Tuesday, June 10, 2014

NEW PRODUCT STRATEGY AND TACTICS II

In my last post I gave the first look at a new product development process used by a team of MBA students at the University of Houston. Below is the final report by a second team of students. You will note that the process is very similar ( you would expect as much since they were my students in the same class) to the one used in the previous post.

The classes that worked with real world clients used the same approach and the results were well received by the client companies. Again, the processes used for these projects are described in my new book, Developing Successful Marketing Strategies, available at Amazon.com.

Beginning in September I will be teaching a Consulting Practicum. For this course, one or two companies per semester are selected to work with a team of select MBA students. Each company is matched with 4 to 5 MBA students that focus their efforts for the semester on a specific objective determined by the client company. The objective can be marketing, operations, finance, administrative or other issue related.

To participate the chosen company must pay the University of Houston a $15,000 fee and assign a company champion to work with the team during the semester. If you would like your company to be considered for this practicum please email me at Gary Randazzo <gwrandaz@Central.UH.EDU>; or gary@gwrresearch.com.

I hope you find this presentation informative. If you have time please post your comments.


Soul Athletic Footwear


Kevin Forsch
Alexandria Bland
Jing Guo
Joe Boyd
Kelechi Onyejiaka


Executive Summary
SOUL Athletic Footwear, also known as SOUL, is a company incorporated in Houston, TX that will compete in the athletic footwear market. Its mission is to promote a healthy lifestyle, enhance lives, encourage eco-friendliness, create value and make a difference. SOUL’s vision serves as the guidance needed to execute our mission and achieve long-term sustainable growth. The following are the vision statements determined necessary to direct every business function and drive success:

1.     Be a great place for our employees to work, where they can be creative, inspired, and given opportunities for growth;
2.     Provide the market with quality products that meet their needs;
3.     Enter into mutually beneficial business relationships with partners that focus on a win-win scenario for all stakeholders involved;
4.     Be an environmentally responsible organization that promotes creative ways to sustain our world’s environment;
5.     Maximize shareowner value, and;
6.     Be a cutting-edge organization that moves efficiently through an ever-changing competitive landscape.
SOUL’s initial product consists of a quality and affordable athletic running shoe. The company’s name refers to the sole of the shoe, which are made out of recycled rubber to promote an environmentally friendly product. The design of the shoe will appeal to both men and women ages 18- 55. We believe that consumers under the age of 17 is an under potential market as their awareness and focus on the environment might not be as great as those of our target market. Non-users of SOUL shoes would consist of those consumers who are loyal to an existing brand.
The competitive landscape in which SOUL is entering contains many large-scale brand recognized companies, such as: Nike, Reebok, and Adidas to name a few. These “big three” own 68.3% of the market, and will prove to be SOUL’s biggest competitors as they all have products in roughly the same price range. The market size has been determined to be approximately $20B per year, worldwide.
Upon forming SOUL’s strategy, our executives understood the need to provide an innovative product that is unique at the ~$65 price point. In order to create such a product, SOUL focused on manufacturing a quality shoe that promotes eco-friendliness, goodwill, and value-add by leveraging strategic partnerships. Our executive team believes our product captures a blue ocean strategy by incorporating these focuses into the price of the shoe. Differentiating our product in this fashion will help gain brand recognition and brand loyalty by appealing to consumers’ emotional responses.
A key strategy SOUL will employ is to donate our used products to poverty-stricken families around the world. We believe this strategy promotes two benefits; 1. It creates goodwill among all parties involved in the SOUL product- manufacturers, distributors, and consumers; and 2. It provides a tracking measure for the durability of the product. SOUL will donate through its own charity, as well utilizing other charitable organizations to get their used products onto the feet of under-privileged individuals.
SOUL’s success depends greatly on strategic partnerships. Leveraging a partnership with Dr. Scholl’s will help gain brand recognition and add value to the product at our price point. . Quality shoe soles would increase the cost of the shoe, which in turn would increase the price extended to our customer. At our products price point, it would not be economically feasible to outfit our shoes with high quality soles on the price nor the cost side, and would negate the company’s business model. That is why we give our customers a choice to keep the manufactured insole or upgrade to a higher quality Dr. Scholl’s product. Partnering with Dr. Scholl’s enables SOUL to provide a perceived higher- quality product at our price point and gain brand recognition, while Dr. Scholl’s benefits from incremental revenue from SOUL’s customers and increasing their company’s goodwill by partnering with a “green” company.
As we evaluated the market, the team identified strengths of the company and its product. SOUL shoes are more affordable than our competitors’ products for the degree of quality at the respective price point. Utilizing recycled rubber for the sole of the shoes, our cost of raw materials is cheaper than our competition, and it also promotes the eco-friendliness of our company. SOUL’s focus to be more than a shoe company by donating used shoes to under-privileged families encourages potential customers to purchase our product as a means of stimulating their personal “goodwill.”
Although we believe our strengths outweigh the weaknesses, our executives evaluated our shortcomings as we entire the aggressive footwear market. SOUL acknowledged that entering this market with no brand recognition and competing against major brand competitors will lengthen the time it will take for SOUL to gain market share and breakeven. In addition, our competitors have greater access to capital at more favorable terms, which allows them to invest into new projects and inventory at a lower cost. We also see not having established relationships in place as a potential weakness as the right partnerships are critical to SOUL’s success.
The athletic footwear market provides SOUL great opportunities. SOUL’s large target market allows for a high volume of sales and captures economy of scale in the manufacturing process to drive cost down. As the initial product is released to the market, depending on the success level and brand loyalty, SOUL will have the opportunity to expand its product offerings to include athletic clothing and more shoe models/styles.
Obviously, SOUL’s potential revenue is based greatly on the global economy. When the economy is stagnant or on a decline, our target customers will tend to hold onto their money, not purchase as often, or purchase a cheaper alternative. Rising labor costs in the U.S. and internationally will increase costs, lower margins, and poses a threat to the company’s profitability similar to a sluggish economy scenario.
Maximizing shareholder value is the most important goal SOUL seeks to achieve. The executive team has developed measurable objectives to evaluate the progress and health of the organization as SOUL launches the product to the market. These objects consist of reaching 100,000 followers on social media sites, breaking even at the beginning of month four by selling 1,475 units between our online store and our distributors, establishing mutually beneficial relationships with collaborators, and controlling costs in the manufacturing and supply chain processes.
SOUL must add value to our customers, collaborators, and the company in order to succeed in this competitive market. To add value to our customers, SOUL provides a multi-purpose, quality and affordable shoe at the strategic price point. Furthermore, our products will be easily accessible through our website and distributors. Social media and other marketing campaigns will be used to gain brand recognition and attract new customers. We believe the intangibles of the shoe and company will help retain customers for future purchases. Strategic partnerships with our collaborators will be based on mutually beneficial terms in which all parties gain value. The value we expect from our partnerships is in the form of lower manufacturing cost and enhanced brand recognition. In return, we believe our company helps promote our partners’ focus on eco-friendliness and goodwill. We see this to be a win-win for all parties involved.  Our product is our main source of company value.  The quality shoe that we are making will provide us not only monetary value but will provide an intrinsic value as well. The low costs that we are aiming for will allow our product to be a profitable one to make. Our optimal product is one that will capture the untapped market share that we are targeting and allow our company to rapidly grow. The ultimate company value will be profitability and success for our brand.
The executive team discussed the tactics needed guide the organization towards success. These tactics include strategies for our product, service, brand, pricing, incentives, communication and distributors. The tactics are customer-focused as the firm understands the consumer’s perception of the brand drives revenues. The tactics are detailed in the business plan that follows.
An execution plan was developed to ensure the tactics set forth can be achieved for long-term sustainable profitability. The synopsis of the execution plan is to control the cost to manufacture the product while maintain high quality. The detailed execution plan is in the business plan that follows.


Our Mission

Soul’s foundation is based on our commitment to our mission. It declares our company’s purpose for existing and serves as the basis for the company’s direction and decision-making. The organizational mission includes the following concepts:
·       To promote healthy lifestyles
·       To enhance lives of consumers
·       To encourage eco-friendliness
·       To create value and make a difference




Our Vision
Our vision serves as the structure that guides every function of our business.  Dedication to our vision enables Soul to execute our mission and provides a means to achieving long-term sustainable growth.    
  • Be a great place for our employees to work, where they can be creative, inspired, and given opportunities for professional growth.
  • Provide the market with quality products that meet their needs.
  • Enter into mutually beneficial business relationships with partners that focus on a win-win scenario for all stakeholders involved.
  • Be an environmentally responsible organization that promotes creative ways to sustain our world’s environment.
  • Maximize shareowner value
  • Be a cutting-edge organization that moves efficiently through an ever-changing competitive landscape.

Situational Analysis

The nature of the athletic footwear industry can be broken down into a few major divisions. These are designing the shoe, marketing, and manufacturing. For Soul shoes the design will be very important as the shoe to be both fashionable and affordable. We will market the shoe as a life enhancer, something that will drastically change the way the consumer goes about their lives in a healthier aspect. Finally we will outsource the manufacturing to keep the costs as low as possible so that we are able to offer the shoe at an affordable price.
Since a large portion of the world sees shoes as a necessity, we will have a large customer base. Nike’s vision statement says that anyone who has a body is an athlete and we will be taking a similar approach so as not to limit our potential customers. With this in mind, our key customers will be men and women ages 18-55. We believe this segment of the consumer market will be likely to want to evoke a change in their life, which is a portion of the emotional pitch we will make to customers. Our under-potential customers are the 17 and under segment. This portion of the market represents a good size percentage of purchases but we feel that their values and reasoning behind shoe purchases do not align with that of Soul Shoes. The non-users will be the segment of the customer base that is already very loyal to other shoe companies. Our company realizes that if we come in attempting to go head to head with shoe giants such as Nike, Adidas or Reebok that we stand little chance of making a lasting impact on the market.
Trying to compete directly with these larger companies could be disastrous for Soul Shoes, but we realize that they still fall into our company’s competitor category. Nike, Adidas, Reebok, Asics and New Balance are some of our largest competitors. Our strategy is to come in as a disruptor to these companies and target their lower end customers with a high quality product at a lower price. The focus of these large companies resides in their high priced products and they would go to great lengths to retain the market share they currently have.
A potential disruptor to our company would be any other start up company that is attempting to adopt a similar plan and target the lower price segments of the market. Soul plans to develop lasting, mutually beneficial relationships with customers that will hopefully preserve them as customers in the event that another disruptor appears in the future.
In terms of blue ocean strategy, we will use an eco-friendly approach to target a segment of the market that has yet to be reached. Young to middle aged adults are becoming more aware of their economic footprint and the lasting affects that their actions and purchase have on our world as a whole. Using this information and our young to middle aged key customer market; we think that we will be able to reach out to customers who have not had the option to purchase eco-friendly shoes. Many of the larger shoe companies are willing to sacrifice good morals behind the production of their shoe in favor of cutting any costs possible. While we still plan on keeping our costs as low as possible, we believe that doing so in an eco-friendly way will appeal to a large portion of the target market.
One of the eco-friendly aspects that we intend to incorporate in our shoe is the use of recycled materials such as used tires and other used rubber goods in the soles of our shoes. This is one way that we plan on reducing waste and helping preserve the environment. Also we plan on offering a recycling project where our customers can send in their old shoes to be recycled when no longer in use. This will keep our products from needlessly piling up in landfills and adding to the waste produced around the world each year.

SWOT Analysis
STRENGTHS:
1. Soul shoes are more affordable than shoes of a similar quality, currently being manufactured by competitors. The footwear is a comfortable and quality product is offered at an accessible price point,
2. With the soles of Soul footwear composed of recycled tires, our company provides a green product, one that will prove to be valuable to consumers.
3. The charitable impact associated with patronizing can appeal to consumers, as they will be able to recycle used shoes that will be repaired and given to charity.

WEAKNESSES:
1. Soul is not only creating a new shoe, the entire brand is new to the athletic footwear market. The company will need time to develop the brand.
2. Competitors have more access to capital thus making it easier for them to highlight our lack of product options by promoting their various designs.
3. There are currently no manufacturing systems in place; Soul will have to develop all processes from scratch.
OPPORTUNITIES:
1. The affordability of the product can aid in its appeal to a large group of people.
2. Securing a partnership with Dr. Scholl’s for shoe inserts to provide comfort and customization will enable Soul to reach the company’s existing customers and the name recognition can help build our brand.
THREATS:
1. Competitors currently dominate the athletic shoe market.
2. The current retail economy is not booming. This circumstance can affect our sales goals in a major way.
3. The rising labor wages in the United States can affect our company’s finances negatively if we choose to have shoes manufactured in this country.

Objective
GOALS
Soul’s ultimate goal is to maximize shareholders’ value. It is expected to incur negative net cash flow in the first one year due to advertising campaigns, promotion activities, and initial investments of new offices. To achieve Soul’s ultimate goal, several objectives should be set ahead.
· Customer objective: Soul’s customer objective is to gain exposure and reach over 100,000 followers on social network pages before December 2015 to create brand awareness.
· Sales objective: Soul’s breakeven sale volume is 9024 pairs each month among 32 retail stores in the Houston area. Products will also be sold online.
· Collaborator objective: Soul strives to establish mutual beneficial relationship with collaborators such as suppliers, outsourcing manufactories. Select top five material suppliers and one excellent outsourcing manufactory in Mexico.
· Internal objective: Soul aims to lower manufactory and inventory cost while keep designing and producing high quality products. In the meantime, Soul aims to establish responsive supply chain.
Customers
Price:
Our prices have been set at an affordable rate for the benefit of our customers. As a new addition in the shoe retail industry, it is important to have competitive prices that are affordable to our consumer. By offering an accessible high quality product at a lower rate, customers will have low expenditure in trying to find the product and purchase it. This price will feel like a “steal” or a “bargain” for the average consumer who is accustomed to spending similar amounts of money for a low quality product.
Place:
Customers will have access to purchase our shoe through local retail stores and our website. We will partner with the retail stores to include advertisements for the shoe in their store ads paper as well as posters marketing the shoe in store and in the windows of the store. Our customers will always be provided access to purchase our shoe at their convenience.
Product:
We will provide consumers with a quality shoe that is eco friendly, fashionable, and fairly priced. The shoe is made for a variety of physical activities like walking, running, or playing sports. It is also versatile enough to be worn for fashion purposes and can be dressed up or dressed down depending on the outfit. Consumers will be purchase a shoe with many benefits and have a variety of stylish design options available. SOUL Shoes will appeal to the consumer concerned with comfort, the consumer concerned with maintaining the most trending fashion style, and the consumer concerned with reducing their carbon footprint on the world.
Promotion:
All promotion regarding SOUL Shoes will be geared towards our customer. Promotional efforts will be focused on the customer’s expectation of receiving a quality shoe with multiple benefits. Customers will also have the opportunity to contribute ideas towards the design of the shoe. To reach out to all customers, we will have a social media presence on popular social media sites and possibly local radio and advertisements. We will also have a special press release for the new shoe line as well as provide an experiential learning opportunity for customers through sponsorship deals and events.

Collaborators

In order for SOUL to execute its mission and vision, strategic partnerships must be made. An overseas manufacture of our shoe design fits SOUL’s business model to operate efficiently and keep costs low. SOUL’s executive team is satisfied with the trade-off between longer delivery times versus lower manufacturing costs. Accurate sales forecasting will help minimize the lengthier transportation time.
Another key partnership is with a recycled rubber manufacturer, which would supply the recycled rubber needed for the construction of our shoe’s soles. Utilizing the recycled rubber is one of SOUL’s critical differentiators.  To help keep operating costs low, SOUL will seek a supplier of recycled rubber as close as possible to our overseas manufacture to reduce transportation costs and delivery time. Having adequate quantities of recycled rubber shipped to the manufacturing facility at the right time will be important to the supply chain running leaner.
The market in which SOUL is entering is competitive and saturated. For that reason, SOUL must find a strategic partner to assist in gaining consumer exposure and brand recognition. We believe Dr. Scholl’s is that strategy partner that makes the most sense to both companies’ businesses. Quality shoe soles would increase the cost of the shoe, which in turn would increase the price extended to our customer. At our products price point, it would not be economically feasible to outfit our shoes with high quality soles on the price nor the cost side, and would negate the company’s business model. That is why we give our customers a choice to keep the manufactured insole or upgrade to a higher quality Dr. Scholl’s product. Partnering with Dr. Scholl’s enables SOUL to provide a perceived higher- quality product at our price point and gain brand recognition, while Dr. Scholl’s benefits from incremental revenue from SOUL’s customers and increasing their company’s goodwill by partnering with a “green” company.
Another product differentiator SOUL will act upon is donating our shoes that have been worn out by the customer to charities structure towards clothing poverty stricken areas/countries. Our existing customer ships their worn out SOUL shoes back to SOUL. In exchange for the customer’s charitable contribution, SOUL will email the customer a coupon for their next SOUL shoe purchase. At this point, SOUL can track the length our shoes stay intact, retain a customer and increases goodwill by donating the shoes to charities.
Competitors

Three key players in athletic footwear industry are Nike, Reebok, and Adidas. They take almost 68.3% market share in USA. The average price of their running shoe is $64. We are not directly competing with the big three, our product serve the niche market, who are sensitive to price and looking for high cost performance customized athletic shoes, such as college students.

Context    
Huge market space
According to the National Sporting Goods Association, expenditure for athletic shoes is 20 billion with 2% growth rate. Running shoes remained the most popular shoe category, capturing 28.9% of all the spending the stores.  Statistic shows that 15 million people participant in Marathon across USA in 2012 and 669 Marathons are scheduled this year.

High margin profit
The athletic footwear industry enjoys a high average gross margin of approximately 45% because of the low input costs of raw materials and the premium pricing of finished product. Thus, low cost and high selling price contribute the high margin profit together.

Value Proposition

Customer Value

Price:
The price that we have set will provide value to our customers in many different ways. The price point is comparable to that of other shoe company’s lower end shoe. We will utilize this by manufacturing a shoe that is higher in quality than those of our competitors. This will allow us to provide value to our customers because of the quality of the product that they will be using at a lower price. Our shoe will be easily accessible through different retail outlets so that our customers do not have to spend a disproportionate time finding our product compared to the price paid for it.
Place:
By providing our shoe both through retail stores and online, the convenient placement of our shoe will provide value for our customers. The stores that we plan on putting our shoes in will be sporting goods stores and other athletic footwear stores that will align with our company’s values of enhancing customers physically. Customers in these athletic department stores will be looking for a product that can be both stylish and effective in benefiting their ultimate goal of a healthier life. By providing our product in these convenient locations for our customers will add value for them.
Product:
The product we are providing will provide customer value because of the added benefits that our customers will gain from it. When we sell a quality shoe at the low end of the price spectrum for running shoes our customers will be receiving more added value than if they had purchased a comparable shoe at a much higher price. Our ability to distribute through online sales will also add value to our customers, as online shopping has become such a huge player in the apparel industry. Finally the customer will create customer value by delivering on the promised benefits that we will convey through our promotional tactics.

Promotion:
We will promote this shoe as a low cost, quality product that will greatly benefit the customer. We plan on using social media to reach out to select customers that we believe will be most receptive to our potential value added and most willing to use our product. Our company also plans on using high profile athlete endorsements to get our brand name out to customers. Having elite athletes wear our product will give the customer a sense of even greater added value. Finally we will promote the use of our big named partner, Dr. Scholl’s, to let our customers know that we are using the best available collaborators.

Collaborator Value

Price:
The collaborations SOUL enters into are for the purpose of adding value to our operations, which gets transferred to our customers. Establishing partnerships with overseas suppliers, utilizing recycled materials, and providing the options to upgrade the sole focus SOUL focused on cost cutting measures to provide quality and affordable products to our customers.
Place:
SOUL will set up manufacturing partnerships overseas. Our vendors supplying raw materials will be reasonably located as close to the assembly process as possible to reduce lead times and transportation cost.
Product:
The fundamental trait of SOUL is the recycle rubber in the sole of our shoes. Establishing accurate forecast with our recycled rubber manufacture adds value to the products by reducing inventory cost and raw material cost.
Promotion:
SOUL plans to leverage its key partnerships and market them as a means to gaining brand recognition and, ultimately, increasing profitability. SOUL’s critical partnership promotion will be with Dr. Scholl’s, where we are leveraging an already recognized brand name to help promote our own.

Company Value

Price:
We have put the sales price for our product at $64.5. In terms of our company value, this price will cover our materials, shipping, labor and provide us with operating profit. The cost to our company to produce a single pair of shoes will be $20. We will sell our shoes to retailers at a price of $30.5. With R&D ($.25), advertising ($2.00) and other fees included ($2.00), we will be earning $6.25 per shoe. Our company feels like this profit margin gives us a good chance as an upstart business to establish ourselves and eventually become profitable.

Place:
We will initially launch our product in the southeastern section of Texas. This placement of our shoes will greatly benefit our company because we are planning to use manufacturing and warehouses along the Texas, Mexico border. Manufacturing in Mexico will allow us utilize a much lower cost of labor and storage space. Also this placement of our product will help us with shipping to our chosen retail outlets. Having a close proximity of manufacturing will give our company an advantage when it comes to making sure we have the appropriate supply available.
Product:
Our product is our main source of company value.  The quality shoe that we are making will provide us not only monetary value but will provide an intrinsic value as well. The low costs that we are aiming for will allow our product to be a profitable one to make. Our optimal product is one that will capture the untapped market share that we are targeting and allow our company to rapidly grow.
Promotion:
In regards to our promotions, we plan to get the word out on Soul Shoes before they hit the market through the use of social media. Getting a viral marketing campaign going for our shoes will be very cost effective and will reach a wide array of people. Using social media to promote our shoe will allow us to target specific regions and target markets that we believe will be the most profitable for our company.
Tactics

Product

Soul offers premium athletic footwear with eco-friendly design features. The shoe incorporates rubber from recycled tires and breathable canvas fabric. When worn, Soul shoes provide support and comfort throughout daily and athletic activities, combining benefits of typical cross training and running shoes with fashionable design. The design of the shoe can be used for everyday activities in addition to running and other methods of working out.

In Fall 2015, we plan to release the first generation of the shoe that will be available in three color options: charcoal grey, neon yellow and silver; black, red and white; navy blue, white and teal. The shoe includes the flexibility necessary for running and options for customizing and the addition of extra cushioning to handle greater impacts. Each pair of shoes will come with two pair of shoelaces, offering customers another opportunity to personalize the shoe to their individual style.

Service  
In addition to shoes, we offer a shoe recycling service that enables patrons to return their used Soul shoes in exchange for 20% off the purchase of a new pair. After used shoes are mailed to the company’s Houston address, necessary repairs are made and the product is donated to Soles4Souls, a nonprofit organization dedicated to fighting the impact and perpetuation of poverty. The organization then distributes those donations to people in need and provides programs designed to create jobs in poor and disadvantaged communities.

In the future, we plan to offer additional services including personalized shoe design software that enables customers to customize our available designs and make them their own.

Brand  
We will build our brand by marketing SOUL Shoes as “the eco-friendly, fashionable, and affordable shoe”. By using social media platforms, SOUL Shoes will become highly visible and represent the company’s goal of modern progression. Through the Internet, outreach for branding can become viral and address audiences that are outside of our target area. Social media will also provide customers with the opportunity to provide direct feedback.
Another way to market our brand will be through alliances with well-known people. Identifying top potential customers with large followings on social media websites will help spread the word on our product. Gaining loyal supporters through this avenue will have a meaningful impact on the acquisition of new clients.

Pricing  
The price of Soul’s athletic footwear is based on direct cost, which allows us to quickly, penetrate into market and capture customers.  The average price of our new footwear is approximately 65 dollars, which is even half price as Nike’s. Since we choose outsourcing manufactories and ducks on the border of Texas and Mexico where labor and raw material cost are similar as they are in Asia, we have lower shipping and inventory cost.  

Incentives
The main incentive that we will push with Soul shoes is the shoe recycle program. We will be offering customers the ability to sell back their shoes to us when they have reached the end of their useful life. Customers who participate in this program will be eligible for up to 15% in savings on their next purchase Soul. Also, this will give us a chance to market our eco-friendly approach even further.
Soul will also offer a Dr. Scholl’s coupon to go with any purchase of a pair of shoes. This will allow customers to get custom insoles for their shoes at a discounted rate from Dr. Scholl’s. Another incentive that Soul plans to offer is free shipping on any online purchase. This will allow our company to grow online as fast as possible and hopefully increase our sales in that area.
Finally, we will offer sales promotions periodically in anticipation of customers becoming more active in certain seasons. Using this knowledge and a well-timed sale, we plan to increase our sales production along with the physical activity of our customers.

Communication

Consumer Communications:

Consumers can learn more about Soul products directly from us and/or from one of our distributors. We use a direct-to-consumer communications strategy to target customers who may not participate in athletic activities regularly, but require shoes for casual usage. We also plan to target consumers who are athletic and interested in fitness using a push strategy with incentives.

Direct-to-consumer communications
· Social and Traditional Media – Soul plans to promote by communicating directly to consumers via online social media platforms including Facebook, Twitter and Instagram. With these pages, we will provide up-to-date information about our products, promotions and events. In addition, we will utilize television advertising on three major networks to promote the launch of the product. Consumers can also contact our company directly via our website, www.SoulAthletics.com and by phone (1-800-GET-SOUL).
· Message – Because our campaign targets a large group of people, our message will focus on the unique and eco-friendly design of the shoe to garner interest.
· Slogan – Our slogan is “Get Real. Get Fit. Get Soul.”


Indirect consumer communications:
To simplify the sales process in retail locations, Soul will provide the stores in which our products will be sold with promotional materials including DVDs, flyers, posters, and stickers. They will be instructed to give these items to patrons who express interest in and/or purchase Soul products.  

Collaborator Communications:
Soul will be in communications with many different collaborators. One of our biggest collaborators will be Dr. Scholl’s. We will work with them to provide the best possible insoles for our shoes and customization options for our customers.
Our company will also be in contact with many retail outlet stores to get our product in the proper locations. We will be contacting Academy, Dick’s Sporting Good, and Sports Authority as our biggest retail customers. In addition, we will collaborate with Foot Locker, Champs Sports and Footaction. These are major athletic shoe stores so they will be important to get our product in. These collaborators work well with our vision of providing an enhancement to our customer’s health.
Distribution
Soul Athletic footwear will be distributed directly to consumers through several retailers including Dick’s Sporting Goods, Sports Authority, Foot Locker, FootAction, and Champs Sports. In addition, orders can be processed online via our online store on our website. Online orders will be processed through our headquarters in Houston, TX and shipped directly to customers.

· Inventory will be shipped to retailers up to three times monthly depending on sales and individual necessity.
· Orders processed online take 2-4 business days to ship from our facility.

Execution
SOUL plans to operate using 40% venture capital and 60% from individual investors. Initial financing will be garnered from a sole investor. During development and the first year of sales, the executive team will receive a $2,000 monthly salary so that the company breaks even within the anticipated sixth month time frame. We will outsource raw materials and manufacturing for our products and use recycled materials often to cut costs and help sustain our environment. Suppliers will be selected based on their ability to supply quality materials at competitive prices in the necessary volumes. The manufacturer in Mexico must be able to keep up with the demand created by the inventory system and make shipments according to agreed upon dates.
In order to execute the operational procedures plan and tactics, SOUL must understand our suppliers’ businesses and constraints, agree to mutually beneficial pricing, and develop metrics to evaluate our contractors’ performance.
First, we must determine where the raw material suppliers are located. Those suppliers that are deemed to be strategically located will be asked to provide a bid based on the scope of work determined. The bids will be evaluated based on the suppliers’ ability to ship quality materials in the necessary quantities and at the necessary times. The chosen suppliers will also be based on their pricing and value they may add to the organization. The manufacturer will be evaluated on their available capacity, amount of storage space for raw materials and finished goods, their ability to increase scope of demand, take on new projects, and the value that they may add to the organization.
It is important for our team to work closely with the vendors to determine how their businesses operate and what constraints they may have. Developing this synergy will enable our teams to establish ways in which to structure each other’s’ business. In addition, setting the suppliers up on our JIT inventory system will be crucial for the suppliers to have visibility of demand to forecast and deliver.
SOUL must strive to understand and integrate our business with our suppliers in order to develop and communicate our expectations of performance. Agreed upon performance metrics will be used to evaluate each supplier and manufacturer. It is imperative for our suppliers to understand how they will be evaluated. Weekly reports will be sent to each contractor depicting the prior week’s performance based on quality and on-time deliveries. These metrics will be tracked for trends. Any negative trends will be communicated and a root cause analysis will be required from the respective supplier identifying the cause of poor performance.
 In Fall 2015, we plan to release the first generation of the multi-purpose athletic shoe and begin sales online. In January 2016, our product will be available in over 10 retail locations and increase availability in stores gradually throughout 2016. Seeing as though the first few months of sales will be solely online, our marketing efforts will focus on social media and other online efforts. Within one year, SOUL plans to achieve a 10% increase in customer acquisitions cost and have garnered over 100,000 followers on social media outlets.




Tactics PERT

List of activities

Activity numbers
Duration in days
     Te (exp. Time)

TE

TL
slack




 a
  m
   b
a+4m+b
6

take largest

take smallest
(TL-TE)


opti-
mistic
mode
pessimistic




1 – Prepare tactics plan
1-2
7
10
14
10.17
10.17
10.17
0
2 – Develop procedures and methods
2-3
5
8
10
7.83
18
18
0
3 - Develop measuring system for # of customers
3-4
3
5
7
5
23
23
0
4 – Create social media accounts
4-6
2
3
5
3.17
26.17
26.17
0
5 – Develop promotional materials
2-5
10
14
18
14
40.17
40.17
0
6- Create alliances with collaborators & well known people
4-6
20
30
40
30
70.17
70.17
0
7-Begin SOUL branding campaign with Dr. Scholl’s
6-7
20
30
40
30
100.17
100.17
0
8 – Do in store experiential marketing
6-8
14
18
21
17.83
118
118
0
9 – Push incentives program on social media and website
8-9
10
14
18
14
132
132
0
10 – Distribute footwear to local stores
9-10
10
14
18
14
146
146
0


Bibliography
  • "Footwear Mfg. Industry." Barnes Reports n.pag. Web. 29 Mar 2014.
  • Miller, Richard. "Athletic Footwear." Sporting Goods Market Research Handbook n.pag. Web. 29 Mar 2014.
Powell, Matt. "Reinventing: The Shoe Wall." SportsOneSource 42.2 (2009): 22-24. Web. 29 Mar 2014.













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