Case Study: New Balance Athletic Shoe, Inc.
Study Case #2: New Balance Athletic Shoe, Inc.
New Balance has been one of the top five producers of athletic footwear in the world for over thirty years. Nike is the leader with 43% of the global market. However, the combining of the second and the third most powerful producers (Adidas & Reebok) has created a new rival for Nike in terms of size, and has boosted Adidas’s shares in the US.
In fact, The U.S. Athletic shoe industry is considered to be a very fertile land. The demand is constantly growing, especially that producers are now suggesting an offer that combines comfort and fashion to attract more ranges of consumers.
The Adidas-Reebok transaction has intensified the competitiveness in the market. New Balance’s focus on the NB2E initiative has shown some success and a high level of employees’ implication. However, new adjustments are very required in order to take the challenge of maintaining, or improving NB’s position in the market.
New Balance has a distinct business model; In terms of marketing, advertising expenditure was the lowest in 2005 compared to the other competitors; the company puts its energies and money rather into research, design, and domestic manufacturing. Production is not fully off shored (NB is manufacturing-and-operations-based); In fact, design is the key component and shoes are made in multiple widths, because NB believes that fit is a critical performance characteristic. Thus, design still needs to be improved and emphasized from being conservative for a long period of time.
In terms of sales and distribution, NB is mainly focused on smaller retailers (as foot locker), running specialty shops and other independent dealers. However, the company tried to give to both small accounts and large account a lot of attention to respond to their need to be successful. Unlike the other operators, NB relied on a sales force composed of independent and exclusive to NB agents. Those agents are compensated through a commission per sale and
New Balance has been one of the top five producers of athletic footwear in the world for over thirty years. Nike is the leader with 43% of the global market. However, the combining of the second and the third most powerful producers (Adidas & Reebok) has created a new rival for Nike in terms of size, and has boosted Adidas’s shares in the US.
In fact, The U.S. Athletic shoe industry is considered to be a very fertile land. The demand is constantly growing, especially that producers are now suggesting an offer that combines comfort and fashion to attract more ranges of consumers.
The Adidas-Reebok transaction has intensified the competitiveness in the market. New Balance’s focus on the NB2E initiative has shown some success and a high level of employees’ implication. However, new adjustments are very required in order to take the challenge of maintaining, or improving NB’s position in the market.
New Balance has a distinct business model; In terms of marketing, advertising expenditure was the lowest in 2005 compared to the other competitors; the company puts its energies and money rather into research, design, and domestic manufacturing. Production is not fully off shored (NB is manufacturing-and-operations-based); In fact, design is the key component and shoes are made in multiple widths, because NB believes that fit is a critical performance characteristic. Thus, design still needs to be improved and emphasized from being conservative for a long period of time.
In terms of sales and distribution, NB is mainly focused on smaller retailers (as foot locker), running specialty shops and other independent dealers. However, the company tried to give to both small accounts and large account a lot of attention to respond to their need to be successful. Unlike the other operators, NB relied on a sales force composed of independent and exclusive to NB agents. Those agents are compensated through a commission per sale and