Positioning document completed at Santa Clara University's Leavey School of Business MBA program for Somnio Running Shoes.

2.
Company Background
In May of 2009, founder Sean Sullivan launched Somnio, a La Selva Beach, California
based footwear company. Somnio’s unique take on footwear is its ability to customize
performance running shoes using a variety of inserts to ensure better alignment, encourage
efficiency and prevent injury.
With the philosophy that each person is built differently and that every pair of shoes
should be too, Sullivan worked closely with doctors and physical therapists at the Boulder Center
for Sports Medicine (BCSM) to develop a platform from which a custom running shoe could be
made. By adjusting four interchangeable components (Exhibit 1), a Somnio shoe can be tailored
for each customer’s foot in a retail store or by using an online shoe configurator. Two of the four
components are determined by the runner’s weight and preferred running surface and are located
beneath the heel and the medial mid sole. The other two components are adjustable varus wedge
inserts, which address pronation or inward rolling of the foot, and footbeds that match the arch
height and the shape of the foot. Using the four components, more than 256 different shoe
combinations can be made to ensure that the runner is in the most biomechanically correct shoe
for them in the market. 10
Business Environment - Customer
For 2009, the Sporting Goods Manufacturers Association (SGMA) reported significant
increases in total running participants, estimating more than 43 million total runners nationwide
and a 6.7% gain since 2008. These runners can be segmented by days run per year into three
groups: casual runners, occasional runners and frequent runners. 1
Product preferences are consistent between men and women according to Running
USA’s 2009 State of the Sport Report. Women purchased an average number of 3.0 pairs of
running shoes per year while men purchased 3.4 pair. 64.4% of women and 56.4% of men spent
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$90+ on their running shoes with 50.1% of women and 42.9% of men purchasing at a specialty
running store. Favorite brands amongst core runner men and women are Nike, Asics and
Brooks. 1
Somnio is a new player in the performance running shoe industry and serves both B2B
and B2C customers focused on the core runner market. The B2B business includes retail
partners in specialty running and comfort shoe stores, medical clinics and international
distributors in Europe, South and Central America, Canada and Asia. The B2C business is
served through internet sales on www.somnioshoes.com and at select running race expos
throughout the USA. For this analysis, only the USA market will be considered. 10
Limited consumer information is known about Somnio’s end user due to the product’s
short life in the B2C market place (thirteen months). Today, the majority of consumer inquiries
come from people who are looking for an alternative shoe because they have a recurring injury
or foot issue, have tried everything else and are seeking something different. It can be assumed
from the number of internet inquiries and direct to consumer purchases that the end user is
52.7% male and 46.7% female and that the most demand stems from California, Florida and the
Northeast. 9
Business Environment - Competitors
The majority of the athletic shoe market is comprised of seven companies; Nike, Adidas,
Asics, New Balance, Skechers and K-Swiss. Other smaller but significant competitors to
Somnio are Saucony, Brooks and Newton. In order to further evaluate Somnio’s direct
competitors, Exhibit 2 reviews a sample of the competitor’s products and their target segment
preferences.
The Competitive Landscape Analysis (Exhibit 3) illustrates Somnio’s position in the
running shoe market. The analysis uses three variables: price, characteristics and market
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opportunity. Quantifying these variables give a clear picture of each running shoes’ position in
the market. Somnio is positioned well and offers a competitively priced shoe with the most
unique characteristics in the market. Hersey and Newton both have customizable parts to their
sneakers but are sold at much higher price points. The difference in price gives Somnio a strong
competitive advantage over these competitors.
Segmentation Scheme
The footwear market is broken into three distinct segments: casual shoes (52% of
market), athletic shoes (31% of market), and dress and rugged shoes (17% of market) 2. Since
Somnio sells high performance running shoes, we chose to segment the athletic shoe market by
three criteria: running days per year, income level and race/non-race participants (Exhibit 4).
Based only upon running days, the athletic shoe market was broken into three categories;
casual runners, occasional runners and frequent runners. The infrequent use of athletic shoes for
running/jogging causes the casual runners segment to be very price sensitive and less motivated
to purchase advanced athletic shoes like Somnios. Therefore this allowed us to ignore this
segment and focus solely on the two remaining.
To further segment the remaining two groups (occasional and frequent runners), we
separated them based upon annual income level as making under or over $75,000 per year. With
Somnio’s higher price point of $140, this income level divides runners who are willing and able
to afford our product from those who are not. Runners making less than our $75,000 threshold
would be less likely to invest in the product.
An additional level of segmentation was done to divide runners into those who participate
and those who do not participate in races. It was determined that 60% of runners had
participated in an event in the last year. This additional layer of segmentation grouped our target
market into individuals with similar interests who can be reached with the same advertising and
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5.
promotions. See Exhibit 4 for the segmentation scheme and Exhibit 5 for additional
segmentation attributes.
SWOT Analysis - See Exhibit 6.
Business Problem
Today, Somnio is challenged by growing pains. Company focus has weighed heavily on
product development and reactive tactical operations; however, a big picture positioning strategy
has been largely ignored. On account of this, marketing efforts have been unfocused, costly and
ineffective to date. As a result of not having a positioning strategy, Somnio is suffering from
low brand awareness and has yet to gain enough market share in the athletic shoe industry to
make it profitable.
For 2009, the Sporting Goods Manufacturers Association reports significant increases in
total running participants, estimating a 6.7% gain since 2008 (approximately 3 million people).1
With the sport of running on the rise, Somnio needs to take advantage of this growth opportunity
by devising a positioning strategy which defines a clear target market where it can establish itself
as a leader in the athletic footwear industry. The challenge will be to position itself in order to
capture those customers who truly appreciate the value propositions that Somnio has to offer.
Decision Alternatives
Alterntive 1 - All Runners making over $75,000 (Segments IV, V, VIII, IX)
All runners are defined by the occasional and frequent segments irrespective of whether
they race or not. Somnio is considered a high-end shoe in the running industry with an average
price point of $140. This price point is well above the $90+ price range where 64% of women
and 56% of men have purchased running shoes.1 Targeting consumers with an income of
$75,000 or more would be a logical decision for Somnio with the assumption that these
consumers will have the disposable income available. A total of approximately 29 million
4

6.
people run either occasionally or frequently and make $75,000 or more. This number provides
Somnio with a huge opportunity to gain market share if the company is able to appeal to this
segment. This strategy would be in line with Somnio’s current channel of selling in specialty
running stores. Runners with this level of income rarely seek deals at discount retailers, such as
Big 5, due to their ability to purchase high end products at full price. 50.1% of female and
42.9% of male runners who spent more than $90 on running shoes, purchased shoes at specialty
running stores in 2009.1
This alternative would be beneficial for Somnio to pursue. Because of its current price
point, people who make $75,000 or more will be willing and able to afford these shoes. The
difficulty with this target, however, is that not all of these runners participate in races and
therefore are not as attracted to the advanced technology and performance characteristic
associated with them. The non-racers in this category may not be willing to pay the premium
price for the advanced technology and would be happy with an “off the shelf” product.
Additionally, establishing an efficient marketing plan to target 29 million people would be
rather difficult and costly. This would require a large advertising campaign with multiple
messages to reach the wide segment of both race and non-race participants.1
Financially speaking, this is the second best option. Reaching new customers requires an
increase in the marketing budget and additional investments would be needed to reach the large
target market (Exhibit 7).
2011 2012 2013
Net profit $(382,890.22) $(71,610.79) $256,532.06
NPV $(208,008.42)
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Alternative 2 - Racers only (Segments II, IV, VI, VIII)
Racers are defined by those runners who participate in races. Somnio is one of the most
technologically advanced shoes on the market. Its high quality and performance provides
runners with the perfect setup for maximum running potential. Targeting consumers who are
racers, regardless of income level, is a strategy that would provide Somnio a large potential
market size of approximately 25 million runners. Somnio’s sales force currently attends race
events across the US which is a strategy very much in line with this alternative. With race
participation on the rise, runners are challenging themselves more and more. Somnio must
increase its visibility to the competitive runner as the brand that will give them the best
performance.
This alternative would be reasonable for Somnio to pursue because Somnio is a high
performance shoe that is ideal for racing due to its customizability for individual runners.
Runners participating at a competitive level are constantly looking for a competitive advantage.
A shoe that can be customized to their individual running style can give them this. The majority
of racers also purchase their shoes at specialty running stores which is where Somnio has its
greatest presence. These types of stores tend to go out of their way to explain the technology
behind the shoe and educate the consumer of the value of the product.
While targeting all racers seems ideal, some have less disposable income to spend on
running shoes than others. Those who make less than $75,000 may prefer to spend on a less
technologically advanced product instead. If Somnio were interested to target all racers,
regardless of their income, it would be beneficial to develop a new line of shoes that could be
sold at a lower price point. This would hurt Somnio’s branding strategy because it positions itself
as a high tech, premium brand. With innovative technology at a high price point, the consumer
believes that these shoes are superior to others. Additionally, in order to produce a shoe that
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sells at a lower price point, Somnio would have to minimize the shoe features and technology
which could sacrifice its unique position.1
From a financial perspective, this is the least attractive of the three options. To create
shoes for the less wealthy runners, Somnio will have to boost R & D to develop a cheaper shoe
and increase their marketing budget in order to speak to a broader audience. This ultimately
lowers the NPV and puts them further into debt in 2011 (Exhibit 7).
2011 2012 2013
Net profit $(526,656.38) $(127,654.59) $201,260.47
NPV $(443,507.62)
Alternative 3 - Racers who earn over $75,000 (Segments IV & VIII)
Another alternative would be to target consumers with an income over $75,000 and who
participate in races. This segment has an approximate size of 18 million runners. Somnio
currently sells shoes through specialty running stores and has a strong presence at organized
races. Currently, Somnio uses these channels to allow participants to see the shoes and consider
them when running races in the future. Runners who train for events are more prone to injury
due to their higher frequency of running which makes Somnio desirable since its technology is
aimed at increasing efficiency while preventing injury. Other brands, such as Nike and Asics,
sell models at a similar price points, however, the ability to customize the shoe to prevent injury
gives Somnio a unique position thus providing a greater appeal to those who have the monetary
means to invest in a pair.
This alternative is logical for Somnio to pursue because segments IV and VIII share
enough similarities to allow Somnio’s marketing strategy to remain consistent across
advertisements and messaging. Since it is the smallest and most targeted in population, it is also
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the most manageable in terms of budget. These segments share the same lifestyle choices, read
the same magazines, race at the same events and will overall, make it easier to reach and
communicate with them. Furthermore, Somnio will not be required to develop new products as
these segments already want what Somnio is offering; a high performance and technical running
shoe. Somnio can continue to create technically advanced shoes and leverage their core
competency of product development.
This alternative causes Somnio to lose a significant portion of the running population.
When compared to Alternative 1, the amount of market share lost by following this strategy is
11 million people. When compared to Alternative 2, the amount of market share lost is 7
million. However, 18 million runners is still a significant market to target considering the
company is still in its early stages of life in the very competitive running shoe industry.1
Financially, this is the most profitable of the three alternatives. The current product
offering that Somnio has fits the needs of this target market. Instead of spending marketing
dollars in many different segments as Somnio does today, it can spend in a focused and more
efficient manner by following Alternative 3 (Exhibit 7).
2011 2012 2013
Net profit $(291,376.98) $18,555.47 $318,505.25
NPV 14,465.28
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10.
Recommendation and Support
Analyzing the pros and cons discussed in the decision alternatives section and the
financial analysis provided in Exhibit 7, we recommend that Somnio pursue Alternative 3 -
Racers who earn over $75,000 (Segments IV & VIII).
This option allows Somnio to reach the right target market with the resources they
already have in a more efficient manner. Somnio is already under heavy debt and has very
limited human and financial resources. Raising more capital in order to execute alternative one
and two would be difficult. With our recommended alternative, the majority of Somnio’s
expenditures would not increase and it could direct its resources more efficiently to target the
market that appreciates its value proposition the most. Overtime, this will help establish brand
awareness and brand loyalty among racers earning more than $75,000. When Somnio shows
growth in these segments, this position can then be used for sustainable expansion into new
segments in the future.
Implementation
Financial Analysis
Currently, Somnio is losing just over one million dollars per year. In order to stay in
business, the company must double its growth over the next two years while keeping a closer
watch on spending.
Based on the net present value (NPV) of the projected net income for the next three
years, the only option that is positive is Alternative 3. Somnio currently has a large amount of
debt which they accumulated in 2010. This option also allows Somnio to get out of debt and
become profitable within the second year.
As stated in the recommendation section, we advise that Somnio follow a multi-segment
strategy and target runners who fall into the occasional and frequent runners category that earn
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11.
an income of $75,000 and participate in race events. While days run per year are varied between
them, runners in these segments are highly similar because they have the same the financial
means, participate in events and enjoy and appreciate the core runner lifestyle (Exhibit 4, 5).
Therefore, the following recommended functional strategies can be used to target both segments:
Product: Customers in this segment have a high interest in athletic shoes and are
knowledgeable about emerging shoe technologies. Specifically, they want improved comfort and
performance.1 These runners are not as concerned with brand, a positive for Somnio since the
company is new to the industry.
With product, Somnio will need to continue to improve its customizability features and
stay ahead of the competition with their advanced technology in order to maintain this segment’s
expectations. Though it is hard to resist the urge to jump on product trend bandwagons such as
shaping and barefoot footwear, it will be important for Somnio to establish its core products first.
To further separate itself and leverage a stronger brand presence, Somnio could also
consider forging an alliance with a well-branded company whose technology offers an additional
value add. Competitors of Somnio have partnered with companies that offer different
applications such as GPS tracking, mileage counting and easy, uploadable ways to track a
runner’s progress. By partnering with Garmin, MapMyRun.com or Facebook, Somnio could
leverage these high profile brands while also offering a uniquely beneficial shoe.
Price: Customers in this segment are the least price sensitive. They have the financial
means to support their running lifestyle (which includes purchases of running magazine
subscriptions, event registration fees and running apparel) and are privy to the latest in shoe
technology and performance. Somnio’s current offerings (models from $130 to $160) should be
maintained at the current price point. At this price, Somnio remains competitive with other
premium shoe brands that are also perceived as high performance and technical. A lower than
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12.
average price point of $140 would erode Somnio’s profit margin and would align their products
in the same price range of lesser technical shoes.
Promotion: Today, Somnio’s sales and marketing budget exceeds 100% of its sales
revenue because of its start up nature, unfocused and costly marketing plan and pressure to
establish itself quickly in the running shoe market. By following Alternative 3, Somnio can
focus its marketing promotion efforts as follows:
- Hone field marketing efforts to 10K, half marathon and marathon events that target 40-
50% attendance of participants who have an annual income greater than $75,000, where potential
market size is greater than 25,000 and in cities where running populations are the largest (Exhibit
8). Somnio’s sales team reports a greater than 90% close rate on shoes purchased once a runner
is taken through the fit process and is able to try them on.10 Using grassroots tactics, the field
marketing and sales team must get as many people in Somnio shoes as possible with a goal of
25% impressions to the target market (approximately 6,250 participants/event).
- Once per quarter advertise in relevant media which could include Runner’s World,
Running Times, Triathlete Magazine or Triathlete.com. 96% of the audience polled who use this
media said that they like to be the first to hear about the latest in products.3 Not only do these
early adopters have the financial means to purchase, but they often have tremendous influence
throughout their running clubs, teams and sport. 3
- Once per quarter create incentives and offers such as a “Trade-UP” program to
encourage consumers to “jump” brands and build brand loyalty (10% discount for trading in
Nikes, Asics, Brooks etc).
Place: Today, approximately 80% of Somnio USA sales come from specialty run stores
while 20% come from internet and on site events. 9 When asked where they purchase running
shoes, 46.5% (average) consumers in Somnio’s target segments prefer buying at specialty run
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retailers.1 Somnio will need to continue to aggressively pursue both of these sales channels by
doing the following:
- Invest 5% of Somnio annual sales into the retail sales program (approximately
$50,000). By continuing to educate retailers by hosting training events, more will buy in to the
technology of the product thus realizing the value add that can be offered to their customers.
This will drive revenue up in the specialty run sales channel and create a sustainable product-
buy cycle.
- As online shopping becomes more of a norm and continues to grow in preference,
Somnio will need to maintain (at the minimum) its current budget of website development
(~$35,000/year). Maintaining a clean, sophisticated and technically visual site with easy to
navigate shopping cart and quick access to Somnio’s customer service team though instant
messaging or video chat will continue to drive business to this channel. Because margins are
largest here, online marketing through Ad Words campaigns and the like will play a pivotal role
in growing Somnio’s business.
- Race participation in half marathons was up 16% for the first quarter of 2010. 5 Somnio
should continue to pursue field marketing opportunities at race expos with special focus on half
marathon events where 40-50% attendance of participants have an annual income greater than
$75,000, where potential market size is greater than 25,000 and in cities where running
populations are the largest (Exhibit 8).
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14.
Works Cited
1. "2010 Marathon, Half-Marathon and State of the Sport Reports | Running USA." Home |
Running USA. Web. 13 Oct. 2010. <http://www.runningusa.org/node/57770#57852>.
2. “Athletic Shoes - US” June 2008. <http://0-
academic.mintel.com.sculib.scu.edu/sinatra/oxygen_academic/search_results/show&/disp
lay/id=295922>
3. Category, By. Triathlon Training, Gear, Nutrition, Photos, Race Results & Calendars –
Triathlete.com. Web. 30 Nov. 2010. <http://triathlon.competitor.com/>.
4. "Customized Running: A Visit With Somnio Running Shoes." Competitor Running Is the
Leading Source for News, Training and Information in the World of Running and
Marathons. Web. 19 Oct. 2010. <http://running.competitor.com/2009/11/shoes-and-
gear/customized-running-a-visit-with-somnio-running-shoes_6854>.
5. "Instant Pageflip." Runner's World: Running Shoes, Marathon Training, Racing. Web. 30
Nov. 2010. <http://www.runnersworld.com/mediakit/gp/index.html>.
6. "Report: The U.S. Market for Footwear TOC." Global Information, Inc. - Market
Research Reports. Web. 2 Oct. 2010. <http://www.the-infoshop.com/report/pf36793-
footwear_toc.html>.
7. Rock ‘n’ Roll Marathon and Half Marathon – Series Lineup. Web. 30 Nov. 2010.
<http://runrocknroll.competitor.com/>.
8. "Runner's World Ranks the 25 Best Running Cities in America." Cool Running. Web. 01
Dec. 2010. <http://www.coolrunning.com/engine/3/3_1/runners-world-ranks-the-
2.shtml>.
9. "Somnio Consumer Services Manager Interview." Personal interview. 7 Oct. 2010.
10. "Somnio Founder and President Interview." Personal interview. 7 Oct. 2010.
11. The ING New York City Marathon. Web. 30 Nov. 2010.
<http://www.ingnycmarathon.org/about/1020.htm>.
13

15. Exhibit 1: Somnio Shoe with Parts

16. Exhibit 2: Running Shoe Comparison
Segments
Casual
Occasional Runners Frequent Runners
Runners
< or > $75K/year <$75K/year <$75K/year >$75K/year >$75K/year <$75K/year <$75K/year >$75K/year >$75K/year
Shoe Name Price Does not Participate in Participate in Does not Participate in Participate in Does not Participate in Participate in Does not Participate in Participate in Does not Participate in
Races Races Races Races Races Races Races Races Races
Adidas Adizero aegis $110 X X X X X
Allegra 3 $52 X X
Supernova Sequence 3 $100 X X X X X
Nike Lunar Slide $135 X X
5.0 V4 $110 X X X X
Air Max $185 X X X X
Asics Kayano $140 X X X X
Nimbus 12 $125 X X X
Evolution $120 X X X
Somnio Motion/mission control $150 X X
Exact Change Stability $140 X X X X
Runaissance Neutral $130 X X X X X
Pacemaker $135 X X X X X X
Westridge Trail $130 X X X X X X X
Self Control Cushioning $160 X X
Hersey Hersey Custom DPS $265 X X
Hersey Custom original $235 X X
Hersey Custom TR $210 X X
Newton Univeral racer YES $175 X X
Momentum $139 X X X X X X
Guidance Trainer YES $149 X X X X
Gravity $175 X X
Distance Yes $155 X X X X
New Balance MR2002 $249 X X
MR1906 $199 X X
MR1123 $150 X X X X
MR993 $140 X X X X
MR1064 $130 X X X X
Brooks Neutral - Glycerin 8 $130 X X X X
Guidance - Ravenna $100 X X X X X
Control - Beast $130 X X X X
Competition - The Wire $100 X X X X X
Saucony Integrated Training - ProGrid $130 X X X
Motion control - Sbabil CS $115 X X
Performance - Fastwitch 4 $85 X X
Reebok Trinity V $130 X X X X
Premier SmoothFit Ultra KFS VII $120 X X X
Premier Road Supreme $100 X X X
Puma Complete Ventis $70 X X
Complete Vectana $60 X X
Sketchers Resistor Run $130 X X X X
K-Swiss Run One-miSOUL Tech $125 X X X X
Keahou II NP $100 X X X
Tubes Run 100 $75 X X
KEY
X Target Markets for Shoe
Our Target Market
Competitors

17. Exhibit 3: Somnio Competitive Landscape

18. Exhibit 4 - Segmentation Scheme
U.S. Athletic Shoes market (31% of total shoe market)
Frequent Runners
•! (Run/Jog 100+ days/yr)
Occasional Runners •! 16,446,000 frequent
•! (Run/Jog 50+ days/yr) runners in 2009
25,559,000 occasional (Up 9.8% from 2008)
runners in 2009 •! Currently the U.S. has the highest
Casual (Up 9.2% from 2008) level of frequent runners in 20 yrs
Runners
•! (Run/Jog Under $75k Over $75k Under $75k Over $75k
under 50 days/ •! 7,923,290 •! 17,635,710 •! 5,098,260 •! 11,347,740
yr) runners runners runners runners
•! 1,887,000
runners in 2009 Racers Racers Racers Racers
Non-Race 10,581,426 Non-Race 3,058,956 6,808,644
•! Low interest 4,753,974 Non-Race Non-Race
in athletic shoes runners 3,169,316 runners 7,054,284 runners runners
2,039,304 4,539,096
runners runners runners runners
I II III IV V VI VII VIII IX

19. Exhibit 5: Segmentation Description
Occasional Runners - 4 Segments Frequent Runners - 4 Segments
(25,559,000 total people) (16,446,000 total people)
CHOSEN SEGMENT CHOSEN SEGMENT
(TARGET MARKET) (TARGET MARKET)
Segment Number II III IV V VI VII VIII IX
Income Under $75k/year Under $75k/year Above $75k/year Above $75k/year Under $75k/year Under $75k/year Above $75k/year Above $75k/year
Market Size 7,923,290 people [31%] 7,923,290 people [31%] 17,635,710 people [69%] 17,635,710 people [69%] 5,098,260 people [31%] 5,098,260 people [31%] 11,347,740 people [69%] 11,347,740 people [69%]
Participates in races Does not participate in races Partcipates in races Does not participate in races Participates in races Does not participate in races Participates in races Does not participate in races
Market Size 4,753,974 people [60%] 3,169,316 people [40%] 10,581,426 people [60%] 7,054,284 people [40%] 3,058,956 people [60%] 2,039,304 people [40%] 6,808,644 people [60%] 4,539,096 people [40%]
Run Days per year (Run/Jog 50+ days/yr) (Run/Jog 50+ days/yr) (Run/Jog 50+ days/yr) (Run/Jog 50+ days/yr) (Run/Jog 100+ days/yr) (Run/Jog 100+ days/yr) (Run/Jog 100+ days/yr) (Run/Jog 100+ days/yr)
Low - Technology, comfort, Low - Technology, comfort,
Low - Technology, comfort, and Medium - Moderately Medium - Moderately Low - Technology, comfort, and Low - Technology, comfort, and Low - Technology, comfort, and
and performance and performance
Style performance considered more concerned with style, fashion, concerned with style, fashion, performance considered more performance considered more performance considered more
considered more important considered more important
important than brand name and personal taste and personal taste important than brand name important than brand name important than brand name
than brand name than brand name
High - overall comfort and High - overall comfort and
High - overall comfort and feel High - overall comfort and feel High - overall comfort and feel High - overall comfort and feel High - overall comfort and feel High - overall comfort and feel
Comfort feel considered very feel considered very
considered very important considered very important considered very important considered very important considered very important considered very important
important important
Low - Considers comfort Medium - High income slightly Low - Considers comfort Medium - High income slightly
Low - Considers comfort and Low - Considers comfort and Low - Considers comfort and Low - Considers comfort and
and performance more influences purchasing behavior and performance more influences purchasing behavior
Brand Loyalty performance more important than performance more important performance more important performance more important
important than brand towards more expensive brand important than brand towards more expensive brand
brand name than brand name than brand name than brand name
name loyalty name loyalty
Medium - Fairly aware of High - Well aware of Medium - Fairly aware of Medium - Fairly aware of High - Well aware of Medium - Fairly aware of
High - Well aware of emerging High - Well aware of emerging
emerging technologies to emerging technologies to emerging technologies to emerging technologies to emerging technologies to emerging technologies to
Technology technologies to improve comfort and technologies to improve
improve comfort and improve comfort and improve comfort and improve comfort and improve comfort and improve comfort and
performance comfort and performance
performance performance performance performance performance performance
Low - Not price sensitive Low - Not price sensitive
Medium - Fairly price sensitive Medium - Fairly price sensitive Low - Not price sensitive due to
Low - Not price sensitive due to use due to high income and Low - Not price sensitive due to Low - Not price sensitive due to due to high income and
Price due to semi-frequent use of due to semi-frequent use of frequent use of athletic shoes
of athletic shoes in races use of athletic shoes in use of athletic shoes in races frequent use of athletic shoes use of athletic shoes in
athletic shoes athletic shoes and high income
races races
High - Performance and High - Performance and High - Performance and High - Performance and
High - Performance and comfort High - Performance and High - Performance and High - Performance and
comfort considered more comfort considered much comfort considered more comfort considered much
considered much more important comfort considered much more comfort considered much more comfort considered much more
Performance important than style and brand more important than style important than style and brand more important than style
than style and brand loyalty due to important than style and brand important than style and brand important than style and brand
loyalty due to semi-frequent and brand loyalty due to loyalty due to semi-frequent and brand loyalty due to
use in races loyalty due to use in races loyalty due to very frequent use loyalty due to very frequent use
use use in races use use in races
High - High income, High - High income, very
High - Occasional use and Medium - Occasional use and occasional use, and Medium - Occasional use and High - Very frequent use and frequent use, and
High - Very frequent use High - Very frequent use
participation in races causes little to no participation in races causes participation in races no participation in races causes participation in races causes participation in races
Motivation to purchase causes little to no hesitation to causes little to no hesitation to
no hesitation to purchase athletic a slight amount of hestitation to causes little to no a slight amount of hestitation to little to no hesitation to causes little to no
purchase athletic shoes purchase athletic shoes
shoes purchase atheltic shoes hesitation to purchase purchase atheltic shoes purchase athletic shoes hesitation to purchase
athletic shoes athletic shoes

20. Exhibit 6: SWOT Analysis
Strengths Weakness
! Product is highly customizable so it ! Little to no brand recognition
appeals to a variety of customer ! Need a high shoe price to cover R&D
needs costs
! Strong customer & media reviews ! High shoe prices create barriers for
! Patented technology. Canʼt be easily attracting new customers
copied. High barrier for entry ! Small company with limited resources
! Experienced customer service team. both financial and human
! R & D. Partnership with world ! Retailers are apprehensive to carry
renowned bio-mechanics experts ! Low availability of shoes to
(BCSM) customers, because of weak retailer
partnerships
Opportunities Threats
! The sport of running continues to ! Intense competition from major
grow in spite of the recession (6.7% brands
gain since 2008) ! Larger companies have additional
! Participation in races like half- resources to develop competing
marathons are increasing every year technology
! Since shoes are customizable Somnio ! Alternative trends (barefoot running)
can easily adapt to take advantage of could reduce demand for running
market trends shoes

21. Exhibit 8: Implementation - Race Promotion
1, 11
Top 5 LARGEST USA ROAD RACES 10K, 1/2 Marathon, Marathon- Sorted by # Participants
%
Expected
Annual Potential
Month Event Distance Race Min Expo Rate Location
income Market Size
Attendance
$75K+
July AJC Peachtree Road Race 10K 49,967 $1,300.00 Atlanta, GA 52% 25,983
May Bolder Boulder 10K 47,067 $2,100.00 Boulder, CO 44% 20,709
Oct Chicago Marathon 26.2M 45,000 $3,000.00 Chicago, IL 61% 27,450
May Bloomsday Run 12K 44,490 $750.00 Spokane, WA 41% 18,241
Nov NYC Marathon 26.2M 43,660 $5,000.00 New York, NY 70% 30,562
Budget for Expo Fees $9,300.00 Total Market Impressions 83,995
7
Rock and Roll 1/2 Marathon Series
%
Expected
Annual Potential
Month Event Distance Race Min Expo Rate Location
income Market Size
Attendance
$75K+
Jan Arizona 12.1M 100,000 $ 2,700.00 Pheonix, AZ 52% 52,000
Feb New Orleans 12.1M 35,000 $ 1,500.00 New Orleans, LA 61% 21,350
March Dallas 12.1M 40,000 $ 1,500.00 Dallas, TX N/A N/A
April Nashville 12.1M 50,000 $ 2,100.00 Nashville, TN N/A N/A
June San Diego 12.1M 75,000 $ 2,700.00 San Diego, CA 45% 33,750
June Seattle 12.1M 55,000 $ 2,100.00 Seattle, WA 48% 26,400
Aug Providence* 12.1M N/A N/A Providence, RI N/A N/A
Aug Chicago 12.1M 35,000 $ 1,900.00 Chicago, IL 50% 17,500
Sept Virginia Beach 12.1M 45,000 $ 1,900.00 Va Beach, VA 58% 26,100
Sept Philadelphia 12.1M 25,000 $ 1,900.00 Philadelphia, PA 64% 16,000
Oct San Jose 12.1M 25,000 $ 1,500.00 San Jose, CA 50% 12,500
Oct Denver 12.1M 32,000 $ 1,500.00 Denver, CO 70% 22,400
Oct St Louis* 12.1M N/A N/A St Louis, MO N/A N/A
Oct Los Angeles 12.1M 30,000 $ 1,500.00 Los Angeles, CA 50% 15,000
Nov Savannah* 12.1M N/A N/A Savannah, GA N/A N/A
Nov San Antonio 12.1M 60,000 $ 2,000.00 San Antonio, TX N/A N/A
Dec Las Vegas 12.1M 65,000 $ 2,600.00 Las Vegas, NV 40% 26,000
Budget for Expo Fees $ 12,000.00 Total Market Impressions 164,250
Key Events to Attend
Top USA Running Cities 8
1 San Francisco
2 San Diego
3 New York City
4 Chicago
5 Washington DC
6 Minneapolis/St. Paul
7 Boulder
8 Boston
9 Denver
10 Portland
11 Austin
12 Seattle
13 Philadelphia
14 Colorado Springs
15 Dallas