CONVERSE: We Love You, Chucks!

Submitted to:

Dr.Lalit Singla

Submitted by:

MBA 2yr. 2nd sem.Roll nos. 1-9

Founder of the converse company

MARQUIS M. CONVERSE

.In 1908, Marquis M Converse founded the Converse Rubber Shoe Company in Malden, Massachusetts,U.S.A.

•In 1917, about ten years after its inception, an addition was made to the converse shoe line was most famous shoe lines of all time: the Converse Canvas All Star basketball shoe.

HISTORY

•Throuout the 1930’ 40’s,50’s,and 60’s ,chucks were the shoes to have.

Chuck Taylor – The All Star

June 24, 1901 – June 23, 1969

•1923-shoes were renamed as Chuck Taylor by basket ball player's name.

•ChuckTaylor,became an aggressive member of converse sales force .

•He drove throughout the midwest ,stopping at playgrounds to sell the high-tops to players.

In 1900s, with a hold on the basketball shoe market,converse introduces both tennis and running shoes.

Contd…

This strategy was successful to boost revenue in 1983 by 215 to $209 milliion.

Turning point 1986: converse's fortune taken a turn for the worse..consumer product maker and retailer ,Interco, acquired it for $132 million…but converse was still the official shoes of the NBA,which gave it the right to use the NBA logo in its advertising.

1993-company changed a positioning strategy-the Chuck Taylor- All Star was dissociated from basketball and given new life as a fashion statement.

But financially ,things only continued to getworse for converse.

•1992-company was forced to abondon the treasured ‘MADE IN U.S.A.’label,and sending its manufacturing unit to India in order to cut costs.

•1996- it restricted, cut off jobs 594 from 2000 & reorganized its product line into 4 categories:-

•Basketball,athleic leisure, cross training $children’s•And no more tennis and running shoes.

•It put the famous Chuck Taylor signature patch on a new line of performance wear the all star 2000 collection.

•It was successful. company launched another line Dr. J.2000…but results were disappointing.

•2000,converse capitalized on this segment and introduced a line of shoes for skateboarders.

ENTER NIKE AND BUY OUT

2003- NIKE BOUGHT THE COMPANY FOR 305 MILLION DOLLARS.

in 2001 ,company had 180 employees and sales of $185 million, but it had global recognition & strong brand equity in the market.

Nike left the converse management to implement its own business strategy . Nike helped converse with advertising dollars.

2001-converse spent $163,500 on promotions.In 2004- Nike spent more than $4 million into advertising the converse and promotion expenses were to over $17 million.

It was after 10 years that converse produced ads with the tagline “the first school”.

The focus was on basketball and the soul of the game, ad ended with converse logo-chuck Taylor-all star.After many years, without the endorsement of a professional athlete, converse is back on pro basketball courts as a performance shoes.

Today Converse enjoys worldwide recognition and is highly regarded as a manufacturer of superior athletic footwear.

Converse is strongly involved in street-fashion and music markets as it associates its heritage and originality with innovative ideas.

QUESTION 1: What are the core, actual, and augmented product benefits of the Converse Chuck?

CORE BENEFITS

•Classic kicks that fit any look•Perceived look of self-expression, free-spirit and creativity •Easy to care for

ACTUAL BENEFITS

•Quality •Comfort•Brand name recognition•Packaged in color-themed shoe boxes•Thousands of choices; create your own

AUGMENTED BENEFITS

•Create your own option•Limited edition and web exclusive offers•Easy returns within 30 days•satisfaction guarantee

QUESTION 2: When Converse outsourced production of its shoes to India, it entered into a licensing arrangement. What are the benefits and risks of that action? Do you think it has helped or hurt the company? The brand?

BENEFITS

•Minimize production costs•Global brand recognition•Increase of international sale

RISKS

•Removal of “Made in the U.S.A.” label•Perception of poor product quality•Job cuts

THE COMPANY

HELPED – Choosing to outsource has helped make Converse the success it is today. Outsourcing helped the company to cut costs; thus decreasing expenses and increasing revenue.

THE BRAND

NEITHER HELPED NOR HURT – Converse brand recognition was established in the U.S., so I don’t believe outsourcing affected the brand. It is the oldest brand of athletic shoes – turned 100 in 2008.

QUESTION 3: What are the sources of brand equity (reputation) for both Converse and Chuck Taylor All Stars.

CONVERSE

•Brand Awareness/Recognition•Logo

•Brand Loyalty/Insistence•100 years old in 2008

•Consistent, Strategic Marketing•Cost – Always Basic, Still Affordable•Effects Unique to Brand

•Rubber Toe and Sole•Canvas

•Brand Associations•Artists/Actors•Skaters•Surfers

CHUCK TAYLOR ALL STARS•Brand Awareness

•‘Chucks’•Brand Loyalty

•‘Chucks’ and other variations of the All Star

•Strategic Global Targeted Marketing•Perceived Quality

•“Every Day” kicks•Comfortable

•Effects Unique to Brand•Design Your Own•Refusal/lack of alternatives

•Brand Associations•Basketball•Famous-athletes,player endorsements.

QUESTION 4: Analyze the Nike-era direction of Converse.

5a) Assess the benefits and risks of the fashion and performance strategies individually, and of the combined two-tiered approach.

FASHION STRATEGY BENEFITS• Age range – appealing retro-fashion for people in their teens and in their 30s • Planning more variations for the Chucks line – creating endless possibilities. • Extensive lines of clothing for men and woman – varying in price range and target markets:• Sales in 2005 hit $400 million – more than double the revenue from 4 years prior.•Sales continue in an upward trend.FASHION STRATEGY RISKS•Contrast of well known antiestablishment image•Negative image from customers for going “mainstream” and trendy,.• All extensions rest on the image of one specific brand. If the brand fails, the extensions fail.

PERFORMANCE STRATEGY BENEFITS• Product sales increase; benefits similar to big name brands.• Performance features and technology such as air bag heel (similar to Nike Air walk) attracts athletic customers.• Potential to attract younger generation• Affiliated with performance (basketball), helping to attain reputation.

PERFORMANCE STRATEGY RISKS• Performance strategies are similar to big name brands, and may damage the brand• Takes away from original “Chucks” image.

TWO-TIERED APPROACH

Benefit: Combining fashion with functionality; reach out to a greater number of people with full line for casual, sports, etc…Risk: Cost to reach all target markets(b) What targeting and positioning would you recommend for the Converse brand in the future?

FASHION POSITIONING: Positioning Converse as a fashion brand, and adding more extensions and product lines to the brand.

PERFORMANCE POSITIONING: Positioning Converse as a performance brand, by focusing on comfort and features.

FASHION TARGETING: Market products to teens .

With different lines available, market to those with high income, as well as those with average income.

PERFORMANCE TARGETING: Target elementary – college age people, especially those in sports.

WWW.CONVERSE.COM

Thank …..u