The North Face, Inc. sneaker industry, is a highly sophisticated designer, distributor, and marketer of technically innovative sneaker products. We have built a strong, widely recognized line of products, and have been established as the world’s premier brand for outdoor apparel. Our sneaker line offers state-of-the-art technology that offers comfort, support, and style, backed by a lifetime manufacturers warranty so that our consumers are provided with all of the luxuries that they deserve.
2.0
Situation Analysis
The North Face, Inc., offers a wide variety of specialized sneakers, designed primarily for professional climbers, and outdoor enthusiasts. The North Face, Inc. offers incomparable state-of-the-art technology, which has satisfactorily led to increased levels popularity and customer loyalty. However, currently The North Face sneaker retains less than 5 percent of the market share due to the popularity and general distribution of our top competitors such as: Nike, Adidas, New Balance, and Saucony.
Our North Face trail sneakers are primarily sold at specialty/outdoor sporting good stores for between $59.95 and $105.00. Adidas offers sneakers with minimal technology, which are trendy reasonably priced, with high-end retail prices of about $65.00. New Balance offers sneakers with limited technology, which are stylish and competitively priced, with high-end retail prices of about $80.00. Nike offers comparably priced sneakers, however like New Balance and Adidas, Nike’s channel of distribution is primarily centralized around general retail shoe/sneaker stores. Nike’s annual sales for 1999 were $8,776.9 M, approximately 35 times that of North Face which in 1999 had sales of $247.1 M.
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The North Face, Inc., intends to accrue and retain unprecedented percentages of our customer base over the next decade. We believe that once a consumer purchases one of our products, that they will recognize how far superior we are to our competition and appreciate our intentions of staying there. The North Face, Inc., intends to create a shift in general consumer preferences, leading to an increasing demand for our highly functional products at the expense of fashion-oriented products. We seek to promote a superior acceptance of our outdoor apparel as casual wear, and we intend to encourage an increase in the technical sophistication of the products in this field.
2.1 Market Summary
The North Face, Inc. is a highly sophisticated technologically based company that offers a variety of outdoor sneaker products to the public around the world. Trends towards more active outdoor lifestyles is demonstrated by the increased participation in a variety of outdoor activities such as, hunting, camping, and hiking. Many outdoor enthusiasts around the world appreciate our services, because they rely on our products as dependable means of security for all of their outdoor adventures. In addition, our products have become increasingly useful to consumers who are not necessarily outdoors men/women, because they too have begun to see the advantages of functionally high-performance products. This, in conjunction with a rise in casual wear popularity, particularly in the workplace, has resulted in a leveling off of our target market, creating an almost even distribution of our sneaker products to the general public.
2.1-1 Market Demographics
Outdoors Enthusiasts- Usually consisting of men and women between the ages of 18 and 35 in a middle to upper/middle socioeconomic bracket. These customers are thought to be the most profitable, and brand loyal consumers, accounting for nearly 45% of total revenue in 2000. Because of their active outdoor lifestyles, these consumers are concerned with reliability, and the proper maintenance of their outdoor gear.
Health Conscious- This customer base provided for about 20% of total revenues for 2000. This group usually consists of men and women aged 25-50 in a upper/middle socioeconomic bracket. Because of the booming health craze, North Face intends to gain an advantage on the marketplace by consistently introducing new high quality models of sneakers into the market place.
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0thers- This customer base, provided for the other 35% of our annual revenue in 2000. Usually consisting of men and women, aged 5-75 from lower to upper socioeconomic brackets. Because of the limited loyalty, stressing the specialized technological attributes, reliability and overall comfort of our products is key toward recapturing their business.
2.1-2 Market Needs
North Face’s trail running line of sneakers provides an invaluable asset for all whom use them. Looks, style, durability, ability and brand are the most important attributes that a consumer is looking for when purchasing sneakers. Consumers are wearing sneakers for their style and appearance, as well as for their performance. At North Face, we have developed a team of inspired individuals who work in perfect harmony to construct a product that is nothing short of the perfect fusion of design and technology. We are providing the highest quality sneaker to our customers, so that they may be capable of withstanding anything that mother nature can throw their way. We have designed the most durable, and capable indoor/outdoor sneakers, so that our customers feel security in their purchase, and We have strived to attain our customers trust, and this is why those who are aware of the North Face sneaker find it to be one of the most stylish and durable brands of sneakers.
2.1-3
Market Trends
Current trends in the sneaker marketplace include, economic conditions, consumer behaviors and outlooks. Health has become an increasingly important issue in the minds and attitudes of many individuals today. Over the past few decades, popular trends have placed significant emphasis on the importance of exercise. More and more doctors are prescribing exercise for their patients as a conventional approach toward achieving good health. As a result many individuals began to pick up on hobbies such as, camping, and hunting, to move towards an active lifestyle. Consequently, consumers have become more apt to go out and purchase the proper equipment for their cardiovascular exercising needs.
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Economic conditions affect the way every consumer evaluates their hierarchy of needs, and how they may choose to dispose of their income. Over the last decade or so, we have seen unparalleled economic prosperity, which in turn has led to an excess of discretionary income for many individuals, resulting in added purchases of leisure products, such as sneakers. This increase in prosperity, has motivated us to work towards targeting a broader realm of consumers, so that we may ultimately gain a greater control over the marketplace.
2.1-4 Market Growth
Our target markets are expected to create an enchanting increase in our market share growth from year 2001 to 2005. We foresee a steady growth rate of approximately 21%over the next five years. Due to our innovative marketing techniques, discounts, endorsements, as well as the new North Face Outdoors Membership Rewards Program®, where members earn rewards for all of their purchases, The North Face, Inc., anticipates these development patterns to remain stable for an infinite amount of time to come.
2.2 SWOT Analysis
Strengths:
I.
Technically innovative products, that are constructed using state-of-the-art technology
II.
Two current patents and 3 others pending in the North Face shoe industry
III.
Well-built Reputation in the outdoor apparel industry
IV.
Brand loyal customers
Weaknesses:
I.
Inaccurate perceptions
II.
Inadequacies in marketing the North Face sneaker line resulting in low levels of brand awareness
III.
Failure to create awareness of innovative technologies in North Face sneaker lines.
IV.
Limited distribution of products
Opportunities:
I.
Upward shift in economy
II.
Increased levels of prescribed exercise from very well respected doctors
III.
Increased number of health conscious individuals
IV.
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Upward moving trends towards more active outdoor lifestyles
V.
Shift in perceptions of unique high-quality products
Threats:
I.
Increased levels of competition
II.
Competitors increased sophistication
III.
No shift in perceptions
2.2-1 Strengths
North Face, Inc.’s, Strengths encompass the following:
• Technically innovative products that are constructed using state-of-the-art technology, distinguishing North Face sneakers from all our competitors’ products.
• North Face sneakers currently retain two patents along with three pending. These innovations distinguish North Face from competitors, and more prominently add to the overall quality and effectiveness of our products.
• A well-built reputation in the outdoor apparel industry helps to give North Face sneakers a competitive edge in achieving popularity through proper marketing strategies.
• North Face sneakers created Brand-loyal customers, where nearly 85% return to retailers for succeeding purchases.
2.2-2
Weaknesses
North Face, Inc.’s, weaknesses encompass the following:
• Inaccurately perceived as products built only to suit outdoor enthusiasts and professional climbers.
• Inadequacies in marketing the North Face sneaker line resulting in low levels of sneaker brand awareness. Consumers are generally aware of the North Face brand, however, are too often not aware of the North Face sneaker line, resulting in unfavorable market share.
• Consumers unawareness of innovative technologies, results in minimal levels of perceived prestige.
• Limited distribution of sneaker products to specialty shops creates inferior levels of general consumer knowledge.
2.2-3 Opportunities
Opportunities available to North Face Inc. include:
• Upward shifts in economic conditions increasing available levels of discretionary income.
• Increased levels of prescribed exercise from very well respected doctors increasing levels of interest to obtain quality exercise equipment.
• Increased number of health conscious individuals creates a boom
2.2-4 Threats
Threats that may exist for North Face Inc. include:
• Increased levels of competition broaden the consumer’s marketplace
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• Competitors increased levels of sophistication threaten to take from North Face’s distinguishable innovations
• The average consumer may not be inclined to purchase products that are designed to withstand treacherous conditions.
2.3 Competition
Competition is composed of a few primary competitors such as Nike, and New Balance as well as some minor competitors such as Montrail, and Brooks. Although the minor competitors are often sold predominantly in specialty stores, the primary competitors preserve a much broader range of retail distributors in the market place.
Major Competitors
·
Nike/Air Crested Butte($79.95)
This sneaker combines a full-length Phylon Midsole with front and rear Air-sole units to make a stable, well-cushioned shoe. It offers G-tek® outsole technology that provides great traction. It also features a Gore-Tex lined inside which keeps your feet dry and warm and a rubberized toe bumper for protection.
·
Nike/Air Terra Humara($89.95)
The Humara also combines dual Air-sole units with G-tek® technology for extreme traction. The difference between the Humara and the Crested Butte is that the Humara has an interlocking Phylon midsole for enhance cushioning and traction.
·
Nike/Air Terra Wildgoat($89.95)
Named for the G-tek® traction technology in its outsole, the Wildgoat supposedly mimics the traction control of a mountain goat. It features sticky rubber pads for surefooted traction. The Wildgoat is also lighter in weight than the Humara. It is a less supportive sneaker but it is extremely flexible.
• Nike/Air Terra Sebec($69.95)
This sneaker is the youngest member of the Nike trail running family. The Sebec is a cheaper option for the entry-level trail runners and is most comparable to The North Face’s Kuna Crest.
• The New Balance M1220S($69.95)
This sneaker offers the ABSORB® and ROLLBAR® technologies designed for cushion and stability. The M1220S is a mid-range option in the New Balance sneaker line up . This sneaker is designed primarily for running or tennis, however is recommended as an every day comfort shoe.
• The New Balance M930AT(59.95)
This sneaker is designed primarily for walking purposes. The M930AT features C-CAB® and ABSORB® technologies which are designed for maximum cushion and flex . This sneaker offers a relatively cheap shoe for the consumer, and has been well afforded with fashionable style for over 12 years.
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Minor Competitors
• Montrail/Vitesse($79.95)
The Montrail Vitesse offers a very comfortable, ergonomically fit running sneaker. Montrail uses a synthetic leather with mesh uppers to make for a “foot friendly” fit. Montrail offers a new innovation to the market, FasTrax®, which adds to the effectiveness of the sticky rubber sole.
• Brooks/Gila($89.95)
The Gila , like the lizard from which it gets its name, possesses a tough outer skin providing protection from rugged terrain. A Polertec lining is designed to keep warmth in the sneaker, as well as to maintain a dry and comfortable foot. It features a Terrapod® outsole to provide flexible traction.
2.4
Product Line
The primary characteristics of the physical sneaker are that they are light, and brightly colored with reflectors. They come standard straight laces and a solid gripping bottom. The conventional function of the sneaker is to run on outdoor trails while experiencing great comfort on the feet. The shoe offers comfort and quality while maintaining a high level of modern fashion. The North face is a very popular name in outdoor apparel and we feel that through implementing effective marketing strategies that this popularity will carry over to our sneaker line.
·
The North Face/ Triple Divide Mid($74.95)
This sneaker is made of prime Weathertuff® waterproof leather built to keep the foot warm and dry through treacherous terrains. This sneaker offers an integrated webbing eyestay lacing system that allows for a uniform, snug fit. It has a Firm X-2® midsole to add support and stability while maximizing comfort. The Triple Divide has a self-cleaning multi-dimensional lug design to provide maximum trail traction. The mid-cut of the sneaker provides additional ankle support. This product costs an average of seventy-four dollars and ninety-five cents.
·
The North Face/ Triple Divide($69.95)
This sneaker is designed primarily for lightweight trail activities. The interior is lined with wicking material known as Drilex® designed to keep your feet drier. The nubuck leather uppers are partially seam sealed and constructed with a full tongue to create a barrier against most elements. The sneaker also has a full-length polyurethane midsole which is more durable than most and adds support and stability. This sneaker has an average cost of sixty-nine dollars and ninety-five cents.
·
The North Face/Sawtooth Ridge(79.95)
This sneaker has an all-terrain outsole matched with a dual density midsole that is engineered for both support and cushioning. The toe-box of the sneaker is composed of a rubber toecap for maximum protection. It is less flexible in the forefoot than most trail runners making it more useful on a rugged outdoor terrain. This sneaker costs sixty-nine dollars and ninety-five cents.
• The North Face/Kuna Crest($59.95)
The Kuna Crest addresses the issues of stability, durability and all-terrain traction. It features a tight fit in the arch and heel to reduce slippage. This sneaker also features a reinforced toe box, rubber toecap, and an innovative lug design for maximum traction. This sneaker is built upon synthetic leather with a breathable mesh upper, which maximize warmth and necessary circulation. The Kuna Crest costs about fifty-nine dollars and ninety-five cents.
2.5 Keys to Development
• Diversification of distribution.
• Implementing effective marketing strategies to achieve maximum consumer awareness.
• Maintain competitive pricing levels.
• Gain competitive edge by further developing patents and new modernizations to keep hold of technological dominance.
2.6
Critical Issues
North Face’s sneaker line is currently achieving positive revenues, however we plan to take a capitalistic approach to maximize profits within the industry. North Face plans to branch out the distribution of our products to a larger line of retail distributors create for. We believe that effectively marketing our products to the general public will us a greater horizon of consumers, while also steering us towards achieving a greater share of the marketplace. We anticipate a highly profitable future, and plan to generate a new standard of sneaker for the entire industry for years to come. We plan to utilize our strengths in order to properly execute the necessary strategies to make the most out of all of our obtainable opportunities.
3.0 Mission
North Face is committed to offering the highest quality of sneaker at the most reasonable of prices. Due to consumers’ recent interests, North Face is determined to provide highly functional, and technological performance-oriented products. North face is dedicated to achieve and preserve customer loyalty and deference through providing products for them, which are second to none.
3.1
Marketing Objectives
The North Face goal is to increase brand awareness by projecting a high quality, technically sophisticated, genuine image that may appeal to professional, and serious outdoor fanatics, as well as a much broader segment of consumers.
1. To become a fierce competitor, and to gain a greater hold of the total sneaker industries market share by maintaining 20% of total sales annually.
2. To diversify distribution of products from specialty to all major retail sneaker stores within four years, which will account for 55% of our total annual revenues.
3. To appreciate a 21% increase in our total revenues to year prior.
4. To increase general consumer awareness of The North Face product line.
5.
To broaden the horizons as to the level of total person purchasing our products.
3.2
Marketing Strategy
Our Marketing strategies are built on a foundation designed to go above and beyond consumers’ expectations. We create synergy between employees in all of our business units in order to properly develop production strategies in order to ultimately gain a competitive advantage over our competitors. We recognize and capitalize on each of our distinctive competencies within the industry. North Face focuses on appropriately emphasizing short and long term objectives in order to bring our missions, objectives, and anticipations of the foreseeable future into a perfect dovetail.
Target Market: Outdoor enthusiasts, health conscious individuals, and general sneaker consumers aged 5-75
Positioning: Highly innovative authentic performance sneakers, which promote comfort and performance, through state-of -the-art technologies which support agility, quality, and ergonomics.
Price: Priced competitively in the marketplace, between $59.95 and $105.95.
Service: Technically superior products, capable of withstanding the most extreme conditions. Offer a fine union of style and comfort, through the fusion of design and technology, all for an equitable price.
Sales Promotion: To develop sales promotions such as discounts and Reward points in order to enhance consumer awareness and loyalty.
Advertising: Develop valuable campaigns through product distributors to heighten product awareness as well as to attract perspective customers. To campaign on the basis of style and quality to individuals who are not outdoor enthusiasts and who have not yet tried North Face products.
Marketing Research: Plans to surveys and to produce survey analysis, to conclude effectiveness of our campaigning and overall satisfaction with our products.
3.3
Financial Objectives
1.
Revenue of $298,991,000 by year-end to realize a growth rate of 21% from prior year.
2.
Total expenses incurred maintained at a maximum of 25% of sales
3.4
Target Marketing:
Our three primary targets consist of the following:
1.
Outdoor enthusiasts who find leisurely time to explore Mother Nature. This group is typically man and women between the ages of 18-35. This group derives much pleasure from our products, and holds a lot of trust in North Face. This group does not mind spending discretionary income on our sneaker products because they act as a luxury for them, in providing great comfort and protection for all of their active needs.
2.
Health conscious individuals whom are shopping for high quality exercise equipment to meet all of their workout needs. This group usually consists middle class men and women between the ages of 25-55 who are searching for new energy and health in their lives.
3.
Our other consumers consist of all people ages 5-75 who are searching for a sleek stylish look, along with a comfortable feel in a sneaker. This group is limited in their loyalty to the brand, due to the vast level of competition within the industry.
3.5
Positioning, and Marketing Mix
The North Face is the leading designer, distributor, and marketer of technically sophisticated outdoor apparel and equipment. Over the past thirty four years, our company has built a strong and widely recognized reputation for high quality, innovative products, which has established The North Face as the worlds premier brand of outdoor apparel and equipment. We design and distribute a broad range of products all under The North Face brand and all backed by a lifetime manufacturer warranty.
Our products include high-performance outerwear, skiwear, tents, sleeping bags, backpacks, daypacks, and Tek-ware – a unique line of one hundred percent not cotton functional sportswear. Our reputation for quality, performance and authenticity differentiates and exemplifies our brand. Our ability to develop technically advanced and superior products, capable of withstanding the most extreme conditions is the reason why so many customers have chosen The North Face.
The knowledge that the North Face has gained through their development process has allowed us to create hundreds of new products over the past several years that appeal to an increasingly wider consumer audience from extreme athletes to weekend athletes to the tranquil consumer.
Our line of sneakers consists of highly advanced, comfortable shoes that are as appealing to the eye as they are the foot. We strive to meet the demands of the consumer. We accomplish this not only by providing our products but also by aiming to stimulate active lifestyles for such a broad range of people. We provide top of the line products so that each time our customers make a purchase, they may return home with a sense of relief and the knowledge of knowing that they bought a name that they can trust.
3.6
Marketing Research
The North Face, Inc., will continue to employ the most competent individuals, so that new innovations and technologies will always be prevalent in the North Face sneaker product line. We will continue to practice customer-first orientation, and we will forever strive to meet the demands of the consumers. Our company places much emphasis on consumer feedback, and that’s is why we plan to conduct and formally analyze consumer surveys in order to determine the success of our marketing tactics, as well as to determine consumer product satisfaction.
4.0 Financials, Budgets, and Forecasts
Our marketing plan requires approximately 263,903,000 in total revenue for this year. By 2004, we plan to experience sale revenues of over 350M. We are currently operating with total expenses maintained at 25% of sales, and it is our goal to make sure that level of expenses is maintained for the foreseeable future.
our plan assumes the following:
1.
Experience a growth rate of 21% from newly built consumer interests, advertising campaigns, concerns for health, economic prosperity, increased population, and an increase in North Face brand loyalty.
2.
Shifts in sales occur during the New Year time frame, as well as during the summer months. These changes of interests effect the P/L, however the effects are temperate
4.1
Sales Forecast
Revenues are expected to increase by a rate of 21% by year-end. There after, we anticipate a very similar rate of growth for the foreseeable future as resoluted by our marketing objectives. A 5% annual growth rate is expected to be observed for heath conscious individuals. A 7% annual growth is expected to be observed for Outdoor Enthusiasts, and a 9% increase in growth is expected for other consumers.
Potential Sales Forecast
2000
2001
2002
2003
2004
Outdoor Enthusiasts
$ 116,754,750
$ 124,927,583
$ 133,672,513
$ 143,029,589
$ 153,041,660
Health Conscious
$ 52,879,400
$ 55,523,370
$ 58,299,539
$ 61,214,515
$ 64,275,241
Other
$ 94,268,650
$ 102,752,829
$ 112,000,583
$ 122,080,636
$ 133,067,893
Total
$ 263,902,800
$ 283,203,781
$ 303,972,635
$ 326,324,740
$ 350,384,794
4.2
Expense Forecast
North Face, Inc., currently observes total expenses to cost a steady 25% of total sales. Although we are anticipating high levels of growth, we recognize the importance of maintaining steady levels of expenses, and we plan to meet our objectives of maintaining a 25% expense rate.
5.0 Organization and Marketing Controls
North Face Inc, is a publicly owned corporation, and is currently traded on the NASDAQ. Our objectives are only achievable by our executives, managers, and specialists effectively implementing all of our planned tactics. We must be able to meet the needs of the market, and it is our objective to continue to offer products that excel beyond the expectations of the consumer.
6.0 Performer Profit or Loss Statement
Projected Sales
2000
2001
2002
2003
2004
Triple Divide Mid
$ 63,307,020.00
$ 76,601,494.20
$ 92,687,807.98
$112,152,247.66
$135,704,219.67
Triple Divide
$ 73,858,190.00
$ 89,368,409.90
$108,135,775.98
$130,844,288.93
$158,321,589.61
Sawtooth Ridge
$ 42,204,680.00
$ 51,067,662.80
$ 61,791,871.99
$ 74,768,165.11
$ 90,469,479.78
Kuna Crest
$ 31,653,510.00
$ 38,300,747.10
$ 46,343,903.99
$ 56,076,123.83
$ 67,852,109.83
Total
$211,023,400.00
$255,338,314.00
$308,959,359.94
$373,840,825.53
$452,347,398.89
Projected Expenses
2000
2001
2002
2003
2004
Promotion
$ 2,637,792.50
$ 3,191,728.93
$ 3,861,992.00
$ 4,673,010.32
$ 5,654,342.49
Advertising
$ 5,275,585.00
$ 6,383,457.85
$ 7,723,984.00
$ 9,346,020.64
$ 11,308,684.97
Maintenance
$ 5,275,585.00
$ 6,383,457.85
$ 7,723,984.00
$ 9,346,020.64
$ 11,308,684.97
Training
$ 2,637,792.50
$ 3,191,728.93
$ 3,861,992.00
$ 4,673,010.32
$ 5,654,342.49
Salary
$ 2,637,792.50
$ 3,191,728.93
$ 3,861,992.00
$ 4,673,010.32
$ 5,654,342.49
Freight-Out
$ 5,275,585.00
$ 6,383,457.85
$ 7,723,984.00
$ 9,346,020.64
$ 11,308,684.97
Property Tax
$ 7,913,377.50
$ 9,575,186.78
$ 11,585,976.00
$ 14,019,030.96
$ 16,963,027.46
Materials
$ 15,826,755.00
$ 19,150,373.55
$ 23,171,952.00
$ 28,038,061.91
$ 33,926,054.92
Other
$ 5,275,585.00
$ 6,383,457.85
$ 7,723,984.00
$ 9,346,020.64
$ 11,308,684.97
Total
$ 52,755,850.00
$ 63,834,578.50
$ 77,239,839.99
$ 93,460,206.38
$113,086,849.72
