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

1. ATHLETIC FOOTWEAR Consumer Market Analysis Prepared by: Mark Bundang Sofia Del Rio Derek Anthony Rossi For: Consumer Behavior April 02, 2009

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. 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.

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

17. Industry Marketing Efforts Product Place Promotion Price Marketing Mix

18. Industry Marketing Efforts Nike Product Place Promotion Price

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. 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.

24. Industry Marketing Efforts New Balance Product Place Promotion Price

25. Industry Marketing Efforts New Balance Product Price Running shoes from $55 to $140

26. Industry Marketing Efforts New Balance Promotion Place Canada 12 stores US 137 stores

27. Industry Marketing Efforts Asics Product Place Promotion Price

28. Industry Marketing Efforts Asics Product

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. Industry Marketing Efforts Asics Promotion

31. Industry Marketing Efforts Adidas Product Place Promotion Price

32. Industry Marketing Efforts Adidas Product Price Women’s from $60 to $125 Men’s from $60 to $200

33. Industry Marketing Efforts Adidas Place

34. Industry Marketing Efforts Adidas Place

38. Primary Research Demographics Q.101, Q.105 Base: All respondents (41) % of respondents Age Gender % of respondents Primary Research Slide

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. 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. 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

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. 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

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. 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. 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. 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%

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. 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)

59. Marketing Strategies Developing the Marketing Mix Promotion Sponsoring Tracking team

60. Marketing Strategies Developing the Marketing Mix Promotion Product placement in Movies

62. Marketing Strategies Developing the Marketing Mix Promotion

64. Thank you for your Time! Any Questions?

65. Appendix

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. 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. 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. 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. 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)