Marketing Plan for Athletics Supreme Sportswear - Essay Example

Marketing Plan for Athletics Supreme Sportswear MARKETING PLAN FOR ATHLETICS SUPREME SPORTSWEAR Section I - Company Overview and Market Research Overview of Company Athletics Supreme is a company that has been selling an array of athletic equipment over the past ten years. During this period, the company has observed a growing interest in sportswear. As a result, the business would like to expand their product offering to also include sportswear and possibly other related lines. It is the company’s goal to provide customers with a one-stop shopping opportunity, while maintaining profitability and brand identity. Founded ten years ago by Nicholas Newman and Lucille Russell, Athletics Supreme is run by a highly qualified group of outdoor enthusiasts. Russell has a bachelor’s degree in marketing and has worked previously in the retail clothing sector, while Newman has also operated an adventure enterprise that used to arrange group trips to different locations across the US. However, both of them sold their respective companies to start Athletics Supreme. The owners’ previous experiences have made them confident that they can market a line of sportswear and related sports accessories that appeal to outdoor enthusiasts. This marketing plan hopes to create a long-term growth model that will build on the current success enjoyed by Athletics Supreme’s athletics equipment. The company has been successful in selling athletics equipment and we hope to transition smoothly into sportswear. Athletics Supreme intends to provide its current and potential customers with quality sportswear products that they require to accomplish their physical goals and maximize their athletics performance. The company will also provide its customers with staff who are knowledgeable about athletics and sportswear. The core products that the business will carry include apparel, shoes, and athletic equipment, as well as other complementary equipment like training literature and health supplements. Marketing Research Conducting market research normally involves gathering primary and secondary data, in which primary information is collected directly from consumers and potential consumers, while secondary information involves the gathering of data, statistics, studies, and reports from external sources (Burns et al, 2014). Athletics Supreme will conduct primary market research using in-store comment cards, whereas secondary research will be conducted via the local chamber of commerce. In-store comment cards should enable the company to collect information directly from the consumer on such issues as their satisfaction with the business offering, how to improve service and offerings that they may want to see in the future. These comment cards will be used to allow current clients to provide their opinions and feedback on current services, as well as what types of sportswear they are most likely to purchase and their satisfaction with the athletics equipment on sale. By conveniently placing the in-store customer comment cards, Athletics Supreme will prevent customers who are unhappy about the lack of sportswear in the store to make complaints about it to a 3rd party. The main goal in using in-store customer comment cards will be to get customer opinions when they are still fresh in their minds (Burns et al, 2014). The chamber of commerce will also be used to collect secondary research on the market for sportswear products, especially from the regular surveys that they conduct about local trading conditions (Burns et al, 2014). As members of the local chamber of commerce, Athletics Supreme will also leverage the specific studies conducted by the chamber on specific relevant issues, such as sales, demand, supply, and pricing. While the chamber does not always publish the results of their surveys, being members will allow the company to access these results in order to inform their decision making. In specific conditions, the chamber of commerce may also conduct market research for some of its members, which Athletics Supreme will seek to take advantage of. It is expected that the rates for such research will be dependent on the complexity and extent of the brief on research, as well as the time over which the research lasts. Moreover, in case the company chooses to conduct a survey, the chamber offers invaluable information and advice on survey formulation to its members (Burns et al, 2014). Some of the reports that Athletics Supreme expects to get from the chamber include demographic results and local competitor directories. In addition, their maps on trading areas in the state and counties will help the company judge the accessibility of specific markets and sites. Pest Analysis Generally, macro-environmental factors that influence the sportswear sector lie external of the company and, as a result, the business owners have limited control over them and minimal impact in attempting to change those (Koskivaara & Pilli-Sihvola, 2013). Political Factors The sportswear industry is influenced by several macro-environmental political factors. Union workers from companies that supply sportswear products may picket their employers from time to time due to medical benefits or wages, which could influence delivery of orders and the ability to fulfill customer needs (reportlinker.com, 2015). This would especially cause delays for seasonal sportswear that has a short sale window. Moreover, the company may also be picketed by activists if they sell products from countries that violate labor laws, which could impact the profits and sales of sportswear retailers. Finally, trade embargoes against sportswear imports may force the retailer to identify new retailers. Economic Factors Consumers may also shop for more expensive brands as a result of increased disposable incomes. The US sportswear industry has undergone significant and rapid changes since the global economic crisis in the late 2000s, although there has been a steady improvement in economic conditions since then (reportlinker.com, 2015). Declining rates of unemployment have increased consumer disposable incomes, thus increasing the demand for sportswear products. However, the strengthening US Dollar has meant that imports from Asian countries have become more expensive and this may have an effect on the retail prices. Social Factors Social factors that may impact on the sportswear industry include population and demographic changes, lifestyle changes, and cultural and norm changes in different ways. Sportswear retailers need to sell styles that can appeal to different cultures in the US, especially if those cultures represent a significant portion of the target market (euromonitor.com, 2014). In addition, these retailers also tend to avoid selling products that fall outside societal norms. The aging population may also lead to an increase in demand for loose fitting sportswear. This is especially important given the increased popularity of athletics among middle aged Americans. Technological factors Some of the macro-environmental technological factors that impact on the sportswear industry include availability of demand, resources, and production. Scarcity of particular materials like leather, for example, may lead retailers to sell leather product substitutes (euromonitor.com, 2014). Moreover, shortages in cotton clothing may lead retailers to increase pricing because they have to pay more to the manufacturers. Sportswear retailers are also required to posses the ability to perceive opportunities in market innovation, specifically prior to their competitors, which means that they must ensure access to manufacturers that are technologically innovative to meet consumer needs. Section II - Situation Analysis Segmentation & Target Market Analysis Athletics Supreme’s target market is the active consumer aged 25-45 years, including people who like to play team sports like soccer and football, skating, surfing, cycling, rock climbing, and hiking. While this target market may not be sports experts, especially for the sports they take part in, they like to enjoy the outdoors. These active sportswear consumers are representative of a successful and well-educated demographic group, who may be married and raising families or single. The incomes for such households range between an annual salary of $60,000 and &120,000 (Ferrell & Hartline, 2014). However, in spite of their comfortable disposable incomes, this consumer target market consistently seeks purchase value and is very price conscious. The single most important factor that brings this consumer target market together, regardless of whether they fall in the lower or upper end of the market target range, is that they all prefer active lifestyles. Moreover, while this target market may be significantly status-oriented, this is not to the extreme. Thus, although they prefer to be associated with high-quality products, they are not as willing to part with premium prices (euromonitor.com, 2014). While majority of the current customer base for Athletics Supreme lives in the US Northwest, a future goal is to also expand this geographical market into the Mid-Atlantic States. Because of the significant number of levels and sports in which US consumers can compete in, Athletics Supreme has a broad range of activities and markets that they can target with their sportswear products. Thus, Athletics Supreme will seek to provide a one-stop shop that will satisfy the needs of various sports enthusiasts by stocking a wide array of sportswear products that can satisfy as much of the target groups as possible. The company will also seek to build personal, long-term relationships with its clients (reportlinker.com, 2015). To accomplish this goal, it will be essential for the company to attract younger customers more aggressively. As a result, the primary target should be parents who shop for sportswear products and have young children. Athletics Supreme, by building a relationship based on trust with these consumers, will seek to possess the ability to maintain a business relationship with the children right up to their university and college years. Targeting parents with young children will be important because of the incredible growth of youth sports in the US, which has the highest rate of growth for all target segments within the sports and athletics wear industry (reportlinker.com, 2015). Focusing on active adults and college students will also be important. Competitive Analysis As the world’s largest sportswear market, the US accounts for almost 41% of total sports and athletics wear product sales globally and, as a result, there is stiff competition in this market among brands controlling majority of the market share (Koskivaara & Pilli-Sihvola, 2013). These companies are heavily dependent on events sponsorship and innovation, which may provide a significant barrier for new industry entrants. The sportswear retail industry has sales of close to $5 billion annually, which range from sports and athletics equipment to clothing. There are several important competitors in this market, including Patagonia, Cabello’s, Bass Pro Shops, Timberland, REI, and L.L. Bean, which are the most recognizable organizations that sell these products. Some of the smaller competitors include Title IX that sells female athletics and sportswear, as well as Ragged Mountain that sells sportswear for hikers and skiers. The market outlook for this industry and its organizations is particularly positive for a number of reasons. To begin with, consumers are increasingly investing and participating in recreational activities that they can access from their homes (Koskivaara & Pilli-Sihvola, 2013). In addition, these consumers are also searching for ways to partake in sports and outdoor leisure activities with family and friends without overspending. Finally, improvements in the economy have led to increased consumer confidence. Although majority of the companies listed above can be considered as major competitors in the sportswear sector, none of them offer the practical but trendy sportswear products that Athletics Supreme seeks to offer. For instance, none of these competitors carry the slogans and logos that Athletics Supreme seeks to offer. Moreover, whereas most of our competitors sell performance sportswear manufactured using high-tech fabrics (euromonitor.com, 2014), Athletics Supreme will seek to sell sportswear made from high quality cotton with the exception of fleece jackets and vests, which means that our customers can wear them around town as well as during sports events. In addition, Athletics Supreme will offer moderate pricing for its sportswear products compared to competitors, which will make the products affordable especially when purchased in multiple quantities. Furthermore, consumers will be able to replace Athletics Supreme’s sportswear from one season to the other at a discount, for example by picking out new colors. This will help in gaining a competitive advantage because most consumers tend to replace their active and casual sportswear more often as compared to other items of clothing, which should attract them to Athletics Supreme’s moderate pricing (euromonitor.com, 2014). Finally, the use natural fabrics should also appeal to environmentally-conscious consumers, giving the company another competitive advantage. SWOT Analysis When examining the potential for Athletics Supreme’s new sportswear product, the SWOT analysis provides a structured planning method that helps in evaluating the opportunities and threats facing the new venture, as well as the company’s inherent strengths and weaknesses inherent that might influence the success of the new venture. Strengths Athletics Supreme has dedicated founders who understand the product and its target market. Athletics Supreme has already established successful distribution in the target region. The company has a significant potential for growth, especially because it currently has very little debt. Athletics Supreme has one athletics manufacturer, which will enhance its quality control abilities. Weaknesses The company’s founders may end up losing focus of the business’ potential scope. The number of consumers who know Athletics Supreme in the US is limited, especially as a sportswear retailer. Reliance on one manufacturer may limit the ability of Athletics Supreme to expand in the future, particularly if it decides to internationalize its market. Opportunities Athletics Supreme’s sportswear target market is likely to purchase new products every new season. There are existing gaps in the current market that require new products to fill, including customized sports luggage and clothing items. Athletics Supreme can expand into new markets across the US by using e-marketing and e-selling. Threats There is a risk that consumers may grow tired of the concept that Athletics Supreme wants to introduce. Larger competitors like REI, Patagonia, and Timberland may also introduce similar items and reduce Athletics Supreme’s market share in the future. Athletics Supreme may face strained relationships with partner retailers if they perceive internet sales as a threat. Section III - Marketing Strategy When marketing its sportswear products, Athletics Supreme will seek to create a successful 4Ps marketing strategy that will seek to ensure that he right product is sold at the right price, at the right place, and using the most appropriate and suitable means of promotion (Ferrell & Hartline, 2014). Product Strategies The first step in creating a successful and appropriate marketing mix is to ensure that the product being offered has the right features, which includes its appearance and functionality (Kotler & Keller, 2012). Athletics Supreme will seek to offer a high-quality line of sportswear items including team jerseys, baseball caps, fleece jackets and vests, and athletics apparel all bearing the company’s brand logo and slogan ‘We Love the Outdoors’. The company has already researched into the most popular items and their colors, which has enabled us to give the sportswear products names that are enjoyable to potential customers. Some of these names include river rock gray, cactus green, sunset magenta, and sunrise pink. Athletics Supreme will seek to expand its product line in the next five years in order to also include customized sportswear items. Moreover, customers will have the choice of logos representing their preferred sports activity, such as rock climbing or surfing. They will also have the choice of adding customized slogans to go along with the logo. For instance, socks for soccer players may bear the slogan ‘Let your feet do the Talking’. The company will begin with four new slogans and eight new logos, which would be added onto later. Over time, the business may introduce new logos and retire older ones. Such a strategy would ensure that the Athletics Supreme concept remains fresh, while also reducing the risk of oversaturation with numerous variations. Finally, the company will also offer a lightweight luggage line, including a day pack and tote bags that will be offered in basic colors and bear the company’s logo. Place Strategies The second step in creating an appropriate and successful marketing mix for Athletics Supreme is to ensure that the sportswear products are available at the right time in the right place, making sure that they arrive where and when they are required (Kotler & Keller, 2012). Currently, Athletics Supreme is marketed via several local and regional specialty shops which are located across the US Northwest and the California coast. However, the company is yet to open stores in other regions of the United States, especially in Northern New England and the South, which is a major goal in the future. Seasonality and climate dictate sales in the current specialty shops and the company will, therefore, ensure the availability of fleece jackets and vests during colder seasons and baseball caps and T-shirts in warmer weather. Athletics Supreme has received most of its information related to overall consumer and sales trends in the sportswear industry at different retail outlets, as well as across the specific geographic areas they operate in, from the local chamber of commerce. In the coming two years, the company will seek to expand its specialty retail stores across the US with a major focus on the Mid-Atlantic and Southwest regions. There is as yet no firm proof that Athletics Supreme will find it beneficial to sell some of its products through major national retail chains, especially since these stores are potential competitors if they decide to sell similar sportswear lines. Finally, customized sportswear lines will also be sold online solely through the internet, which should allow for differentiation between specialty shipping offerings and internet offerings. Pricing Strategies The third step in creating an appropriate and successful marketing mix for Athletics Supreme is to ensure that the price is appropriate and competitive, especially since the company needs consumers to buy more products in order to turn a profit (Koskivaara & Pilli-Sihvola, 2013). As already mentioned earlier in the marketing plan, the company’s products will be priced based on the pricing of current and potential competitors. In this case, Athletics Supreme does not set out to offset low pricing through the sale of high product volumes or to set high prices in order to differentiate its sportswear products as prestigious or luxurious offerings. Rather, the sportswear company will seek to pursue a strategy of value pricing so as to ensure that its customers are comfortable with buying new sportswear items to replace older ones. This pricing strategy should also ensure that the sportswear products and related accessories are good gifts, such as for graduations and birthdays. In this case, customized sportswear items will be sold at approximately $2 to $4 above the price set for regular Athletics Supreme’s sportswear items. Moreover, pricing for the luggage will be done competitively to offer good value against the company’s major competitors. Since the store seeks to provide a one stop shop for its customers, it will be positioned in a way that encourages impulse buying, which means that the company has to maintain a flexible strategy in its pricing. Thus, the pricing will be based on guidelines on competitive parity and will not exceed 10% of competitor pricing, although premium pricing may be pursued for innovative products. Promotional Strategies The final step in creating an appropriate and successful marketing mix is to ensure that the target market is made aware of the sportswear products’ availability via promotion (Burns et al, 2014). Currently, Athletics Supreme communicates with retailers and consumers about available athletics equipment in various ways. Information on the company and its products is presented to our consumers through direct mailings, the internet, and in person. Athletics Supreme’s promotional efforts are specifically meant to differentiate its athletics equipment products from competitor offerings. Public relations and sales promotions make up the current bulk of the company’s promotional strategy. The staff offers short-term sales promotions in relation to contests and events. In addition, the founders are also working in collaboration with trip outfitters across the Northwest to offer Athletics Supreme products on a promotional basis. Because Athletics Supreme also takes part in cause marketing by making valuable environmental program contributions, this will be used as a good public relations opportunity for the sportswear brand among ‘green’ consumers. The company also seeks to pursue non-traditional promotional methods that need a lot of creativity and little cash outlay. This promotional strategy especially lends itself to Athletics Supreme because it is a flexible company, which makes it easier to implement various ideas like discount coupons, skiers, and free water distribution during outdoor sporting events. The company plans to undertake several promotional efforts in the next twelve months. For instance, it will create an Athletics Supreme Tour that involves employees taking turns to drive around the target region and its sporting events and campgrounds to distribute Athletics Supreme discount Coupons. Section 4 - Global and Financials/Control Global Opportunities The global sportswear market in 2013 amounted to more than $244 billion, which was a growth of ~7.5% from the previous year (euromonitor.com, 2014). Brazil, Japan, China, and the US were the four largest countries that accounted for the growth in this market, making up 50% of the entire sportswear market with the US making up the single largest market at $80 billion, while the global market for sportswear should see an increase of $55 billion in sales between 2014 and 2018 (euromonitor.com, 2014). Thus, Athletics Supreme has the opportunity to leverage this global growth in sportswear demand by internationalizing its sales operations. This can be done either through utilizing a franchising model in the three aforementioned countries, or using the internet to make international sales, especially given the significant growth and potential in e-retailing. There are three major regions where sportswear companies like Athletics Supreme could expand to, including the Asian, Latin America, and Western Europe, in which they could focus on the major markets, i.e. China and Japan, Brazil, and France, Germany, and the UK respectively (reportlinker.com, 2015). The global market is currently dominated by major sportswear and apparel manufacturers and retailers like Adidas and Nike, both of which generate approximately 60% of total sales outside Western Europe and North America respectively. Market dynamics in the different markets are completely different. For instance, the sportswear market in Western Europe is more fragmented compared to that in the US sportswear market with the top ten companies in Europe accounting for ~37%, compared to approximately 75% of sales controlled by the top five US sportswear retailers (reportlinker.com, 2015). Adidas and Nike already have in place the required distribution and logistics functions, which means that Athletics Supreme would have to spend a lot of time and money creating a supply chain to rival that of the its future international competitors (reportlinker.com, 2015). The shortest route for Athletics Supreme to take would be to host moderately big sporting events in these international markets, although it would take time for the company to scale up its promotional ability to the level of its future competitors. Already, major global sportswear retailers like Nike, Adidas, Puma, and Warrior are looking to leverage the approaching Olympics in Brazil and the World Cup in Russia in 2016 and 2018 respectively (reportlinker.com, 2015). While it would be impossible for Athletics Supreme to compete with these companies at this level, it is possible to sponsor smaller events being held in preparation for these events in the host countries if it elected to go global. Financial Analysis Athletics Supreme will monitor its financial statements regularly since these statements have a direct relation with the company’s health. The three financial statements that will be identified in this marketing plan are budgeting considerations, projected profit/loss statements, and the break-even analysis. Budgeting Requirements Start-up Requirements Start-up Expenses Legal $300 Operating Assets $0 Brochures $0 Consultants $0 Insurance $0 Rent $4,310 Marketing/ Advertising - Grand Opening $1,000 Renovation $1,000 Other $0 Total Start-up Expenses $6,610 Start-up Assets Cash Required $8,489 Start-up Inventory $82,901 Other Current Assets $0 Long-term Assets $2,000 Total Assets $93,390 Total Requirements $100,000 Start-up Funding Start-up Expenses to Fund $6,610 Start-up Assets to Fund $93,390 Total Funding Required $100,000 Assets Non-cash Assets from Start-up $84,901 Cash Requirements from Start-up $8,489 Additional Cash Raised $0 Cash Balance on Starting Date $8,489 Total Assets $93,390 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $60,000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $60,000 Capital Planned Investment Owner/Operator $20,000 Angel Investor $20,000 Additional Investment Requirement $0 Total Planned Investment $40,000 Loss at Start-up (Start-up Expenses) ($6,610) Total Capital $33,390 Total Capital and Liabilities $93,390 Total Funding (Total Capital and Liabilities + Total Set up Expenses) $100,000 Profit and Loss Statement Year 1 Year 2 Year 3 Sales $434,552 $452,802 $471,316 Direct Cost of Sales $260,731 $271,681 $282,790 Other $0 $0 $0 Total Cost of Sales $260,731 $271,681 $282,790 Gross Margin $173,821 $181,121 $188,526 Gross Margin % 40.00% 40.00% 40.00% Expenses Payroll $101,232 $105,000 $111,000 Sales and Marketing and Other Expenses $21,600 $21,600 $21,600 Depreciation $0 $0 $0 Utilities $9,600 $9,600 $9,600 Rent $23,760 $23,760 $23,760 Payroll Taxes $0 $0 $0 Other $0 $0 $0 Total Operating Expenses $156,192 $159,960 $165,960 Profit Before Interest and Taxes $17,629 $21,161 $22,566 EBITDA $17,629 $21,161 $22,566 Interest Expense $5,350 $4,200 $3,000 Taxes Incurred $3,042 $4,240 $4,973 Net Profit $9,236 $12,721 $14,593 Net Profit/Sales 2.13% 2.81% 3.10% Break-even Analysis Monthly Revenue Break-even $32,540 Assumptions: Average Percent Variable Cost 60% Estimated Monthly Fixed Cost $13,016 Measurement/Control In order to maximize on the returns of this marketing plan, Athletics Supreme will put in place controls meant to monitor the progress of the plan. The controls will be analyzed constantly as the marketing plan is realized, specifically in order to determine the actual performance of the marketing plan as it compares with the present projections. Changes that require to be implemented will be done on the basis of marketing controls analysis. References Burns, A. C., Bush, R. F., & Sinha, N. (2014). Marketing research. Harlow: Pearson Kotler, P., & Keller, K. L. (2012). Marketing management. Bosto: Pearson Education euromonitor.com. (2014, July). Sportswear in the US. Retrieved May 15, 2015, from EuorMonitor International: http://www.euromonitor.com/sportswear-in-the-us/report Ferrell, O. C., & Hartline, M. D. (2014). Marketing strategy: Text and cases. Mason, OH: South-Western/Cengage Learning Koskivaara, J., & Pilli-Sihvola, J. (2013). International competitiveness and business strategies: Sportswear industry. Helsinki: Helsinki School of Economics reportlinker.com. (2015, March). Sport clothing and accessories key trends and strategies explained. Retrieved May 15, 2015, from ReportLinker: http://www.reportlinker.com/ci02121/Sport-Clothing-and-Accessories.html Read More