Operations JournalJamal Williams

Miguel A. SarmientoBrian Wallace

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FORMality Operations JournalCompany Synopsis

&11 Year History Analysis

Est. 2014

Elegant Form. Balanced Function.Walk with FORMality.

Chief Research Officer Jamal WilliamsChief Marketing Officer Miguel A. Sarmiento

Chief Strategy Officer Brian Wallace

Table of Contents1. Journal Introduction 4

2. Section Summary 5

3. Simulation Takeaways 6

4. Brand Name 6

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5. Mission Statement 6

6. Positioning Statement 7

7. Logo 7

8. Tagline 8

9. Target Market 8

10. SWOT Analysis 9

11. Period Analyses 10

12. Integrated Marketing Communication 14

13. Personal Evaluations 17

Journal IntroductionThe purpose of this journal is to inform potential investors of strategic opportunities available

through comprehensive analysis of company operations. A secondary purpose will serve as a

detailed information source for colleagues, students, and various professionals. The contents

herein will inform the reader of the FORMality business model. Extensive information systems

were used to comb through eleven years of data to extract pivotal input from FORMality

decision strategy. A broad understanding of what makes FORMality successful including

company objectives, business strategy, and marketing concepts will be attained upon the

conclusion of this journal.

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Notable Current Market Rankings

#1 Product Development

#3 Overall Customer Satisfaction

#3 Cumulative Return on Marketing

#3 Cumulative Net Profit 11 Year Span

Section SummaryBrand Name: Information regarding the history, selection, purpose, and effectiveness of the

FORMality brand name.

Mission Statement: Detailed coverage of the founding company mission and discussion of

FORMality goals and objectives.

Positioning Statement: How FORMality seeks to position itself in a competitive market.

Logo: In depth look at FORMality’s signature suit and tie emblem.

Tagline: The line that never dies. Why FORMality’s original tagline remains unchanged.

Target Market: What makes someone a FORMality customer? How this company used status

as a marketing weapon.

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SWOT Analysis: Strengths. Weaknesses. Opportunities. Threats. In relation to FORMality and

its competition.

Period Analyses: An exhaustive report on every decision period of the past 11 years. The good,

the bad, and the ugly.

Integrated Marketing Communication: Synopsis of how FORMality presents itself to the

market using the latest technologies without compromising its timeless persona.

Simulation TakeawaysThe NewShoes Simulation is truly original in its approach to cementing concepts into students.

We would not have gained nearly as much insight into the strategies, pitfalls, trends and changes

that take place in a typical market. By running our own business from its year of inception, we

were given a progressive picture of how seemingly small changes could result in large variances.

Not only did NewShoes teach us how to keep a business surging with sound decision making, it

also gave us an opportunity to gain a unique edge over competition. So long as the users take

advantage of the information afforded to them, the possibilities of applying marketing concepts

to an evolving real world situation are truly limitless. We leave this semester with a much richer

understanding of the concepts and lessons we took from the text and lectures. Most specifically,

the FORMality team learned how to successfully thrive as a smaller operation against large,

global manufacturers. The best advice we could give to future business models akin to

FORMality is this; choose your battles wisely, and never let the customer down.

Brand NameFORMality is a name that is easy to remember. It sounds good and rolls off the tongue without

edges, so to speak. The company prides itself on the elegant form aspect of its tagline, hence the

capitalization of the first four letters. The name has an upscale feel to it, giving customers the

sense that they are dealing with a higher end product. FORMality would pursue a nickname for

their shoes by emphasizing these first four letters, ultimately having their shoes talked about as

“Forms”.

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Mission StatementFORMality Luxury seeks to offer its wearers distinguished and tasteful style through refined

design and superior quality. Our shoes bridge the gap between the comfort of athletic sneakers

and the timeless look of formal wear. Our wearers do not have to choose between function and

form.

Our goal is to become the premier name in luxury footwear. We seek to offer a fashion solution

to those who would rather make a debonaire statement with their choice of shoe. We want to

offer expression to those who do not run the courts and would rather walk with elegance. We

seek to remain a luxury brand so garnering large amounts of market share is not concurrent with

our mission. Our goal is to build an upscale brand that occupies the gap between extremely

expensive formal dresswear and inexpensive athletic shoes. We seek to respond to demand from

consumers whose lifestyle may not be focused on athletics or basketball. We will deliver these

consumers products that they can wear in the streets of Brooklyn or a black and white party in

Manhattan. Throughout our decisions, we will maintain a high standard of product development

and dealer promotions, ensuring that the highest quality products reach its consumers through the

highest quality distributors and retailers.

Positioning StatementFor young innovators who favor debonair footwear, FORMality luxury shoes designs superior,

high-quality products that bridges the gap between the courts and the upscale while offering

timeless design and high function.

Logo

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The FORMality logo needed to follow the upscale idea and image of the company. Black and

white has always been very classy, so the colors were selected quite easily. We wanted an image

that was easily recognizable but also encapsulated what the company is about. A sharp suit and

tie image in use delivered what we wanted. The image would be found alone on the white boxes

our shoes are sold in, and also engraved on the heel and insole of every shoe

Tagline

Elegant Form. Balanced Function.Walk with FORMality.

The FORMality tagline needed to be short, simple, and encompass everything the company

wanted its customers to know. Form is what the company bases itself off of, so that is addressed

first. Customers know immediately that this is not a common shoe, but an elegant one. The

company also wanted to keep interest and balance in the tagline by speaking on function.

Marketing our shoes as elegant and functional would help us secure more of the market. Finally,

the tagline ends with a short prompt, walk with FORMality. We want customers to

unconsciously develop our brand name into a noun associated with class, elegance, status, and

prestige.

Target MarketFORMality’s target market are young innovators, the fashion forward, young professionals, and

those looking to invest in high-end, quality footwear. As described through the VALS customer

research service, innovators are highly successful consumers with high resources. FORMality is

a luxury shoe brand and our target market will look to pay a premium for superior footwear. As a

new entry into the footwear market we are looking to market towards early adopters who will

take to our unique market offering and set trends on a larger scale. Luxury brands such as

Versace and Moschino have been benefitting from a resurgence due to an increased demand for

the prestige that such brands offer. These innovators will buy our shoes as an expression of self

and would reflect their taste in refined, upscale brands. Innovators would rather purchase

authentic products and FORMality will be sure to deliver a quality product every time one of our

shoes is laced. Current upscale shoe market offerings such as the AIR Jordan line or the Nike and

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Kanye collaboration retail for at least one hundred and fifty dollars, all the while people line up

outside stores to buy them. However, they are not quality products and are made in the same

factories that other less popular Nike’s are fabricated. The sole reason for the markup is due to

the rabid dedication of fans of Jordans and Kanye alike. The “sneakerhead” culture has no

problem paying large sums of money for inferior footwear. At a lower price tag, FORMality will

offer better design and a superior product. We will appeal to those consumers who have

outgrown the sneaker culture and would rather express their love for quality footwear through

more upscale and elegant designs.

SWOT Analysis StrengthsFORMality did not seek to become a global organization. The company operation would be

smaller and easier to control compared to most of the competition. Information could be spread

more easily over a flatter organization. Our high status and exclusivity that FORMality lays

claim to would become desirable to wealthier customers. This would allow the company to

eventually attract celebrity endorsements, and compete against larger companies even with a

smaller customer base.

WeaknessesThe major weakness identified for FORMality is its high sticker price. We knew we would be

charging the most out of any company on the market, and that would surely affect our day to day

operations. This high price specifically would lead to a lower market share. Our shoes would

also be less popular amongst the general public, because most people would not be willing to pay

the price we were asking. Another weakness would be our commitment to strong investments in

product development. Our continuous investment in this category often left us short for stronger

advertising or promotions.

OpportunitiesOur large online presence presents great opportunities to build our brand name and image to an

audience we might not normally reach. The website provides potential customers everything they

need to know about the company, and makes ordering extremely convenient. FORMality also

operates in more of a niche market, which gives us a chance to make something truly unique

compared to the competition.

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ThreatsA weak economy is a very real threat to any business, especially a smaller operation like

FORMality which lays a stake in customers shelling out a little more money. Another threat

would be the long established competition. There are countless companies that have been selling

upscale shoes for many years, and FORMality would have to use a unique strategy to penetrate

that market.

Period Analyses Period 1The inception of FORMality was a critical time in company history. The initial strategy was to

invest heavily in product development so that the competition could never catch up. A

$1,950,000 investment right away seemed aggressive enough. Price increased from $93 to $95 at

Home to help us penetrate the market with the idea of increasing it steadily. FORMality aimed to

keep a firm grip on its Home market from the start, and would make bold decisions to do so.

Domestic price increased from $86 to $89 echoing the Home decisions. Prices were kept lower

in the Domestic market to compete better with competition. Home advertising got a $100,000 cut

while we attempted to spread our name by increasing $75,000 in Domestic advertising.

Consumer promotions were never part of FORMality’s long term strategy, so they were slashed

considerably in both Home and Domestic at the start. Sales people became 6 in Home and 9 in

Domestic with an eye on increasing that number frequently to foster relationships. Dealer

promotions were also cut, although not as drastically as Consumer promotions. FORMality

declared no interest in the Foreign Market.

These decisions, while backed by strategy, were mostly experimental. FORMality had an idea of

the direction it wanted to go, but had yet to collect enough evidence of what worked. The

decisions did not cause damage however, as FORMality ended the first year ranked #5 or higher

in all categories, and came in #2 overall. Return on sales increased to 16%.

Period 2Price increased by $3 in Home, and $6 in Domestic. FORMality wanted the price to begin to

reflect the quality of its product development. Investments in product development increased

$50,000. In the Home market, advertising and consumer promotions increased by $200,000 and

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$15,000 respectively. Dealer promotions increased $165,000 to strengthen the brand. Sales

people remained at 6. In the Domestic market, advertising and consumer promotions increased

$20,000 and $15,000 respectively to help grow the brand name. Sales people were decreased to

8, and dealer promotions got a modest $10,000 raise.

The result of these decisions was varied across the board. Overall FORMality dropped to 4th in

the market. Notable changes were ranking 7th in total unit sales, a predictable outcome from the

price increase. FORMality came in 2nd in return on sales, cumulative net profit, and cumulative

return on marketing so not all changes had negative effects.

Period 3Not many changes were made in either the Home or Domestic markets. A slight increase in

funding for product development was attained, but cost strategy dictated that expenses should not

be increased at this point in the company’s life. Very modest changes were made to advertising

and promotions, totaling less than $15,000.

FORMality’s rankings did not shift dramatically in any area. Customer satisfaction and product

development were at the middle of the pack, which drew attention from corporate. The company

mission bases itself on strong customer satisfaction and leading the market in product

development. Period 4 would bring on more drastic changes, albeit not at the benefit of the

company. Return on sales registered at 20%.

Period 4Price increased rapidly by $7 in both Home and Domestic markets. This was where FORMality

tried to market itself as high end by charging significantly more than any other shoe on the

market. Very little else was changed during this period, aside from slight increases in Home

marketing investments.

This decision proved to be nearly fatal to the company. Unit sales plummeted to dead last.

Return on sales, return on marketing, and net profit were all negative. Customer satisfaction was

the worst in the market. Overall the company got away from its core philosophy by overcharging

the customer for a product that had not yet earned that price. FORMality would have to work

very strategically in the coming years to recover from this mistake. Return on sales registered -

5%.

Period 5

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FORMality responded to Year 4’s disaster by dropping prices considerably in both Home and

Domestic. A generous $250,000 was also invested into further product development in

accordance with company objectives. Consumer and dealer promotions got a boost in the Home

market in an attempt to repair some of the damage done to customer satisfaction. Domestic

market expenditures remained the same.

The fall from grace would require a long recovery, so any positive signs could not be taken for

granted. Customer satisfaction climbed two spots, 8th overall. There were no more categories in

the negative, but rankings across the board were still quite poor. A strategy of heavy product

development and more sales persons would be initiated in order to climb back to the top of the

market. Return on sales registered 18%.

Period 6Prices remained stable in both Home and Domestic markets in an attempt to gain stability in the

overall market. Small changes were made in Home advertising and promotions, each receiving

less than $10,000 increases. Another salesperson was added to the Home market as per

FORMality’s long term strategy. Domestic policy changed very little, only adding $10,000 to

consumer promotions to repair any lingering negative opinions in the larger market.

This period marked a great improvement in FORMality history, taking 3rd overall in the market.

Notable achievements were attaining 1st in return on sales at 30% and investing the second

highest amount in product development which resulted in the most advanced product on the

market. FORMality blew away the competition with a 76.2% return on marketing, making a

statement that they would not be defined by their previous mistakes. Customer satisfaction was

still at 68%, which was only good enough for 7th place and would become a focal point of the

company moving forward. Return on sales registered 30%.

Period 7In an attempt to test the market after a very strong 6th period, corporate made the decision to

hold their ground on every aspect. No changes were made due to the “if it’s not broke, don’t fix

it” mentality.

FORMality gathered resoundingly that remaining neutral in a competitive market will hurt the

company across the board. Customer satisfaction took steps back as did total unit sales, both

placing 8th in the market. The company now defined mediocre, average footwear by placing 5th

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in the market, far from the renowned status FORMality was looking to build. Return on sales

registered 16%.

Period 8Little was changed in company strategy for a second straight period. Fearing any negative results

from bold decisions still affect corporate management. Very small increases were give to

Domestic advertising, and product development did not receive any additional funding.

A second period of small changes and stability did have the effect FORMality was looking for.

Placing 2nd overall in the market, the company was now pulling away and leading the charge in

product development. Still charging the most money on the market, customers now began seeing

FORMality shoes as deserving of that price. Customer satisfaction rose to 70% but was still only

good enough for 6th place in the market. Return on sales registered 28%.

Period 9Wanting to capitalize on newfound stability and high market rankings, corporate decided to push

the envelope. An additional $200,000 was invested into product development, bringing the total

to nearly $500,000 more than the closest competitor. Prices dropped by a dollar to encourage a

surge of buying in both Home and Domestic. Salespeople increased by one in each market, and

advertising and promotions received generous investments throughout. This was the period that

would solidify FORMality as a top contender in the market.

Again securing 2nd place overall in the market, the company managed to also improve its

customer satisfaction to 74%. Cumulative net profit came in at 3rd after 9 years, and cumulative

return on marketing was 2nd. The company’s product level was now cutting edge, and worthy of

the status FORMality originally set out to attain. Return on sales registered 33%.

Period 10Continuing to define itself on cutting edge materials, FORMality again invested $200,000 into

product development and left competition far behind in that category. Sales persons were

increased in both Home and Domestic. Advertising and promotions received their largest

increases in both markets, as the company sought to expand its image and customer satisfaction.

Prices remained steady.

The company slipped one spot to 3rd overall. The exact reason is not known, but is likely due to

decisions made by competition rather than FORMality decisions. Customer satisfaction changed

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little, coming in at 72%. Most rankings across the board fell to mid-market levels. Return on

sales registered 22%.

Period 11Corporate decided to attempt a stabilization strategy by locking all expenditures to their previous

levels. This strategy proved positive and negative in the past, but due to FORMality’s strong

placement in the market, rolling the dice was not so risky.

Fortunately, the final year moved the company into 2nd place overall in the market. Even more

satisfying for corporate however, was that customer satisfaction climbed to 78%, good for 3rd in

the market and achieving a company goal. Cumulative net profit and cumulative return on

marketing were both good enough for 3rd place, and total revenue was 4th, Return on sales

registered 30%.

Integrated Marketing Communication

The Integrated Marketing Communication for FORMality became a unified plan to maintain our

image as a luxury brand and deliver a consistent message through different forms of media and

promotion. Over 11 years our advertising budget steadily increased in order to work in concert in

sending our brand message to our target market. After the failure of the previous brand, we

began to set our priorities to turn the tables and become a successful company.

To differentiate our brand in the market our biggest focus would be on product

development with an initial investment of 1,950,000. To begin our advertising and marketing

campaign we invested an amount of 1,750,000 and 1,900,000 in the home and domestic markets

respectively. Our investment into advertising would steadily increase over the next few years.

After a large downturn in our fourth year of business, our advertising budget plateaued at

1,950,000 in both markets for years five through eight. After successfully rebounding from the

downturn, our expenditure in advertising increased to 2,000,000 for both markets in year nine.

Our budget then increased further to 2,300,000 in the home market and 2,100,000 in the

domestic market for years ten and eleven.

As a luxury brand we chose to enact a marketing program with a strong online presence,

strong brand identity, and representation in print publications that would reach our target market.

The majority of our advertising budget would be in maintaining and polishing the operation of a

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website that would establish our brand presence online and communicate our luxury brand

image.

Website URL:

http://sarmientomiguel0.wix.com/formalityshoesUpon entering the website, the visitor immediately sees our logo set over a complimentary black

and white motif. The black and white motif would attract our consumers with predilections of

formal wear, while the minimalistic qualities of the website would cater towards young

millennials and the Tumblr generation. The first large image visitors encounter is one of our

products being assembled. The shoe is being created using quality leather and manual stitching.

Since the focus of our brand is in product development and the quality of our footwear, our site

makes that image the first focal point. Beside the image lies our tagline; “Elegant form. Balanced

Function. Walk with Formality.” Underneath lies a small description of our differentiation and

target market. The second image encountered is the finished product of the shoe being assembled

set against assembly materials and the same table as the first image. This image helps further

reinforce our commitment to offer quality products to our customer. Beside are a few bullet

points describing our distinguished footwear offerings, quality products used, competitive market

pricing, and our distribution. To round out the home page and to give visitors a picture of our

company while connecting to the lifestyle of our target market is an image gallery.

Beginning with a tux and ending with a model slinging footwear over her shoulder, the

site aims to paint a brand picture. The second image displays an urban area, further targeting our

desired demographics. The third image portrays a man in front of a luxury automobile and the

fourth image displays a man and women parlaying on a boat in what looks to be an luxurious

corner of the world. More than just appealing to those looking for a luxury product, our brand

wants to be tied into what people consider a luxury lifestyle. The next photo depicts one of our

more athletic designs and the footwear is displayed against a backdrop of blacktop. Despite

being on a normal street, the wearer of our footwear is still making a statement through his

choice of shoes and straying from the norms of typical athletic footwear. The next image shows

the footwear choices of a couple men without showing any faces or bodies. This is to add

mystery and allure to the brand and having the wearer believe that they could easily step into the

luxury lifestyle that our wearers participate in. Further cementing the brand affording wearers a

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particular lifestyle, the next image states, “Why look at a model wearing them when you can try

them on yourself?.” One does not need a camera crew to appear fashionable. The last two images

look to invoke intrigue and sensuality with our footwear perceptible through a thick haze and the

last image of a faceless model slinging our footwear over her shoulder.

The next portion of the website, the ABOUT page, describes our company in concrete

terms. The first section shows an image of one of our product offerings next to our mission

statement. The next image shows a rack with a fashionable outfit rounded out with another

product offering at the bottom of the clothing rack. Next to this image are our organizational

goals, another description of our products, and our commitment to our target market. The next

page shows our products. The PRODUCT page takes a very minimalistic approach; our

organization wants our products to speak for themselves. The page begins with a light

description in three black fonts over a stark white background. Below lies our product offerings

set against the same white background, offering attractive contrast while highlighting our

designs.

The next page shows our OUTLETS. This page shows our distribution partners. Despite

being a newer brand we hope to utilize the strength of our high end retailers in order to build

brand recognition and connections with prospective customers. Our dealer promotions will focus

on the retailers listed on the page. Our brand outlets include Macy’s, Dillard’s, Lord & Taylor,

Bergdorf Goodman, Bloomingdale's, Neiman Marcus, Nordstrom, and Saks Fifth Avenue.

The last page shows some our endorsement and promotion efforts. Since FORMality

appeals to seekers of a luxury lifestyle, celebrities are the perfect figureheads for our

organization. Tom Brady became our brand ambassador due to his widespread appeal,

fashionability, and his wife Giselle’s connection to the fashion world. As an athlete he chooses to

make his statements off the field in FORMality footwear. Dwyane Wade is our second

ambassador and his interest and prominence in fashion has been documented since his entrance

to the NBA. His interest in a domestic brand is a testament to our product’s quality when

compared to our established competitors overseas. P. Diddy is very knowledgeable in marketing

a luxury brand, seen in his successes with Ciroc. His interest in our brand speaks to our

positioning in the luxury footwear market. Last, is one of our print advertisements in GQ. As a

luxury brand, we would try and stay away from expensive, large-scale tv ads and hope to target

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more specific readers of print magazines. As we make high quality mens shoes, GQ seemed like

the perfect outlet for advertising and building brand identity.

Personal EvaluationsBrian Wallace

I really enjoyed working with this simulation. I was in charge of the strategy aspects of

making decisions, so it got more and more interesting as the simulation evolved. I never would

have learned nearly as much about marketing concepts and strategies had I not been involved

with NewShoes. Reading about concepts and ideas will only take me so far, when I can actually

apply the concepts to a real situation, I learn 1000% more. I learned how markets react to bold

and subtle decisions alike, and loved trying to gain an edge over the competition. I had no idea

what to expect at the beginning of the semester regarding this simulation, and really didn’t figure

it out until the third period. That was when we began applying a long term strategy to our

decisions instead of just changing things for the sake of change. I was really surprised how

negatively the simulation reacted to our Period 4 decision to raise the price. I expected a possible

backlash, but nothing as severe as what happened. That served as a wake up call for sure, but in

hindsight it made my experience with the simulation even richer. I had to battle back against stiff

competition after FORMality took a huge hit across the board, and our decisions had to be sound

and thought out from that point forward. I wish we could have found a way to unseat IGo Inc. as

the number one company in the market, but seeing as how they were a global organization and

we remained domestic, I’m not too upset about it. The virtual team experience for a project like

NewShoes took some getting used to. As with any group project, coordination is everything. We

had a three man team, so we were literally one of the smallest organizations in the simulation.

Looking back I believe we all got on board with a great mission statement from the beginning,

and we never let the pitfall of Period 4 define our company. Our creativity was outstanding, and

we consistently put up a competitive company even after a huge hit. Overall I loved NewShoes

and had no idea how much I would actually take away from it. I’m glad programs like this are

available because I’ll take what I learned and apply it to real world situations down the road.

Miguel Sarmiento

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With me recently switching to majoring in marketing, I believe this was the quintessential

project to introduce me to valuable marketing concepts and immerse me directly into an

engaging environment. Tackling the marketing of an entirely new product is something I would

definitely love to do in the future and this was a great starting point. The simulation has made me

excited to enter the field and has set me up with useful knowledge that will remain valuable in

the future. What made the new shoes project so interesting was that the task challenged you to

think about the product from many perspectives. The simulation made you translate your group’s

ideas about your product’s positioning into concrete numbers that would reflect your decisions

each week. This became very interesting as we had a very specific product concept and plan;

seeing it be successful was definitely gratifying. Seeing our decisions on product development

and marketing being received by the simulation and turned into measurable statistics was

interesting and dynamic. Also, a unique aspect of this project was the existence of competition

and a student market. These aspects are part of what made this project such a novel experience

for me. Being focused on Marketing for FORMality gave me the responsibility of handling our

IMC. Building the product’s concept and fleshing it out in a concrete form was my favorite part

of the experience. Taking our strong mission statement and making an image of our brand from

it was challenging and engrossing. Working on our brand’s website has furthered my interest in

website development and to experiment with platforms other than Wix. Being able to build a

public space that communicates a brand message is a valuable skill to have and I believe this

project has pointed me in the right direction. This project also was an invaluable experience for

me to have as a distance learner. Working as a team with two people that didn’t even live in the

same time zone presented its challenges. We were never able to meet in person but we were

successful in splitting up our responsibilities. Despite having a small group, I believe that we

were able to create a distinctive product and succeed on different levels. Our simulation results

reflected our organizational goals. Despite having a small market share, the company was

amongst the most profitable while maintaining a high level of customer satisfaction. This

reflected our position as a luxury brand and I think our IMC was successful in conveying that

message as well. Overall, this has been the most interesting part of being a Marketing student

thus far and I hope to have similar challenging material in the future.

Jamal Williams

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This simulation is so realistic.

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