Lady Foot Locker

1
Lady Foot Locker

• Presentation byJulie Perkins Jody Vail
• March 21, 2006

2
Situational Analysis

• Founded in 1982
• More than 600 stores nationwide
• Athletic footwear industry offers a wide array of
  product segmentation
• LFL specializes in athletic footwear, apparel,
  and accessories
• There are very few retail chains that specialize
  in athletic footwear for women exclusively
• Competition consists of department stores, and
  apparel specialty shops

3
Situational Analysis

• Strong relationships with key suppliers is
  essential
• Current products on shelves
• Special make-up products
• Highly competitive markets
• Advertising in-store marketing
• Negotiate for
• pricing
• product exclusivity
• shoe design
• colors
• material
• matching apparel

4
Situational Analysis

• Technological advances
• Aided in developing further differentiation in
  the industry
• Increases consumer demand and competition
• Shortened product life cycle
• Promotional activity consists of
• Health magazine Race for Women
• Sponsored events such as fitness classes, and spa
  treatments w/ well known instructors
• Receive market funds from vendors for
  advertising, in store displays, and sales
  associate education for products
• Athletic event sponsorships

5
Situational Analysis

• Trends within industry
• Prior to LFL, women were purchasing Keds Canvas
  shoes
• It is now possible to find a sneaker for every
  activity or sport and even casual wear
• The athletic footwear market has declined over
  the past couple years

6
Situational Analysis

• Objectives Constraints
• Staying current with new and updated products
• Working to secure product exclusivity (very hard
  due to other competitors within the industry)
• Financial Condition
• Strong financial position
• Pricing strategy allows them to reduce inventory
  quickly and still maintain profits
• LFL is currently 3 in the top ten retailers for
  total pairs sold
• History of Problems
• Suffered one huge product launch failure (Swoopes
  II)
• Initially product only sold 3-4 per week and
  was forced to markdown after only 10 weeks
• Issue at Hand
• Whether or not to launch a new product (Rebecca
  Lobo Reebok sneaker)
• Product exclusivity
• When to start advertising and launch product

7
Marketing Strategy

• Target Market
• 18 37 year old active females
• Likely to be active in sports, fitness, and
  family life
• 12 17 year olds represented an important
  secondary market
• Sales however occurred across a broad age
  segment, the LFL customer was considered to be
  somewhat ageless market
• Total U.S. Athletic Footwear Market ( of total
  pairs sold by consumer segment)

8
Market AnalysisU.S. Athletic Footwear Market (
of total pairs sold by footwear category)
9
Marketing Mix Variables

• Product
• Due to growing consumer demand, consumer
  segmentation, and increased competition,
  manufacturers frequently introduce new products
  which shortens product life cycles
• Pricing
• Based on 30 55 supplier gross margins on
  wholesale selling price and 45 retailer markups
  on the retail selling price
• Typically offered at full suggested retail price
  for 1st two weeks
• Shoes were not marked down until they fell below
  a 10 weekly push
• Retail Channels
• Competition was based upon several factors 1)
  target consumer segment, 2) price,
• 3) merchandise assortment, 4) store reputation,
  5) store location, 6) advertising, and
• 7) customer service
• Promotion
• Celebrity endorsements
• National brand and image campaigns

10
Marketing ExpendituresTotal Advertising
Expenditures for the Top 10 Athletic Footwear
Brands
11
Lobo Launch or No Lobo Launch?

• Facts surrounding the decision
• The Lobo shoe would incorporate Reeboks Hexalite
  technology
• Lobos contract with Reebok enabled them to
  involve her in product endorsements and ads,
  store appearances, and speaking engagements
• 12-17 year olds would be critical to reach due to
  their buying power, in the past this segment
  bought shoes based on fashion, styling, and brand
  appeal rather than performance
• When to launch the product
• June at the start of the inaugural WNBA season or
  October when school basketball season begins?
• Retail Exclusivity
• LFL desired exclusivity to help differentiate
• Marketing Support
• Reebok would provide the launch plans and
  marketing funds (television, print, and in-store
  merchandise displays)
• Can a female athlete drive product sales or at
  least create demand?

12
SWOT Analysis

• Strengths
• 3rd highest of total pairs sold within a given
  year
• Great reputation for supply of womens athletic
  shoes
• Few other chains specialize in womens footwear
• Largest portion of sales during back to school
  season
• Prides itself on service
• 600 store chains strengthens relationship with
  vendors
• Power to solely own the Rebecca Lobo launch
• Weaknesses
• Sales below that of Footlocker and Kids Foot
  Locker
• Swoopes II launch failure
• 12 17 year olds do not purchase shoes for
  performance
• Web page is not kept up to date
• Lack of creative advertising

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SWOT Analysis

• Opportunities
• More product segmentation
• Technologies designed to enhance performance
• Increase in womens sports participation
• Lobo contract enabled product endorsements, ads,
  store appearances, and speaking engagements
• 12 17 year olds critical is proceeding with
  Lobo launch also offer athletic wear and
  accessories to match
• Threats
• More product segmentation
• Sales within industry starting to fall
• Increasing demand for mens and childrens shoes
• Discount stores

14
The Decision

• Launch Lobo shoe with Reebok
• Take minimum amount of pairs for exclusivity
  (15,000)
• Price product at 80.00
• Advertising and promotional support to commence
  in June
• October delivery date for purchase
• Rebecca Lobo is well known among teens and with
  solid marketing efforts the market can be reached
  effectively
• The Hexalite technology can be marketed as an
  attractive lightweight active wear shoe providing
  a great deal of comfort
• First 5,000 pairs sold will receive one of the
  following
• free tickets to a Lobo game
• photograph with Rebecca Lobo
• autographed accessories or apparel
• team shirt