Question 1:
What factors could explain the success of Havaianas in becoming a global brand?
1.) Stable and well developed economic background through acquisitions and expansions lead to a huge sandal market share * Sao Paulo Alpargatas exists since 1939, specialization in four business units: (sandals, sporting goods, industrial textile and retail) * Controling Shareholder (67%): Camargo Correa Group with operation in 20 countries * Acquisition of Companhia Brasileira de Sandalias (Dupé brand) in 2006 leads to increased share in the Brazilian flip flop market * Acquisition of 60% of Alpargatas Argentina to expand in Latin America
2.) Long experience and know-how in manufacturing sandals and producing the special rubber * Own operational and logistic framework * Extension of the manufacturing plant in 2007 ( capability to produce 212 million pairs of sandals annually) * Production in the northeast of Brazil, Santa Rita, in order to reduce costs, increase productivity and further streamline the logistic network * Headquters in Camargo Correas Centro Empresarial to optimize the administrative processes
3.) Product innovation
* From one style with five colors to 509 new models of sandals and sport footwear
* Different designs and colors
* Special editions
4.) Product properties
* Low price: affordable
* Durability, robust
* Comfortable
* Trademark in 1962
* “shoes for the poor”, outside work (coffee bean pickers and blue collar workers), all day shoes
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* For hot and humid weather
5.) Repositioning of the brand (1994)
* Before: one style and five colors, poor point of sales execution and functional based advertisement, image of a cheap product that can be bought everywhere
* “Havaianas Top”, matching sole and strap
* in 13 colors
* slight premium price
* advertising showing upper class consumers and celebrities wearing Havaianas
* upgrade through better packaging
* new sales channels with more emotional context
* Continuous product innovation
* Launch of new designs (80 styles)
* Incorporation of world fashion trends
* Changing costumers
* Opinion leaders, celebrities and upper class costumer wear Havaianas not only at home, but in many places and occasions
* Free publicity from fans (international fashion and movie stars)
* International fashion magazines, catwalk, MTV Music Awards and the Hollywood Oscars 2003
* Communication
* 12% of the turnover was spent for marketing
* Buzz marketing and advertising with electronic media
* Local and international celebrities
* Online advertising, youtube videos, …
* Co-branding: Havaianas was linked to ecological causes due to IPE limited editions and limited editions by famous artists, that financed “favela” projects
Question 2:
How far goes the company in terms of expanding the brand?
1.) 1960 export to Latin America
2.) 1990 tourism to Brazil increased and Havaianas were brought home 3.) 1998 big export to France
* Europe (major markets are Italy, Portugal, France, Spain, Switzerland, Netherlands)
* At the Soccer World Cup of 1998 Havaianas with the Brazilian flag on the strap became an instant hit 4.) Communication strategy change
* Europe, France
* Independently managed markets (local entrepreneurs)
* European subsidiary to harmonize the brand strategy, advertising, product and price positioning
* In 2001 “Tudo Bem” was established as an official importer
* Cooperation with leading designers from fashion to luxury * Sponsorships (events at trendy discotheques, fancy hotels, gyms)
* Customize your own Havaianas
* US
* Havaianas became a “must wear”
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* In 2004 “Style West”, exclusive distributor, equipped celebrities and designers each season with the hottest colors
* In 2007, entry in the US market with a guerilla marketing strategy
* In order to catch college students, the brand had to be authentic, over-promotion can make a brand less cool
* The US market is extremely interesting because of the huge price, that costumers are willing to pay: up to $30
* Asia
* Countries with the ideal Havaiana weather: Philippines, Singapore, Malaysia, Indonesia, Thailand
* Hot and humid weather and similar footwear culture to Brazil
* Philippines is the only market with an significant level of sales
* Reason of Haivaiana the fail: Large middle class or below and many branded US, EU and Asian competitors as well as cheap and unbranded Chinese entrepreneurs
* Japan
* Fashion conscious and hot and humid weather
* Limited editions exclusively for Japan with Chiso
* Advertising and buzz marketing techniques
5.) 2007: 20.000 stores in over 65 countries Main markets: Brazil, US, Australia, Latin America Question 3: How sustainable is their competitive advantage?
1.) Consumers love the “Made in Brazil factor”
* This is one of the most sustainable factors of Havaianas’ competitive advantage as long as the positive Brazilian image not changes 2.) Bigger size than its competitors: Economies of Scale
* This success factor is hard to replicate and creates a sustainable competitive advantage as well as a cost advantage * Production in the northeast of Brazil, Santa Rita, in order to reduce costs, increase productivity and further streamline the logistic network * Headquters in Camargo Correas Centro Empresarial to optimize the administrative processes 3.) Bigger market share than its competitors: Expansion of the market share through the acquisition of other flip flop companies * Due to the Economies of scale * Due to advertising and branding
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4.) Unique brand positioning
* Celebrities and opinion setters have already adapted the trend, this competitive advantage is effective and persuasive but only as long sustainable as Havaianas are not replaced by other footwear brands * Production in the northeast of Brazil, Santa Rita, in order to reduce costs, increase productivity and further streamline the logistic network * Headquters in Camargo Correas Centro Empresarial to optimize the administrative processes
5.) Continuous product innovation
* Adaption to actual tendencies and trends is the best protection of keeping one’s reputation and market share.
6.) Top-secrete rubber recipe
* Sustainable competitive advantage as long as there is no better recipe.
7.) Authentic comfort and quality
* Authentic image not at least due to ecological conscious co-branding.
Havaianas have the biggest market share because their customers are convinced of the quality, price (in Brazil) and fashionable emotional value. This package is one of the keys of the brand’s success and is only hard to replicate of its competitors.
