefit 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, product
functionality, design, quality, pricing, customer service, marketing and distribution.

For the traditional Crocs clogs, the first two characteristics that stand out are the weight and colors
offered. Crocs stand out with 16 different colors offered for their crocs and a weight of only 12
ounce. The Price of crocs is not the lowest but on the lower half of all mentioned brands. Crocs is the
only 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 the
operational force and size of the company. Most competitors try to recreate the croslite material
with 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 bigger
size and larger brand awareness. Quicksilver is also featured in many retail stores and has greater
store presence. With the exception from Olukai, the sustainable lifestyle flip flop brand is in the
higher 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 female
footwear segment. However, YOU customers will have a strong attitude towards the importance of
comfort in combination with style. Competition will be on price, quality, brand awareness, brand
equity and design. Biggest competitors that have this same emphasis are clarks, sketchers and
aerosoles. Sketchers currently has an advantage in established distribution channels, where the
Sketchers 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 product
diversion of all, it is a experienced company with long established well-selling products. However
Teva and Keen only sells shoes and are thus more intense competition for Bite. Teva’s product line
correspondences the most with Bite’s product line. Keen only has tough and somewhat nicer looking
shoes.

For Crocs accessory items, Jibbitz is facing little competition. There are various brand less products
on the market but not of decent size to compete fully with crocs. One of the few products sold that
do 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, strong
customer loyalty makes state no other shoe can replace their crocs.

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3.5 Competitive Advantage & Challenges
Advantages
We believe that crocs unique footwear designs, prices and expanding product offering and
distribution network are positioned well in the marketplace. The main competitive advantage is the
Croslite resin material and the strong customer loyalty by crocs fans. The patented Croslite
technology, which exact formulation is a closely-guarded secret, is lightweight, waterproof, and slip
and odor resistant. Their unique appearance, which some call ugly, made them easily identifiable and
added to Crocs appeal.

Crocs, Inc also continues to augment its licensing strategy. Since the start of the year, it signed an
agreement with Nascar and expanded existing deals with the National Football League (NFL) and the
National Hockey League (NHL). It also signed deals with Nickelodeon and Warner Bros, allowing it to
sell shoes featuring Dora the Explorer, SpongeBob SquarePants, Superman and Batman. Both
domestic and international markets still offer extensive opportunities for growth and could drive
overall demand even if domestic sales fall.

Challenges

However, 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 main
challenges 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 recognition

Furthermore, the unique designs and resulting success of our footwear products have attracted new
players in the market with imitation products that are similar to crocs, Crocs faces competition from
these new market entrants.

The greater capabilities of the Crocs competitors in these areas may enable them to compete more
effectively on the basis of price and more quickly develop new products. If Crocs fails to compete
with these competitors successfully in the future, their sales and profits will decline.

1
Crocs K-10

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4. Internal analysis
4.1 Company
Key Facts

Company: Crocs, Inc. Industry: Footwear
Founded: 2002 Sector Consumer Goods
CEO: John McCarvel No. of Employees 3,700
Executive VP: Dan Hart Entity Type: Incorporation
Website www.Crocs.com Ticker Symbol CROX (Nasdaq)
Location Niwot, Colorado, USA
Mission

Bring profound comfort, fun and innovation to the world’s feet.

4.2 Current Marketing Mix
The crocs footwear is a consumer product that can be categorized as a shopping product due to its
planning and shopping effort required and the comparison in brands that is included in the purchase
of such a product.

4.2.1 Core Costumer value
Crocs wanted to solve various problems for customers concerning the shoe industry. First of all, they
wanted to provide a comfortable, light weight pair of shoes. Especially nurses and employees who
spent most of their day on their feet seek these items. Secondly, the non-slip sole would keep both
working people, as well as recreational users more safe. At last, Crocs offers a shoe that lasts long
and can be worn during all seasons in a year.

4.2.2 Actual Product
The Crocs clogs feel nearly weightless. This is because it is made of Croslite, a closed cell resin
material. 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. In
order 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 core
competencies in this product, by emphasizing comfort and durability. Ocean Minded consists out of
sandals 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 built
on 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. By
adding 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-shirts
include several prints with the Crocs logo.

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Product attributes

Quality 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.
adhesives
Style Practical as ‘Ocean lifestyle’, Sexy, sensible Sporty Pro Sports
well as adventurous and fashionable Team
fashion Entertainment
statement Light Up
3D
Design Clog – The more Various designs, Rough xx
formed, advanced design mainly classic
colourful of flip flops

4.2.3 Augmented Product
Crocs introduced a few additional consumer services. If the customer is not satisfied, it can return
their item within 60 days. Compared to other manufacturers, this number is fairly high. The item
needs to be in a resalable condition though and can only be returned if unworn. Crocs are also
covered by a 90 day warranty, which means that if one of the items is damaged before the end of
this period, they offer a new, similar product. Customer service also replaces broken straps and
rivets.

When you return an item because it wasn't quite right using our return process on a purchase done
through the crocs online channel, you'll receive a $5 credit toward your next purchase at crocs.com
and Crocs will ship it to you for free.

4.3 Product Line and Product Mix
Initially, Crocs started by introducing original clogs. The wide public that thinks of Crocs, mainly
considers these vitally coloured shoes. However, through the years, the company has expanded in
various directions. Apparel, accesscories and gear were all introduced to utilize the new, successful
technology called Croslite. In this way, we imposed product line stretching. The new items are
noticeably different.

The Crocs product range is divided into three categories: everyday, style and sport. Our everyday
product range is composed of fully molded products, which are closest to our core products and
targeted widely to several distribution channels. Our style product range consists of more
fashionable silhouettes targeted towards higher-end department stores. Our sport product range
includes sport inspired products that offer a Crocs point of view for active end uses like boating,
walking, and hiking.

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Product Mix

Crocs

Footwear Apparel

Everyday Style Sports Jibbitz

YOU by
Clogs Bite T-Shirts
Crocs

Ocean
Minded
Product life cycle
Crocs
At the moment, Crocs is situated in the maturity phase. Competition has come to a peak, and most
former potential customers have purchased the product. The market starts to saturate, but profits
are kept high. Crocs are probably a fashion, currently very popular but is starting to decline slowly

Ocean Minded, YOU by Crocs and Bite
Items have been added in late 2007, which means it is still in the introductory phase. A lot of
investments (with the help of Crocs’ profit) are realised to promote and familiarise customers with
these fairly new products. Soon or a later, these items (especially YOU by Crocs) need to generate
enough profit, which means they enter the growth phase.

Jibbitz
Jibbitz is an additional item that can be purchased to decorate the Crocs shoes. It is not responsible
for 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 2009
Unit sales ‐ footwear 46,900 35,300 36,800
Avg selling price n/a $ 18.35 $ 16.60
Sales ‐ Jibbitz (in $000s) $ 67,500 $ 47,200 $ 25,200

Product mix percentages
Classic 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 Mammoth

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4.2.3 Price
Croc inc. uses a Value-based pricing, which is setting a price based on buyers’ perceptions of value
rather 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 value

Many shoe makers will push the base selling price of trendy shoes upwards. Crocs, however, wants
their product to be accessible to many people, so the base price point for their shoes is $30. People
desire 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 sale
its shoes for a cheaper price than 30 dollars. Idea behind this decision is that crocs wants to maintain
its image as a premium mix of quality and comfort. (Sun, Leo (2011) Crocs (CROX) Collapses and
Shares Crash 35%) Crocs lowered their cost eliminating the standard box packaging for individual
pairs 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 fabrics

4.2.2 Place
Crocs bypass the traditional distribution models of competitors and instead adopt a distribution
model with similarities to Just-in-time-management. Rather than having retailers order large
quantities months in advance, Crocs has allowed retailers to order as few as 24 pairs of shoes. This
strategy 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 to
customers. 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 the
customers. 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 in
order 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 crocs
footwear. Other retailers, not under the Croc flagship, feel disadvantaged and in response to Crocs
online distribution decide to sell the lower-priced alternatives or products of crocs their competitors
instead.

Distribution Channels

Crocs customers are located in many countries worldwide, however the majority of sales are in the
USA. The competition is heating up with new brands entering the footwear industry one of them is
Sketchers. Sketchers uses another type of retailers, while Crocs uses the more specialty product
retailers, 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 lines

Page 23 of 50


to attract more and a wider range of customer, compared to their competitor it is not enough. Cali
Gear captured more distribution channels while Crocs seems to be holding to selective distribution to
their specialty product retailers. To show how Crocs delivers its products to customers, we have
drawn up the following distribution channel overview.

The general location, use and approximate size of Croc’s principal properties are given in table 6 of
the appendix. Manufacturing of the crocs is predominantly separated over factories in Leon, Mexico
and Shenzen, China. From these locations, the shoes are shipped to a warehouse in the United
States. From Aurora, Ontario and Bolder, warehouses of 264,000, 399,000 and 16,000 square feet
respectively, the products are distributed to regional retailers, crocs stores and the customer
orderings at the crocs webshop.

4.2.4 Promotion
Advertising

Especially magazines were targeted thoroughly. Fashion magazines such as Vanity Fair and Curve
included ads with the quote ‘Ugly can be beautiful’, aiming on the critics that defined Crocs to be the
most ugly shoes in the world. And of course, with the imminent role of the internet, online
promotion increased. They mainly focused on making people aware of Crocs and create special
discount tools that would be attractive for customers (discussed in Sales Promotion). Crocs is also
doing sponsorships (Pro Beach Volleyball), folk/rock campus tours and segment licensing deals
(Disney, NBA, MLB, NFL, NHL).

Sales Promotion

After a short period of time, Crocs introduced coupons and various discount codes that allowed
customers to buy the shoes for a more attractive price. It refers to consumer promotions. These
codes and coupons were placed on their own website. By downloading or copying the codes,
discount is granted.

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However, Crocs avoids margin squeezes often associated with retail price incentives. Crocs does not
utilize incentives to retailers, discourages retailers from using price concessions to help clear out
inventory build-ups Also events and shows were introduced (event marketing). Crocs published the
names of cities where special Crocs events would take place.

Public Relations

Crocs also used this promotional tool to inform and persuade potential customers. They wanted to
create favorable publicity for their brand. They released several news items during their growth
phase. In 2007, for example, Crocs announced a Charm Giveaway in celebration of the new DVD of
Pirates 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 Crocs
would automatically donate five dollars to the Cancer Research Foundation.

4.4 Business Portfolio
Below 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 share
but low relative growth. These SBU’s produce a lot of cash that can be used to support the growing
Ocean Minded and YOU brands. Bite in its current state is low-growth and low-share. YOU brand has
a high potential, however is facing a lot of competition in the female footwear market and therefore
has a relatively low market share. Ocean minded is also potentially if becoming a cash cow, but will
together with YOU need large cash investments to grow.

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4.5 Financial Performance
Since Crocs is on the Stock market (NASDAQ) it is obligated to share its financial performance with
their 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 42.078

Numbers 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 that
Crocs will start making profit again in 2010.

4.6 Personnel
As of December 31, 2009, crocs employed approximately 3,560 persons, compared to 3,700 as of
December 31, 2008. This included 2,030 employees in the U.S. and Canada, 220 employees in
Mexico, 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-direct
channels. While croc’s headcount in the consumer-direct channels grew to accommodate our
business, 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 in
staffing. As of December 31, 2009, none of our employees were represented by a union.

Management

Name Position Age Current/Previous Employment
John 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 Corporation
Board of Directors

Name Position Age Current/Previous Employment
Thomas Smach Director - Chairman 48 Riverwood Capital; Flextronics
Stephen Cannon Director 57 Constantine Cannon; Circuit City
Raymond Croghan Director 59 Croghan & Associates
Ronald Frasch Director 60 Saks Fifth Avenue; Escada
Peter Jacobi Director 65 Levi Strauss
Doreen Wright Director 54 Yankee Candle, American Express

Page 26 of 50


5. SWOT analysis & Confrontation matrix

5.1 SWOT Analysis
Strengths

 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 Brand

Weaknesses

 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 sales

Opportunities

 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 market

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5.2 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 - -- -- 0

Strategy: Attack Defend

Strengthen Reduce Risk

Page 28 of 50


Conclusion

From the confrontation matrix can be concluded that to expand its product lines, it can make great
use 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 its
product line. In order to achieve its goal of either expanding beyond or within its current product
range, it has to consider changing its distribution policy. New products can also be the solution to the
seasonal issue of the crocs product. If Crocs can develop a more winter proof profiled shoe, they can
fill in the gap and compete on an all year bases.

Just in time Management gives Crocs the opportunity of granting customers with the opportunity of
customizing their own footwear to their own preference. It has to exploit this opportunity to
differentiate itself from the competitor brands.

Crocs’ policy to prohibit incentives to retailers is increasing the risk of retailers dropping the Crocs
product and switch to the imitator brands. On the other hand, Crocs loyal customers and its patents
are obstructing current users to switch and new competitors from entering the market. To defend its
intellectual property on design and style and keep out imitator brands, Crocs has to keep seeking an
exclusion order, banning the importation of infringing products to the United States.

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6. Segmentation, Target Market, Positioning
6.1 Customer Needs and Wants
Needs
Customers need footwear to protect their feet from harm, or to keep their feet warm and cozy and
away from the wet.

Wants

Customers want lightweight, comfortable, slip-resistant and functional shoe. When they have to be
on their feet all day, being it for work or recreation, customers need comfort that prevents them
from pain issues at the end of the day.

Demand
Customers demand high quality footwear that is easy to maintain with an ultra-hip sense of styling.

6.2 Target Groups & Segmentation

The geographic country region all the products target is United States which consisted of a
population of almost 323 million inhabitants in 2009. Crocs Clogs can remain with an
undifferentiated marketing strategy, where the other parts of the product mix are dedicated for a
certain segment and will lean more towards a concentrated marketing strategy.

Crocs Clogs

Man & Woman Kids
Demographic
Age 12 + Years 3-12 Years
Occupation Professionals who have to be on
their feet all day
Psychographic
Social class Middle Class and Working Class
Lifestyle Like to play outside
Behavioral
Occasions Walking a lot
Benefits Convenience, lightweight & Put on own shoes , easy to clean
Comfort and water resistant
Attitude Relieved that this products exists

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Other Product Lines

Crocs You by Crocs Jibbitz Gators

Geographic
Region Coast, wild life All All All
parks and national
parks
Demographic
Age 18+ Years 20+ Years 3-20 Years 13-23 Years
Gender All Women All All
Psychographic
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
fashion
Behavioral
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 price

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6.5 Positioning Map
The value proposition for all brands within crocs brand portfolio crocs should be as more for the
same, extra features such as comfort, convenience, easy maintenance and non-marking soles that
customers 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 that
offer less than 1/20th of Jibbitz styles. Therefore Jibbitz is awarded a 9. Crocs clogs may be cheap but
their main competitors are counterfeit brands. Therefore Clogs score low on price. Ocean minded
scores high on benefit because croslite is a very convenient material in this segment, though the
price is relatively the same as the competitors.

In conclusion, in order to reach the customers and show them the competitors’ advantage of the
new 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 Design

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7. Strategy
Throughout its successful introduction of the Crocs Clogs, Crocs hold on to their core values of
undifferentiated marketing strategy, rejecting retailer incentives and exclusive distribution to
maintain its image as a premium mix of quality and comfort. However, in order to stay ahead of
competitors the new corporate level strategy should be to shift this emphasis away and look towards
the future. In the first place, Crocs should continue using its patents as ammunition to shut down the
inevitably countless knockoffs and also protect its intellectual property when introducing new
products into the market.

More of the strategic planning should include the redesigning of the Crocs, Inc business portfolio and
product mix to expand its target market. Rather than one shoe for all segments, Crocs should have at
least one matching shoe offering for each segment. Moreover, the Crocs management should
evaluate 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 to
assemble the environment minded products and extend the ocean minded philosophy to areas such
as 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 Angry
Croc. The Colorado based company must find the right extension that can get their core customers to
grow 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 attract
the female footwear market more effectively the YOU brand should be separated with the croc
brands as much as possible.

As Business-level strategy, we advise to redesign parts of the Crocs product lines, to create a better
fit with the market segments. Crocs needs to expand its product line though both line filling and line
stretching. Product development is required without losing touch with Crocs core compatibilities of
comfort, functionality and durability.

To keep up with the in-store presence of other competitors in the market, Crocs is required to
expand its number of marketing intermediaries, enlarge its number of crocs stores and intensify its
selective distribution policy. The company’s need for the rapid store expansion is required to
merchandise 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 undifferentiated
marketing strategy, where he other parts of the product mix are dedicated for a certain segment and
will lean more towards an concentrated marketing strategy.

For crocs, the product concept applies where innovation by the Research and Development unit on
product quality and improvements are important to build profitable relationships with the target
consumers. On the long term, continues product development is required to keep up with the
environment and evolving needs of the customers and merchants.

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8. Objectives
All 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 2012

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9. Marketing Mix

9.1 Product
We advise Crocs to stay within its core compatibilities and core business to stay ahead of the
competition rather than diversification. Such a decision would require huge investments in research
and development. Money that is better spend for expanding crocs current product mix.

9.1.1Core Costumer Value
Crocs 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’ve
added the costumer value of fashion to YOU and Gators because this value this is a very important
value for most people buying shoes. Together with the existing Croc values we have the ultimate
shoes.

9.1.2Actual Product

Gators

Products  Clogs  Flip Flops  High Heels  Casual  Accessories
 Casual  Hiking Boots  Boots Shoes
Shoes  Outdoor  Casual  Athletic
 Loafers Sandals Shoes Shoes
 Water Sports  Sneakers

Quality 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
features
Style Practical as ‘Ocean lifestyle’, Sexy, sensible Though, cool Pro Sports Team
well as adventurous and and fashionable Entertainment
fashion fashionable Light Up
statement 3D
Design Clog – The more Various Modest and xx
formed, advanced design designs, Outstanding
colourful of flip flops mainly classic

Crocs
The first Crocs were the famous Clogs, the Bright color shoes with all those special features rapidly
started taking over the shoe business. It was a one type fits all gender and age. To bring this product

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to the next level we think that you should be able to ‘’customize’’ your crocs on the Internet, color
material 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 the
values 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 important
for Jibbitz because the shoes are for kids from 0 to 8. In this age category fads change rapidly. The
type of Jibbitz charms should keep with modern happenings and innovate to stay attractive to the
market.

YOU by Crocs
Focused on women from 25 to 50, the YOU by Crocs carry all the Crocs women’s footwear other than
the clogs. With You crocs is approaching the group that spends and buys the most shoes in the entire
shoe market. Currently YOU only has sold high heels. We want to stretch this product line in width to
high heels, boots and casual shoes. The focus shifts to women from 20 years old. You by Crocs carry
the basic values of Crocs core costumer value, with fashion and beauty added. To add these last two
values we explicitly separate YOU from Crocs clogs and Jibbitz.

Ocean minded
What 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 colors
and the material is though. Ocean minded focuses primarily on men, fathers and sons who seek the
wild adventure.

Gators by Crocs
Gators is created to follow YOU in the fashion market. Gators are made for teens from 13-23 which is
a new consumer group for the Crocs company. These shoes are bright colored modest fashion
models relatable to the popular Nike Air Max and the bright colored Adidas shoes. We use a market
penetration strategy because Gators is a new product, this means that in contradiction with the
other Croc brands we sell out on exclusivity and incentives. This should not affect or harm the Crocs
brand image because it’s both age, and psychographic different oriented.

9.1.3 Augmented Product
When Crocs first launched their products they introduced a few additional consumer services. If the
customer is dissatisfied with the product, he or she can return their item within 60 days. The shoe
needs to be in a resalable condition though. Crocs are also covered by a 90-day warranty. Which
means that if one of the shoes is damaged before the end of this period, they offer a new, similar
product. 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 same
warranty etc. on the new products. This to separate ourselves from our competitors and to be loyal
to our customers.

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9.2 Product Line and Product Mix
9.2.1 Product Line

Crocs

Footwear Apparel

Everyday Style Sports Jibbitz

Crocs Style YOU by Ocean
Crocs Minded

Crocs Clogs Gators by
Crocs

Broadly Crocs new product mix does not vary much from the original. Ocean minded and Bite
merged so Ocean minded shifted to the sports category. The new brand Gators was added to Style
footwear. Crocs new casual shoes are added to everyday’s footwear since it are comfortable durable
shoes for suitable for almost every occasion.

9.2.2 Product Life Cycle
Crocs Clogs
The Clogs by Crocs are in the maturity phase, we use this concept as a cash cow to financially and
brand awareness wise contribute to our other products and brands.

Ocean Minded, Crocs, Jibbitz and YOU
These brands products are already in a growth phase, though addition of new product to these
brands partly brings them back to the introduction phase. These particular products need extra
attention and promotion.

Gators
This is a whole new Brand in a whole new segment. The product line of this brand is still in a
developing phase and can therefore not be profitable yet. With support of the other brands this
brand can develop fast into a Star since it now still is a Question Mark. However to achieve this, a lot
of promotion effort has to be put into creating brand awareness for the Gators Brand.

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9.2 Place
Crocs, Inc should enhance and further develop production capacity and global infrastructure to
support the growth of the business and retail sales. Wholesale should remain the primary channel,
but crocs should continue to develop the successful retail model that allows crocs to present its full
product line and have guaranteed access to consumers.

Wholesale Seperation of Channels

Crocs need to continue selling through
wholesaling to national department stores,
10%
sporting goods retailers, and independent
specialty stores. Intensifying the selective
distribution policy by adding new external Wholesale
retail stores to carry the crocs product line is
30% retail
required to enlarge Crocs presence in the
market and carry the increase in products 60% Internet

that Crocs plan to bring on the market.

To rapidly expand its number of crocs retail
stores, it can consider franchising the store
identity by the year 2012. We advise that
60% of the sales should be done through wholesale selling.

Retail

Focus in the new strategy should be on opening new U.S. flagship stores in key geographic areas. The
flagships in major cities nationwide provide marketing “buzz” and increased exposure to the brand
driven by Crocs retail concept stores which showcase all of its product offerings. From all sales,
approximately 30% should be done through its own retail stores.

Online Distribution

Crocs should continue to focus on its internet sales channel, given the constant increase in
ecommerce and the use of the internet. However, to prevent conflicts with retailers who feel
disadvantaged by the expansion of the Crocs online channel, retailers should be offered special
products that are not for sale online to force customers to visit the brick and mortar stores. 10% of
the future sales should be done on the Crocs website.

The overview of the distribution channels remains the same as mentioned in the analysis.

Page 38 of 50

Crocs Marketing Plan

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