Marketing Plan Sample
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Mkt 101 – G Batingal, Marinella Crisostomo, Monique Ilustre, Annah Cassandra Prado, Paula ATENEO DE MANILA UNIVERSITY
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Transcript of Marketing Plan Sample
Mkt 101 – G
Batingal, Marinella
Crisostomo, Monique
Ilustre, Annah Cassandra
Prado, Paula
ATENEO DE MANILA UNIVERSITY
Havaianas Aqua
A paper submitted in partial fulfillment
of the requirements in MKT101: Principles of Marketing
TO: Mrs. Maria Teresa Cano Lopez
BY: Batingal, Marinella
Crisostomo, Monique
Ilustre, Annah Cassandra
Prado, Paula
BS COMTECH
ON 14 October
2009
I. Marketing Background
A. Overview of the Industry
1. Market Size
In 2008, Euromonitor issued out a value of 2.98% or P137.6 billion of P4.607
trillion in total 2007 consumer expenditures on clothing and footwear in the
Philippines wherein 9.7% was spent on footwear amounting to P13.3 billion. It was
shown that from the review period of 1995 to 2007 spending on footwear went up
to 115.3%. Moreover, the Philippines tries to maintain a yearly requirement of
producing 46 to 51 million pairs. In fact, in 2006, the country made the footwear
sector as one of its main focus in developing industries as indicated by _______
Figure 1.7 Philippines Footwear Consumer Expenditures % Analysis/ % Growth
1995 2000 2007 1995-2007 2000-2007
6.9 9.4 9.7 115.3 45.6
Source: National statistical offices, OECD, Eurostat, Euromonitor International
Through the recent years, the world and Asia pacific footwear market has
steadily grown in terms of volume and value. In 2006, the world footwear retail
volume reached up to 6,989,852,700 units which equaled to the world retail value
of 201,903,100 US dollars. Furthermore, 50% of footwear sales come from women’s
footwear, 37% from men’s footwear and the rest on children’s footwear. The Asia
Pacific footwear retail volume reached up to 2,651,438,400 units which equaled to
46,986,800 US dollars.
Figure 1.1 World and Asia Pacific Footwear Market Sizes from 2001 to 2006
Categori
es
Geographi
es
2001 2002 2003 2004 2005 2006
Footwea
r - Retail
Volume
- '000
units
World 5484737 5646936
.7
5860482
.4
6208749
.3
6580605
.2
6989852
.7
Footwea
r - Retail
Value
RSP -
US$ mn
World 157709.
5
156632.
3
171254.
9
186967.
5
195254 201903.
1
Footwea
r - Retail
Volume
- '000
units
Asia
Pacific
1863219
.9
2018589 2136789
.9
2255144
.4
2409672
.9
2651438
.4
Footwea
r - Retail
Value
RSP -
US$ mn
Asia
Pacific
37200.2 38090.1 40621.2 43771.2 45484.2 46986.8
Source: Euromonitor International
Figure 1.2
Source: Euromonitor International
Figure 1.3
Source: Euromonitor International
Figure 1.4
Source: Euromonitor International
Figure 1.5
Source: Euromonitor International
Figure 1.6 Philippines Footwear Consumer Expenditures in Ps Billions
1995 2000 2002 2004 2006 2007
6.2 9.2 10.5 11.5 12.4 13.4
Source: National statistical offices, OECD, Eurostat, Euromonitor International
Sports footwear continues to dominate the footwear market. With casual
footwear renovating to a more sporty look, the sports or athletic footwear market
grows. Sports shoe brands such as Nike, Reebok, New Balance and Adidas have
showed to have greater market shares in the footwear industry. Nike tops them all
by being the single largest brand. It has become a recognized brand thanks to its
brand awareness efforts such as celebrity advertising and store merchandising.
Figure 1.6 Global Sales and Market Share of Athletic Footwear
Company Global Sales
Global
Market
Share (%)
Nike 6780 33.2
Reebok 1963 9.6
New Balance 1357 6.6
Adidas 3150 15.4
K-Swiss 480 2.4
Converse 905 4.4
Vans 395 1.9
Puma 1396 6.8
American Sporting Goods (Avia, Ryka,
Nevados, Turntec) 303 1.5
Asics 920 4.5
Keds/Pro-Keds 203 1
Foot-Joy 180 0.9
Fila 305 1.5
Saucony 141 0.7
Sole Technology 140 0.7
And 1 175 0.9
Mizuno 287 1.4
Hi-Tec 191 0.9
Brooks 126 0.6
Lotto 141 0.7
Other 873 4.3
Total 20411 100
Source: (Drbul et al. 2006)
2. Market Trends
More shoes for better earning Women
In the recent years, women have shown to be a rising number in the
workforce. With the growing education sector, women become more educated
opening more working opportunities and even higher incomes for them. Women
then opt for marrying at a later age since their careers have become a high priority
for them. On another note, better child care facilities are being offered which makes
it easier for women to join the workforce. With this, women enjoy increasing
incomes that obviously lead to greater consumer power.
Since women earn more, they also spend more. A mounting trend with the
women of today is retail therapy. To women, footwear has been an important item
to spend for. Subsequently, given the women’s priority for their careers, an
increased awareness has dawned on them of keeping fit and healthy for such a fast-
paced lifestyle. Athletic footwear has then become another priority in terms of their
range of footwear. Comfort and style are essentially valuable factors in their choice
of footwear.
Spending preferences of Young Adults
Aside from women, young adults have also opt to marry at later ages such as
their thirties. In effect, young adults have become big spenders of clothing and
footwear. Moreover, they tend to buy these more frequently and go for quality
products. In line with the influence of media, they have shown greater preference
for products that are fashionable and trendy. They have become less formal with
their clothing and footwear. Men prefer sportswear and women prefer to be less
formal.
Health concerns
Today, an obesity epidemic is emerging. According to the World Health
Organization, there are about 300 million obese people and approximately one
billion overweight people. In Asia, the Philippines is considered as the third fattest
population right after Malaysia and Singapore. There are approximately five
hundred thousand Filipinos who are obese.
These people have shown to have a particular need for better cushioned
shoes and other specialty footwear. Moreover, an increasing awareness of this issue
leads to interest in physical activities which, again, would pave the need for
comfortable athletic footwear.
Casualization: Western Wear Trend in Asia Pacific
Casual attire has been a favorite for various kinds of social settings. With
people’s changing mindsets in regards to fashion, casual attire has then become
acceptable in even formal settings like the workplace. More than that, casual attire
has become a general preference for dressing. Athletic footwear is a sure key item
in casual dressing since comfort and style continue to be significant elements.
Developing specific needs of consumers
Aside from the awareness of such brands, consumers have developed
specific needs for their activities. In response to this, companies have developed
specialty lines which specify whether the shoes are meant for running, biking, and
other categories. Product development has been ongoing to cater to these needs.
The development of new technologies for shoes widen the possibilities of generating
more products. For example, the Nike Lunar Glide provides a unique cushioning
system that would enable just the right support.
B. Market Profile
Everyday wear of sportswear for Filipinos has constituted as a big chunk of
the athletic footwear market. Furthermore, since there has been an amplified global
attentiveness on sports, Filipinos have become more adventurous in engaging in
different kinds of activities may it be sports or even social events. With all the
activities that the contemporary Filipino has to do, comfort becomes a big deal
breaker in every footwear purchase. Subsequently, this kind of comfort is usually
equated with athletic footwear as well as with new alternatives like Crocs and
Havaianas.
Footwear is purchased by all types of market segments varying in terms of
price and specific function. Slippers are indispensable in any household whatever
demographic the consumer may belong to. Athletic footwear also seems to be a
compulsory item for kids and teenagers since they need this for a required basic
subject, Physical Education. It is also one of the most used type of footwear since all
the different market segments engage in some kind of strenuous physical activity.
The purchase of other kinds of footwear would vary depending on the consumers’
taste and the occasion needed for.
Footwear could be bought through almost any distribution channel. It could
be purchased from marketplaces, malls, bazaars, online shops, direct sellers,
designers and the like. The increase of purchase of footwear would diverge
depending on the season and footwear type. Consumers would usually purchase
water-durable or water-intended footwear during summer or the rainy season. On
the other hand, consumers would usually find themselves occasionally buying the
whole year round out of whim or out of personal reasons.
Consumers still have as their footwear choice multinational brands such as
Nike, Adidas and New Balance which continue to lead the market. They are
considered leaders for the latest fashion trends and technologies. Moreover, their
incessant strong brand awareness efforts make them the major preferences when it
comes to footwear.
C. Environmental Analysis
1. Analysis of Opportunities and Threats
Opportunities
Availability of Sports through Media
With the media saturation today, sports has undeniably become more
available to people. Even with the issues of recession, sports has been an aspect
that people continue to pursue because of its usage as a stress buster. In fact,
according to the FDS International's Supporting Sport survey of 2007, 70% of
respondents from 16 countries claimed to be interested in sports in general. Given
this heightened interest in sports watching, an increased participation in sports is
inevitable which would lead to greater consumption of sporting goods especially
athletic footwear.
Fitness Hype
Due to the surge of sports awareness, greater consciousness is also bent on
fitness. Since Filipinos have been more concerned with leading healthy lifestyles,
they have been more intact of ways to become more fit. Thus, the emergence of
gyms, supplements, specialty drinks and the like. Most especially today, more and
more people are hitting the gym and engaging in physical activities. This doesn’t
just include the young and on-the go consumers. More than that, the Baby Boomers
are more apprehensive of keeping fit and healthy. They become a more attractive
market as fitness is now a high priority for them. Aside from that, they have more
money to spend on such a cause. They would then want to participate in different
kinds of physical activities whether it be running, skiing, swimming, scuba diving
and many more. Undeniably, athletic footwear is an anticipated necessity for
engaging in these different kinds of fitness endeavors.
Beach tourism
In the Philippines, there has been an increasing popularity of heading to
beaches. Most popular of these beaches are Boracay and Palawan. In line with this,
many Filipinos and foreign tourists become aware of the different offerings at the
beach especially water sports. Some of these water sports would include water
skiing, parasailing, windsurfing, wakeboarding and the like. For these off-the court
outdoor activities, a growing market is building up for athletic footwear that would
specifically cater to such activities.
Athletic translates fashion
Although a great number are interested in sports, this would not always
translate to them actually engaging in it. Some are just confined to consuming
sports simply by just watching it. Nevertheless, this inclination to sports influences
their choice of fashion. More than ever, celebrity athletes have proven to be icons
even in the aspect of fashion. This has pushed athletic footwear more to be
regarded as casual wear, thereby, increasing consumption by different generations.
Growing market for footwear
As of June 2009, the National Statistics office has issued that the Philippine
population numbers about 92,226,600 with gender distribution being almost equal.
As of 2005, teenagers, those in the ages of 13 years old to 19 years old accounted
for about 12,771 while young adults, those in the ages of 20 years old to 29 years
old accounted for about 15,125. Due to this, it has been expected that those in
these age brackets would produce a high demand for footwear.
Resilience of higher income segment to pricing changes
Despite the global economic crisis, high-end brands continue to progress. In
effect, other consumer goods manufacturers find that the higher income segment
shows to be an attractive group to focus on. It shows that basic necessities like food
and shelter aren’t the only expenses Filipinos value. The higher income segment
still proves to value brand equity and product quality. Given the high pricing for
famous footwear brands, these consumers continue to patronize it.
Increasing value of comfort to consumers
Nowadays, rather than going for just the design of the footwear, consumers
have become more particular of its fit. Comfort deems not only to be a factor but a
major clincher in their choice of footwear. True to this, there has been an evident
rise of footwear brands and lines that offer different kinds of specialized technology
intended for maximum comfort. For example, Crocs features their Croslite material
which “enables Crocs to produce soft, comfortable, lightweight, superior-gripping,
non-marking and odor-resistant shoes.”
Threats
Small slice of the budget pie for footwear
In the Philippines, consumers spend about an approximate 10% of their
income for clothing and footwear. Across all consumer incomes, it has shown that
consumers spend the same percentage for footwear. This could prove to be a
difficulty in increasing footwear volume and value.
Availability of cheap China-made footwear
Because of the presence of informal retailers like tiangges which offer China-
made footwear or counterfeits , they have been an emerging competition for
private labels. Due to the economic situation of the Philippines, Filipinos have
become more conscious of prices. Since these kinds of footwear are 50% - 80%
cheaper, these have been most especially favorable to those who have lower
income. Although, over time, it is expected that these consumers would eventually
prioritize better quality products.
Competitors going for same marketing strategies
Since most of the brands are riding on the same marketing strategies in
terms of product, price, place and promotions, it makes it hard for both competitors
and consumers to mark a distinction for the different products available in the
footwear market. By product, most of the competitors have been riding on the same
product features namely specialized technology. By price, competitors who go for
the same target market also have relative prices. By place, competitors have
stationed themselves in the same areas. By promotions, most competitors have
used sports to advertise its products.
2. Key Success Factors
Celebrity advertising
Celebrity endorsements and sponsorships are fundamental advertising
practices for market leaders such as Nike and Adidas. In the world and in the
Philippines, Nike gets sports celebrities as its brand ambassadors. Because of such
efforts, there is great awareness of these brands. Due to the values that brands
embody through such endorsements, many aim for these kinds of products.
Athletic footwear turned casual footwear
Athletic footwear deems to not only be limited to needs like physical
activities. Because of the changing trends in fashion, athletic footwear is now seen
as an option for casual wear. Moreover, there has been an increased penchant for
footwear that has comfort as a key feature. More people are then turning to athletic
footwear as necessary purchases fashion-wise and comfort-wise.
New Fashion Lines
There is no stopping to the various kinds of athletic footwear being developed
and manufactured. Many companies are developing new materials or technologies
that would make their products more appealing than just the average offering of
comfort and style. Furthermore, brands also try to keep up with other emerging
trends. For example, there has been the development of incorporating iPods with
footwear. Also, the creation of new fashion lines for different seasons garners as a
plus in offering consumers fresher concepts.
II. Competitive Analysis
A. Competitive Positioning
The group has chosen 4 main competitors in aqua shoes footwear namely Nike,
Adidas, Speedo and Keen. Nike, Adidas and Speedo are known for selling quality
footwear, thus having strong brand loyalty from customers. Keen is not well known,
but the group believes that Keen is the strongest competition to our proposed
product as they sell products that offer both design and function.
Nike basically promotes their aqua shoes as “second skin” of the foot. This is
because the strongest feature that their aqua shoes supposedly have is a very
strong grip. It is designed primarily to have strong grip and traction on wet surfaces.
Adidas promotes their aqua shoes as having a “360 degree cooling” for the entire
foot. The technology they used on their shoes is basically designed for comfort. It
also adds to the given feature of aqua shoes which is having good traction against
slippery surfaces. Speedo is mainly a company as focusing on water sports apparel.
They promote their products as “developing footwear from the inside out.” Their
footwear is designed to have overall function like complete breathability,
drainability, grip and comfort. Keen differentiates itself from the other competitors
as they offer eco-friendly products that are made out of recyclable and
biodegradable materials. Their aqua shoes for women are mainly promoted as
“sweetly feminine and uniquely functional.”
B. Market Shares/ Sales Volume/ Sales and Profit Trends
Based on the clothing and footwear retailers brand shares by value of 2005-2008
in the Philippines, Nike brand under Nike Philippines Inc. is the said market leader in
the footwear industry with a 2.2% sales value last 2008. Nike is at the same level
with Levi’s under Levi Strauss Philippines Inc. with also a 2.2% sales value last year.
They are followed by Adidas under Adidas Philippines Inc. with a sales value of
0.9%. Bench, Cinderella and Penshoppe each has a sales value of 0.7%. Hang Ten
and Rusty Lopez have 0.3% and 0.2% sales value respectively. Speedo under Sprint
International Inc. and Oygen each has a 0.1% sales value. Thus, all the other
competitors under clothing and retail footwear share the remaining 92% of sales
value last 2008.
So basically, if we focus on the athletic footwear industry, we can assume the
competitive positioning of our 3 main competitors. Nike as the market leader;
Adidas as the market challenger; Speedo as the market follower as it follows at a
distance; and the other companies which offer athletic footwear will fall under the
market nichers.
The following table will show only the 3 chosen main competitors in the athletic footwear industry,
along with their percentage of sales in value in year 2008.
Company 2008 Sales Value in
%
Nike Nike Philippines Inc. 2.2
Adidas Adidas Philippines Inc. 0.9
Speedo Sprint International Inc. 0.1
Source: Trade associations, trade press, company research, trade interviews,
Euromonitor International estimates
Based on the data showing the trends in clothing and footwear specialist
retailers in the Philippines, the specialist retailers are affected by the economic
downfall, thus resulting to a minimal sales growth at 4% and sales stand at Php92
billion. However, up-market brands or those international brands still stand strong
despite the challenges brought by the economic slowdown.
Well-known international brands such as Nike and Adidas stayed strong due to
their quality and higher loyal customer base. These brands maintained and even
increased their shares because of higher pricing strategies that they imposed. In
fact, Nike retained its leadership in the clothing and footwear retailers with sales of
Php2.02 billion. Levi’s followed Nike with its sales reaching to Php1.97 billion. These
brands focused on their image of providing higher and better quality of products
balancing their higher prices. Nike had the highest increase in share last 2008
because its customers were not affected by their pricing strategy. These
international companies will continue using their products with its brand name to
generate growth in sales.
The following tables show the value in sales and the growth in the value in sales
of clothing and footwear retailers in the Philippines from year 2003 to 2008.
Clothing and Footwear Retailers: Value in Sales from 2003-2008
2003 2004 2005 2006 2007 2008
Value
Sales
Php
million
75,863.7 78,367.2 81,110.1 84,273.4 88,487.0 91,584.1
Source: Official statistics, trade associations, trade press, company research,
trade interviews, Euromonitor International estimates
Clothing and Footwear Retailers: Value in Sales from 2003-2008: % Growth
2007/2008 2003-2008 CAGR 2003/2008 TOTAL
Value Sales Php
million
3.5 3.8 20.7
Source: Official statistics, trade associations, trade press, company research,
trade interviews, Euromonitor International estimates
C. Marketing Strategies
Product Price Place Promotions
Nike Nike Classic Aqua
Socks
* 4-way stretch
mesh
Php1,695 Nike Philippines,
Inc. (Makati City,
MM)
* 45 retail stores
nationwide
Endorsements
for famous
athletes. Like
for swimming,
Michael Phelps
Adidas Boat CC
* open mesh
Php1,995 Adidas Philippines,
Inc. (Pasig City,
MM)
* 45 retail stores
nationwide
Endorsements
for famous
athletes. Like
for swimming,
Ian Thorpe
Speedo Women’s Aqua
Jane Slip-On
Water Shoe
* slip-on with
elastic gore
Php2,388 Sprint
International, Inc.
(Muntinlupa City,
MM)
*17 retail stores
nationwide
Top female
swimmers like
Natalie
Coughlin and
Amanda
Beard. Also
endorsed
Michael Phelps
Keen Madrid Ballerina
* slip-on with a
ribbed mesh and
natural gum
rubber outsole
Php3,840 * consignments to
sports shops
specifically like
Toby’s
Planet Shoes,
a shoe retailer,
in association
with the
manufacturer
of Keen sells
Keen shoes
globally at
lesser prices
The previous table presented showed the 4 chosen competitors in the athletic
footwear industry along with their different marketing strategies for a sample of
aqua shoes that they have.
Product
Nike has an existing product designed as aquatic footwear named Nike Classic
Aqua Socks. The product is designed to have a very strong grip that would feel like
the “second skin” of your foot. Embedded is a soft sock liner that adds comfort for
engaging in water sports activities. It also offers grip and traction on wet and
slippery surfaces. Adidas’ existing aquatic footwear is called Boat CC. Its design is
based on the classic boat shoe. CC stands for ClimaCool, a technology which
provides “360 degree cooling for the entire foot.” It is basically designed for comfort
through its synthetic lining and slip-on construction. One of its features is the water
grip outsole to give good traction even on wet and slippery surfaces. Speedo is very
much focused on swimming apparel and footwear. Thus, they offer a lot of different
aquatic footwear. One of which is the Women’s Aqua Jane Slip-On Water Shoe. For
its rubber sole, they used a technology called Hydro Tread that offers maximum
traction and water dispersion. The product also offers 360 degree ventilation. It is
also constructed as a slip-on with elastic gore for a more secure fit. Keen promotes
Madrid Ballerina through the shoes’ femininity and function. The natural gum rubber
outsole gives protection and comfort in walking through different landscapes.
Each company had uniquely labeled and named their aqua shoes. The
competitors din not show a clear system on the packaging used on their aqua
shoes, except that mainly their shoes are packaged in large conventional boxes.
Speedo uses recyclable cardboard sourced from Forest Stewardship Council (FSC)
certified well-managed forests. For some products, the boxes contain product
information.
Price
The price range for aqua shoes range from Php1,500-4,000. Among the
competitors, Nike offers the lowest price. Adidas’ is priced higher than Nike’s aqua
shoe. Speedo’s aqua shoes prices differ by the features of the shoes that they sell.
Same as for Keen, the prices also differ depending on the kind of aqua shoes since
both Speedo and Keen offer a wide range of aqua shoes. The prices differ
depending on the technology used on the shoe and the size and quality that they
give. Basically, aqua shoes with fewer materials used are priced cheaper than those
which are made up of different materials that would help the shoes perform better.
Promotions
The promotion strategy of Nike is mainly through endorsing famous athletes
from different sports. Nike offers a lot of sponsorship arrangements with different
famous athletes like Michael Phelps, which Nike offered recent endorsements to for
their swimming apparel. They also appoint their athletes to be their brand
representatives in different countries worldwide. Basically, they cater to younger
customers worldwide. Adidas followed the same promotional strategy as of Nike’s.
Adidas also focused on sponsoring and endorsing celebrity athletes and thus also
focusing on the younger customers. They have endorsed world champion swimmer,
Ian Thorpe. Just like the other athletic apparel companies, Speedo associate and
promote their products through endorsing top swimming athletes like Natalie
Coughlin and Amanda Beard who have competed wearing Speedo. Keen had a
different approach, being known for producing eco-friendly products. Planet Store, a
retail brand store with the same advocacy of recycling and using biodegradable
materials, tied up with the manufacturer of Keen and decided to sell their products
globally at a cheaper price.
Mainly, companies try to create much brand awareness through the use of
celebrity and sports advertising. Most especially in the season for particular sports,
some brands such as Nike and Adidas launch huge campaigns to incorporate it in
their products. In the Philippines, Adidas tied up with UAAP teams to make use of
their products. It would then help increase the demand for athletic footwear in the
season for that particular spoor. People usually show a greater following for
sportswear during these times.
Place
There is a big number of Nike retail stores in our country. Just like Nike,
Adidas has the same number of retail stores nationwide. Speedo has the lowest
number of retail stores in our country compared to Nike and Adidas. Keen sells
using stalls located in different sports shops.
Athletic footwear is very accessible since they are available in department stores
and sports specialty stores. The multinational brands would sometimes have their
own specialty stores which would usually have a wider range of product lines
compared to the department stores. Aside from malls, they have also situated
themselves in some gasoline stations. On a different scale, Filipinos who are more
price-sensitive may fall back to imitations of such brands. An evident showcase of
this is the presence of such products in local market places, tiangges and known
bargain places such as Greenhills and Divisoria.
D. Strengths and Weaknesses of Competition
Athletic footwear had the highest market share in the previous years. Nike is
the leading brand while Adidas was one of the sport footwear companies to
contribute in topping the market shares. They have strengthened their brand equity
due to the different advertising and marketing strategies imposed by these
companies. Stronger relationships between customers were built, thus creating high
income from their customers. The strong branding of the top sports companies
stabilized the uprising challenge brought by the idea of private labels being the way
to gain profit and increase sales. This idea of private labeling is a concern to brand
manufacturers because it caused price wars that decreased the average unit prices
of products.
The main promotional strategy of the leading athletic footwear companies
like Nike and Adidas is the numerous endorsements and sponsorships by
contracting agreements with big sports celebrities. Sponsorships have become the
normal advertising and marketing strategy which will result to customers’ higher
recognition of brands. Companies’ focusing on endorsing these athletes is a
strategy that will surely continue and grow. However, a downside here is if the team
or the athletes endorsed perform poorly, the brand would also be affected.
Nevertheless, spending on these endorsements and costly advertisements did a
great effect on the sports companies like Nike and Adidas as they were accountable
for the growth of sports apparel as the clothing trend among youth today. Due to
the strong effect of endorsements and marketing strategies done, huge sports
events have increased the value of the brands of the different sports companies to
their target young customers. Even to the extent of different controversies being
thrown at some companies like Nike, sporting events still continue to increase
Nike’s value to their target market due to the sponsorships and endorsements they
make. For a fact, the 2 leading sports apparel manufacturers, Nike and Adidas, top
footwear sales.
Different manufacturers are also constantly improving their products as new
technologies are continuously being instilled in different kinds of athletic clothing
and footwear, like Hydro Tread and Clima Cool in aqua shoes. These are all done
due to the main purpose of providing comfort and efficiency in the said products.
However, the companies would thus price their products higher because of the
updated technologies applied in their products. This would probably weaken the
competition as the buyers are becoming more price conscious.
Another weakness is that all of the competitors fall under clothing and footwear
industry, not mainly on the athletic footwear industry. Basically, they have a larger
range of products to sell, thus not focusing only on athletic footwear. The
companies’ sales on footwear compete with their own sales on clothing.
Nevertheless, it is still important that clothing and footwear retailers are now in
fact dominating the distribution of clothing and footwear, and will continue to be the
most important distributing channel of retail.
With aqua shoes, based on the competitors’ strategies on selling specifically
athletic footwear, there is a very weak competition in selling aqua shoes or casual
beach footwear since all the leading competitors, Nike, Adidas and Speedo, are not
giving much attention to it. For Nike and Adidas, they are more focused on selling
shoes for training, more like running shoes and those that are used for land training
especially. That could be seen on their advertisements as they usually spend more
on advertising basketball shoes and clothing. Speedo offers a narrower or more
focused range of products as the company caters mainly on athletic swimming
apparel. Among the group’s chosen competitors, only Keen offers a number of
products which offer both design and function. Since only a small number of
sporting shops are offering and focusing on selling swimming apparel, opportunities
in selling clothing and footwear specializing in casual swimwear would probably
increase due to the less number and strength in the competitors.
III. Company Background
A. Company Profile
SÃO PAULO ALPARGATAS S.A.
São Paulo Alpargatas S.A., is a leading international branded company that started
in Brazil more than 100 years ago. Though it is best known for
its Havaianas thong sandals, it also turns out various kinds of
footwear, sports clothing and other sporting goods, and a
range of international textiles. It also operates a chain of retail stores and is active
in property development. The company is then divided into four business units –
Sandals, Sporting Goods, Industrial Textiles and Retail.
The company’s origin dates back to 1884 when Juan Echegaray and Robert
Fraser founded S.A. Fábrica Argentina de Alpargatas in Buenos Aires to produce a
version of alpargatas, traditional Spanish light sandals worn by peasants and
laborers. As they brought this footwear to Brazil in 1907, São Paulo Alpargatas S.A.
was founded and production immediately began the year after. Since then, the
company has gone through times of glory and decline, from being forced to stop
their production and to close several factories because of market crashes and
recessions to being the biggest textile conglomerate in Brazil with $422 million
revenue and 30,000 employees. Over time, it has introduced various lines of
clothing and footwear such the well known Havaianas flip flop in 1962, Madrigal
bedspreads in 1967 and US Top faded jeans in 1972, among others. It has also
bought competing companies such as Raihna Calça dos e Materiais Esportivos Ltda.
and Jeaneration. Moreover, it has acquired license to manufacture and sell top
brands like Arrow, Polo/Ralph Lauren, Van Heusen, Timberland Co. and Mizuno Corp.
Vision
To be a world class company with desired brands of sport products, shoes, and
industrial textiles.
Mission
To develop and commercialize innovative, world class and profitable products of
high perceived value and quality and to create value for shareholders, employees,
suppliers and customers through socially and environmentally responsible
operations.
Business Philosophy
Old: To turn out more goods, at lower prices, of the products in which it specialized
changed in 1989 due to the economic crisis in Argentina
New: To seek products with major brand recognition.
São Paulo Alpargatas S.A. intended to become more a service than a manufacturing
company, concentrating on marketing and on supervising the logistics of
distribution
Organizational Structure
São Paulo Alpargatas’ organization consists of Board of Directors, Board of
Auditors, Internal Auditing, CEO, and seven departments: Sandals, Sporting Goods,
Retail, Industrial Textiles, CFO, Human Resources, and Operations.
The Board of Directors has six members, four representing the controlling
shareholder and two are elected by the minority holders of common and preferred
shares. They are responsible for monitoring the execution of established policies to
define the organization’s strategy.
The Board of Auditors consists of five members; three are nominated by the
controlling shareholder and two by the minority shareholders. They are responsible
for the deliberation of management reports and financial statements.
Executive officers are those responsible for running the businesses and to
ensure that São Paulo Alpargatas pursues its established objectives. Also, to
execute deliberations of the Board of Directors.
Figure 3.1 Organizational Chart
Office Locations
Brazil
□ São Paulo – Head Office
□ Manaus – Synthetic Fabrics
□ Natal – Sports Footwear
□ Santa Rita – Sports Footwear
□ Campina Grande – Havaianas Sandals
□ Carpina – Dupé Sandals
□ Pouso Alegre – Coverings and Tarpaulins
□ São Leopoldo – R&D Center
Argentina
□ Buenos Aires – Head Office
□ Florencio Varela – Footwear and Textiles
□ Corrientes – Textiles
□ Saenz Peña – Textiles
□ Tucuman – Footwear
□ Catamarca – Footwear and Textiles
□ San Luis – Footwear
□ Santa Rosa – Footwear
Uruguay
□ Dolores – Footwear
Chile
□ Santiago – Subsidiary
United States
□ NewYork – Subsidiary
Alpargatas - Head Office
St. Funchal, 160 - Vila Olímpia
Campina Grande (PB)
Havaianas Sandals
Av. Assis de Chateaubriand, 4324- Distrito Industrial
B. Current Position of the Company/Brand in the Market
São Paulo Alpargatas S.A. has been establishing itself as a top quality
manufacturing and retail firm, catering to the high end market with products costing
twice as much as similar brands. It is one of the leading companies in the industry
and last 2007, it was given numerous awards and acknowledgements by several
institutions.
□ Best Company in the Apparel and Textile Sector, from Exame magazine’s
Maiores e Melhores
□ Best Company in the Textile, Leather and Apparel Sector from the Valor 1000
ranking published by the newspaper Valor Econômico
□ Best Company in the Textile, Leather, Footwear and Apparel Sector,
fromBalanço Anual magazine, published by the newspaper Gazeta Mercantil
□ Best Company in the Apparel Industry Sector, from the magazine Financial
Officer
□ Most Admired Company in Brazil in the Sporting Goods Category, from the
Carta Capital / TNS InterScience survey in the magazine Carta Capital
□ Most Admired Company in the Footwear, Leather and Accessories Category,
from the newspaper Diário do Comércio, Indústria & Serviços.
Domestic operations of São Paulo Alpargatas S.A. are increasing their market share
as of the 1st quarter of 2009 while international operations are currently at an initial
growth stage. The company’s strategy of investing in people, sourcing,
manufacturing operations, logistics, brand communication, research and
development and information systems resulted in long-term profitability and value
generation.
Table 3.1 Net Sales Revenues
Brazilian GAAP 2008 1st Q 2009
Net Sales Revenues 439.3 455.9
Domestic Operations 345.5 340.8
International Operations 93.8 115.1
Alpargatas Argentina 86.4 92.5
Alpargatas USA and Europe 7.4 22.6
Table 3.2 International Operations
Consolidated International Operations
Alpargatas Argentina, USA and Europe
Brazilian GAAP
1st Quarter 2008 1st Quarter 2009
Net sales revenues (R$ million)
93.8 115.1
Sales volume: (000’s of pairs)
Havaianas 1,017 1,278
Topper and other footwear brands
2,476 2,285
Figure 3.2
C. Company Strengths and Weaknesses Analysis
STRENGTHS WEAKNESSES
Pioneer and original, Global, large-scale production and distribution Strong products and brand names Huge and powerful company that can buy out competitors Has a huge following Knowledge on the target market
Prone to imitations Sole manufacturer Limited advertisements
D. Brand Consumer Profile
Identified Market Segment
Since Terry S.A. Incorporated brought Havaianas in the Philippines in 2003,
the company perceived that there is a ready market for Havaianas because using
rubber slippers is common to Filipinos. It caters to all ages and gender, offering a
wide range of slippers with different styles, designs and colors. Yet, it is geared
more towards the high end elite market as the slippers cost a little less than a
thousand pesos as compared to the locally made cheaper brands that are even less
than a hundred bucks. It has turned into a status symbol than a commodity.
The bulk of the Havaianas Philippines’ market are women, accounting for
70% of the buyers. Men compose 20% and the children at 10%.
Market Needs Being Addressed
More than just being rubber slippers, Havaianas represents three F’s thus
making it the leading brand of flip flops in the country.
Source: http://www.havaianasphilippines.com/original/wearoriginal.php
Buying Patterns
Havaianas has a huge cult following in the Philippines that some of its buyers
have gone so far to making it as a hobby with collections ranging from 30 to 250
pairs. It has become close to the hearts of the Filipinos that they want so much of it
as it makes them feel good. Despite its relatively high cost for a rubber slipper,
Filipinos are still inclined into buying them. Having at least one pair means
something for them; more so, since it has turned to a status symbol already.
Usage Habits
Havaianas has indeed transformed the local perception of flip flops. From
being the lowly plain footwear for home and beach, it has become a wardrobe
essential that are now proudly worn anywhere and everywhere. It is paired with
almost everything from bikinis and board shorts, jeans and shirts and even the
dressier pieces.
E. Present Marketing Strategy
Segmentation, Targeting and Positioning
Segmentation
Havaianas goes across all market segments. It has products for all ages with
varied styles and colors to match different personalities and lifestyles of people.
Targeting
Havaianas is geared more towards the high end market but is not limited to
that. Though it is still more expensive than the department store variety, it has
changed over time to accommodate the needs of the customers. It had set the
trend and targets people who wants to be fashionable and trendy.
Positioning
Havaianas has established itself as one of the first class rubber slippers that
people would spend on over the locally produced and imitations of the brand.
Despite its high price, it promises quality that is sure worth every peso spent on it.
Furthermore, it offers products that are not only fashionable but also durable and
reliable.
Marketing Mix
Product
Havaianas hails itself as the best rubber flip flops in the world. They are made
of a patented rubber formula by Sao Paulo that makes it ultra-comfortable and
highly durable. A single factory in Brazil exclusively manufactures the slippers and
all the other offices around globe are just distributors.
The flip flops’ soles and straps come in varying colors such as dark brown,
navy blue, black, magenta, gold, silver, royal blue, cyanic blue, tomato, white,
forest green, pumpkin, blush rose and lavender blue, among others. There is also
room for customization through an event called Make Your Own Havaianas which is
conducted roughly once a year in different areas in the Philippines. There they can
mix their preferred colors of soles and strap then embellished it with various pins
and Swarovski crystals.
Price
Havaianas is indeed quite pricey as compared to the other brands of slippers being
sold in the market. The price ranges from 400 to 700 pesos for the children’s line
and 600 to 1,400 pesos for the adult collection. Special collections may also be
available at a higher retail value. These retail prices are standard for all the
authorized retailers in the country, as dictated by Terry S.A.
Place
Havaianas flip flops are available throughout the globe. In the Philippines,
Terry S.A. Incorporated is its exclusive distributor and the only one authorized to
market the brand. The slippers are then made available to the public through
reputable establishments and retailers that are carefully selected and discerned by
both Terry S.A. and Sao Paulo so as to ensure the brand’s integrity and the
protection of its trademark.
They are not currently being sold through the Internet but the Havaianas
Philippines website can help you find stores where you can find the pair you want.
Not all styles and collections are available in all stores since the supplies in each
store vary from what they actually order from Terry S.A. There are also some
special collections that are exclusive to certain outlets. Furthermore, the collections
sold in the Philippines depend on the styles made available by Sao Paulo to the
country, based on the carefully crafted marketing strategy of Terry S.A.
Currently, there are 116 authorized Havaianas retailers in the Philippines and
below is the complete list of them.
METRO MANILA AREA ALABANG : All Flip-Flops 2/F New Wing, Alabang Town Center Alabang-Zapote Rd., Muntinlupa City 807-7145; 809-0617 Celio UG/F, Alabang Town Center Alabang-Zapote Road, Muntinlupa City 850-4153 Kidsports UG/F, Alabang Town Center Alabang-Zapote Road, Muntinlupa City 807-5816 Rustan’s Department Store Alabang Town Center 850-5532 Stoked Alabang Town Center 772-1763
MAKATI CITY: Aloha Boardsports 3/F Power Plant Mall, Rockwell Center, Makati City 837-0118 All Flip-Flops 2/F Greenbelt 5, Ayala Center, Ayala Avenue
Makati City 729-9322 2/F Glorietta 3, Ayala Center, Ayala Avenue Makati City 818-2508 Celio 1/F, Greenbelt 3, Ayala Center, Ayala Avenue Makati City 757-4926 J&S Surfshop 2285 Don Chino Roces Ave. 893-5766 Manila Polo Club 17 McKinley Rd., Forbes Park, Makati City 817-0951 loc. 258 Moana 1/F Power Plant Mall, Rockwell Center, Makati City 756-5104 Nail Spa Gamboa St., Legaspi Village, Makati City 817-3128; 830-0702 Orange Juice The PowerPlant Mall Rockwell Center 757-5096 Rustan’s Department Store Rustan‘s Dept Store, Ayala Center 813-3739 Stoked
The PowerPlant Mall Rockwell Center 856-4013 The Zone 7221 Malugay St. cor, Gil Puyat Avenue, Bel-Air Village, Makati City 894-0087
MANDALUYONG: All Flip-Flops E 317 SM Mega Atrium, SM Megamall Mandaluyong City 637-0989/638-5944 Celio 2/F, Shangri-La Plaza Mall, Shaw Boulevard Mandaluyong City 634-5402 Kidsports 4/F, Shangri-La Plaza Mall, Shaw Boulevard Mandaluyong City 633-6948 Nail Spa 2nd level, Shangri-La Plaza Mall, Shaw Boulevard Mandaluyong City 687-4991 Rustan’s Department Shangri-la Plaza Mall, Shaw Boulevard 633-4636 Souk 2nd level, The Ramp, Crossing Department Store, Shangri-La Plaza Mall, Shaw Boulevard 635-4410
MANILA: Rustan’s Department Store Robinson’s Place Ermita 551-2788 All Flip-Flops 1/F Robinson‘s Place Midtown, M. Adriatico St. Ermita, Manila 567-2203
ORTIGAS/GREENHILLS: Orange Juice Virra Mall, Greenhills Shopping Center 725-1244 Stoked 4th floor, The Podium Mall 683-0736 2nd level, Bridgeway, Greenhills Shopping Center 723-9286
PASAY CITY: Stoked Ground level, SM Mall of Asia 556-0146 All Flip-Flops 2/F Entertainment Mall, SM Mall of Asia Roxas Bay Blvd., Pasay City 556-0639 Celio 2/F, Main Mall, SM Mall of Asia Roxas Bay Boulevard, Pasay City 556-0095
QUEZON CITY: All Flip-Flops Level M2 Trinoma, EDSA cor. North Avenue Quezon City 901-3978 All Flip-Flops Unit 213, 2nd level, SM Fairview Annex Quezon City Celio 1/F, Gateway Mall, Araneta Center Cubao, Quezon City 912-0247 Fiveforty Surfshop 227 Katipunan Ave., Quezon City 437-4816 Kidsports Level M2 Trinoma, EDSA cor. North Avenue Quezon City 901-3970 Nail Spa 5th floor, The Block SM North Edsa 441-0323 Rustan’s Department Store Gateway Mall Araneta Center 911-2401 Stoked 2nd level, Trinoma Mall 916-9708
TAGUIG CITY: All Flip-Flops Unit 960 and 962 Bonifacio High Street Fort Bonifacio Global City, Taguig 856-1390, 0906-578-3349 ROX Bonifacio High Street, Fort Global City 856-4639 Sepatu 2/F Market Market 322nd St., Brgy. South Side Fort Bonifacio, Taguig City 844-5544 Stoked Bonifacio High Street, Fort Global City 898-1913 Souk 2nd level, Serendra Piazza, Fort Bonifacio Global City 907-7040
LUZON AREA PANGASINAN: Tutti Footie Eastgate Complex, 231 AB Fernandez East, Dagupan City
BAGUIO CITY: All Flip-Flops Patria de Baguio EXT., Session Road Baguio City (074)442-5712 High Tide Store Special Economic Zone, Camp John Hay Baguio City
(074)4460886
LAOAG: Red Dot Boutique 72 F.R. Castro Ave. Laoag City, Ilocos Norte (077) 771-1437
LA UNION: San Juan Surf Shop San Juan Surf Resort, Urbiztondo San Juan, La Union (072)720-0340
PAMPANGA: All Flip-Flops Lot 1 Robinson’s Star Mills O.G. Rd San Fernando, Pampanga (046)636-3565
LAGUNA: All Flip-Flops Paseo de Sta. Rosa, Sta. Rosa, Laguna (049)541-2087, 0916-331-8623 Fashion Outlet Sta. Rosa, Laguna (049)541-2087
SUBIC: Royal Subic Duty Free 1109 Palm St., Subic Bay Freeport Zone Olongapo City 0917-521-5141
VIGAN: Red Dot Boutique Syquia Bldg. cor. Men Crisolog St. Heritage Village. Vigan City, Ilocos Sur. (077) 632-1168
TUGUEGARAO: Red Dot Boutique 16 College Avenue, Tuguegarao City
SOUTHERN LUZON BATANGAS: All Flip-Flops G/F SM City Batangas, 194 Pallocan West Pastor Village, Batangas City (043)783-0454 All Flip-Flops G/F SM City Lipa, Ayala Highway Lipa City, Batangas (043)757-4074 H Kape Maharlika Highway, Lipa City, Batangas (043)312-6289
BICOL: All Flip-Flops G/F SM City Naga, Central Business District, 2 Triangulo, Naga City
(054)495-5055 Evolution Salon and Day Spa G/F Villa Caceres Hotel, Magsaysay Ave., Naga City (054)811-1192 Soleil et Lune 2/F Avenue Square, Magsaysay Ave., Naga City (054)473-6611 Wardrobe and Me 3/F E-Mall, Elias Angeles St., Naga City F2M Pacific Mall, Legaspi City, Albay (052)480-0828 Hotel Venezia Renaissance Gardens, Washington Drive, Legaspi City, Albay (052) 481-0877
QUEZON PROVINCE: Mug Cafe Pacific Mall, Lucena, Quezon (042)660-4200
BORACAY All Flip-Flops by the Beach Station 1, Balabag, Boracay Islang, Malay, Aklan (036)288-1544 (036)288-1545 Fridays Resort Panglao Island, Bingag, Dauis, Bohol (036)288-6200 Latte Sta. Monica, Andagao, Kalibo, Aklan (036)268-9026 (036)268-6000 Nami Resort Diniwid Beach, Boracay Island, Malay, Aklan (036)288-6753 (036)288-6754 Discovery Shores Station 1, Boracay Island, Malay, Aklan (036)288-4500 Waling-Waling Station 1, Balabag, Boracay Island, Malay, Aklan (036)288-5556 (036)288-5557 Regalo Boutique Shangri-la’s Boracay Resort and Spa, Barangay Yapak, Boracay Island (036)288-4988
CENTRAL AND EASTERN VISAYAS CEBU: All Flip-Flops G/F North Wing, SM City Cebu North Reclamation Area, Cebu City (032)236-0985 All Flip-Flops G/F Paseo Ciudad, Ayala Center Cebu Cebu City July 2/F Ayala Center Cebu, Archbishop Reyes St. Cebu City
(032)412-5724 Republik G/F Banilad Town Center, Gov. M. Cuenco Ave. Banilad, Cebu City (032)231-5641 What A Girl Wants 2/F Ayala Center Cebu, Archbishop Reyes St. Cebu City (032)415-6136 Rustan‘s G/F Level 1, Ayala Center Cebu, Archbishop Reyes St., Cebu City (032)231-5641 Meddah Spa CrossRoads, Banilad, Cebu City
DUMAGUETE: Hayahay 211 Flores Ave., Piapi Beach, Dumaguete City
MACTAN: Abaca Boutique Hotel Abaca Boutique Hotel, Punta Engano, Mactan (032)495-3461 Maribago Bluewater Beach Resort Maribago Blue Waters Resort Gift Shop Maribago, Mactan (032)492-0100 Plantation Bay Resort and Spa Plantation Bay Resort & Spa Dive Shop Marigondon, Mactan (032)340-5900
ORMOC CITY: Tshilly’s G/F Ormoc Villa Hotel, Obrero St., Ormoc City
BOHOL: Panglao Island Nature Resort Pangloa Island Bingag, Dauis, Bohol (038)411-2599 Amorita Resort Easter A. Lim Drive, Brgy. Tawala, Pangloa, Bohol
TACLOBAN: 7R Store Salazar St., Tacloban City, Leyte
WESTERN VISAYAS BACOLOD: Learning Gallery G/F Lourdes Center, Lacson St., Bacolod City (034)423-2699 Pink Elephant G/F Parking Annex Bldg., Lopue‘s East Center Carlos Hilado National Highway, Bacolod City (034)433-9280 Seed 2/F Robinson‘s Place Bacolod, Mandalagan Bacolod City Carlos Hilado National Highway, Bacolod City (034)441-0558
ILOILO: All Flip-Flops LG/F SM City Iloilo, Sen. Benigno Aquino Jr. Ave. Mandurriao, Iloilo City (033)329-2346 Seed G/F Robinson’s Place Iloilo Iloilo City
NORTHERN AND WESTERN MINDANAO BUTUAN CITY: Cirrus Lifestyle Haven 1342 Sentro Bldg., JC Aquino St., Butuan City (085)815-5264
CAGAYAN DE ORO: All Flip-Flops SM City CDO, Materson Ave. cor. Gran Via St. Cagayan de Oro City, Misamis Oriental (088)859-2335 Ban Sabai Traditional Thai Massage Corrales Ave. Cor Ramon Chaves St. Cagayan de Oro City, Misamis Oriental (08822)714-032 Gazebo A. Velez St. corner Gaerlan St. Cagayan de Oro City, Misamis Oriental 088-857-4667 Mallberry Suites Business Hotel Florentino St., Limketkai Center, Cagayan de Oro City, Misamis Oriental (088)854-9999/ (08822)72-4999 Spruce 2/F Limketkai Center, Rosario St. Cagayan de Oro City, Misamis Oriental (088)856-2234
DIPOLOG CITY: Myx Boutique General Luna St. cor.Ortega St., Dipolog City
ILIGAN CITY: Shelves & Hangers Juan Luna St., Iligan City, Lanao del Norte (063)223-2652 Street Shop Quezon Avenue Extension, Iligan City Lanao del Norte (063)221-6335
MARAWI CITY: My Tiny Closet Panggao, Saduc, Marawi City
OZAMIZ CITY: Spruce G/F Medina Bldg, Gallardo St. Ozamiz City 088-5215982
SURIGAO CITY: Pieces of a Dream Stall No. 6 City Commercial Bldg.,
Borromeo St., Surigao City
ZAMBOANGA CITY: The Sidewalk 3/F Southway Sq., Gov. Lim Ave., Zamboanga City
SOUTHERN AND EASTERN MINDANAO COTABATO CITY: Bajunaid 20 Biruar Bldg., Bonifacio St., Cotabato City (0917)708-1889
DAVAO: All Flip-Flops SM City Davao, Quimpo Blvd. cor. Tulip Dr., Ecoland Subdivision, Brgy. Matina, Davao City (082)282-0977 Apo View Hotel G/F 1510 J. Camus St., Davao City (082)221-6430 Bliss Salon and Day Spa G/F Lanco Corporate Center, J.P. Laurel Avenue Davao City (082)225-5677 Chimes Specialty Store Sales St. (0918)942-4639 Choo Choo Baby G/F Gaisano Mall, J.P. Laurel Ave., Davao City (0918)910-3079 Jill & Co. G/F Victoria Plaza Mall, J.P. Laurel Ave., Bajada, Davao City (0917)717-0885 Martish Store Villa Margarita Hotel, J.P. Laurel Ave., Davao City (082)221-5674 Sunlab 2/F Gaisano Mall, J.P. Laurel Ave., Davao City (082)305-2902
KORONADAL CITY: Mia Lee’s Boutique (0926)447-5357
SAMAL ISLAND: Pearl Farm Boutique Pearl Farm, Kaputian District, Island Garden, City of Samal (0920)917-1640
Promotions
In the Philippines, there are no television and radio advertisements for
Havaianas. Most of the promotions are done through print ads in various magazines
and events that they host and sponsor. Every year, there’s the Make Your Own
Havaianas event where Havaianaticos, avid users of the brand, can customized
their own pair of flip flops. They also had Havaianas Playback that relieved Filipino
street games.
Havaianas is also effective in creating a bandwagon to promote the use of its
slippers. Names of famous celebrities who are spotted wearing them are being
spread, particularly through word of mouth and their actual pictures. Moreover, they
make use of their website, mailing lists and various fanbase sites so they can
interact and keep in touch with their customers.
As to how successful are they in promoting the brand, the long lines to their
stores who even needed bouncers and velvet ropes to control the crowd are just
enough proof.
Competitive Strategies Employed
According to Anne Arcenas-Gonzales, managing director of Terry S.A., they at
Havaianas are not worried with the current deluge of competition. They even see
this as an advantage since it brought more attention to the industry as a whole.
Furthermore, even if there’s a lot of variety to choose from now, they are banking
on the brand’s popularity and superior quality that will make the consumers still
choose them over the others. Rather, what threatens them more are the existence
of imitations and the availability of the same products sourced via parallel
importation. With this, they are planning to release 20 to 25 new styles every two
months to encourage more buyers. They also try to find out what their customers
want in their Havaianas and make them closer to their hearts. Just recently, they
added a Pinoy touch to its flip flops with a theme “Put some Pinoy soul into your
step.” Whatever changes and makeovers Havaianas undergoes, they assure that
the “flexibility, grip, and comfort that has made Havaianas not just a flimsy fashion
trend but a dependable and durable footwear essential that will last for years to
come” will be constant no matter what. Moreover, they have been establishing a
loyal group of consumers that they even organize parties for them as a way of
giving back. Also, people who are subscribed in their mailing lists get the privilege
of being informed with their promos and events first.
III. Identified Market Opportunity
The Philippines have shown to be a country with changing lifestyles given the
increasing awareness with health and fitness opportunities. Add to that, the
Philippines has presented itself to be a venue wherein beaches have been local
hotspots especially for the young adults generation. Yet, the beach has also been
shifting its image from being just a vacation destination to being a pleasure haven
for water sports as well.
Since women have been marrying at later ages and prioritizing their careers,
there is an increase of value for their own needs and wants. Women in general are
known to be big spenders of footwear since they equate it as their necessities or
pleasure items. In fact, shoes are just some of their rewards for themselves. With
their increasing incomes, they become more gracious of spending for things other
than their daily basic necessities. They have also developed different types of
leisure activities so as to compensate with their stressful lives such as the pursuit of
fitness. Essentially, Filipino females have been an emerging sector with an
increasing consciousness for fitness. Moreover, they have also become more
adventurous in trying out sports that would usually be ventured out by males like
water sports. Given the increasing popularity of such activities, Filipino females
generate a higher demand for goods that would complement and aid them with
such endeavors especially goods such as footwear particularly water shoes.
As of now, market leaders Nike, Adidas and Speedo have been the brands
known to consumers to provide water shoes that would precisely answer athletic
needs. Havaianas, Sanuk, and Crocs are the brands consumers go to for a more
casual yet fashionable choice of beach footwear. Still, Nike, Adidas and Speedo
present itself as more of a functional product. On the other hand, Havaianas, Sanuk
and Crocs just pose themselves as comfortable and stylish footwear without
meeting actual sports related needs, in this case, water sports.
Nikole, age 29, is on a company trip at Boracay. She wants to try
riding the Banana Boat. However, Nikole is worried that she might lose
the flip-flops that she is wearing and if she uses her sneakers, she’s
afraid that it might get ruined when she gets thrown off the banana boat.
Sandra, age 25, is in Puerto Galera during the Christmas holidays.
As she is swimming on the beach, she noticed that there are sea urchins
on the waterbed. Afraid of stepping on one, she decides to wear her flip-
flops to the water. Oh no! Her flip-flops floated on the water. She ended
up going bare foot. The next day, she borrowed her friend’s flip-flops that
had a strap. Confident of the slippers, she started swimming and walking
in the water. When she reached the corals, she stubbed her toe on one of
them.
Angeli, age 13, is in Palawan with her family for a vacation.
Although she likes the ocean, she doesn’t like the scorching hot sand.
Even while wearing her flip-flops, she can still feel the hot sand going in
between her toes giving her rashes.
Ella, age 19, owns a pair of aqua shoes. She knows of the shoes’
benefits and uses, and thinks that it is practical for wearing in the beach.
However, she noticed, her aqua shoes doesn’t go with her bikini, summer
dress, and other beach wear. Also, the designs available in stores for the
With these various selections in the footwear market today, many females
still have concerns regarding the footwear that would best adjust to their lifestyles
at the beach.
The modern active Filipina, most especially young adults and teenagers,
continues to have fashion and personal style as her prevailing major factors in
footwear purchasing decisions. Nevertheless, she needs more than the usual
footwear that would provide her with the standard comfort and style. In pursuing
her active lifestyle at the beach, she also needs footwear that would deliver
optimum performance. She is faced with compromising function with style.
Havaianas Aqua jumps on the opportunity of delivering the balance of both for the
modern active Filipina.
Since Havaianas has established itself as a brand known for its comfortable
and fashionable footwear not only for the beach but for other casual occasions as
well, it differentiates itself away from only catering to athletes. As other sports
brands have been focusing on promoting itself as an athlete brand, Havaianas has
posed itself as brand for everyone who has sense for the trendy and the efficient.
Although Nike, Adidas and Speedo have focused more on the athletic needs of
women, they have not established themselves so much as a go-to for the fashion
concerns of women. Havaianas shows as a friendlier choice for females who are not
that keen with sports in general. Given this, a wider range of women of different
personalities would be more in touch with Havaianas Aqua. Add to that, Havaianas
Aqua directly wants to address the fashion needs of women who engage in water
sports. It also introduces aqua shoes as another alternative for casual beach
footwear. Moreover, with Havaianas being popular for its quality and fresh colorful
designs, it proves to be an ideal brand for the fashion-conscious and the brand-
conscious.
V. Proposed Target Market
A. Demographics
POPULATION Female
CIVIL STATUS Preferably Single
SOCIAL STATUS Middle-Income to High-Income
EDUCATION Private Schooling
AGE 13-29
The proposed target market is the female population in the Philippines. From
there, Havaianas Aqua will be targeting those females aged 13-29, considered to be
teenagers and yuppies. As for the social status, Havaianas Aqua will be targeting
those belonging in the middle class and in the high class. It would also target single
women since they have more tendencies to be more active than those who are
married – a factor that that we highly regard in advertising our product.
The proposed product can be pricy for most consumers so Havaianas Aqua
will only target those with higher income. Since it is targeting the middle-income
class and the high-income class, the group assumes that these females are
currently studying or have experienced private schooling. Also, it can be assumed
that students from exclusive schools are more exposed to our company and the line
of products it offers. The proposed target geographical segment is expected to hold
the highest average annual family income and expenditure, and among all the
regions based on our research, it is NCR.
Average Annual Family Income and Expenditure by Region 1997 to 2006 (in PhP)
Region 2003 2006
Average Average Average Average
Income Expenditur
e
Income Expenditur
e
PHILIPPINES 148,000 124,000 172,730 147,180
NCR 266,0
00
218,000 310,860 257,930
CAR 152,0
00
126,000
192,1
26
150,508
Ilocos 124,0
00
102,000
142,3
58
123,502
Cagayan
Valley
126,0
00
99,000
142,7
70
117,889
Central Luzon 160,0
00
138,000
197,6
40
170,347
Southern
Tagalog
184,0
00
158,000
209,7
49
186,287
Bicol 103,0
00
84,000
108,9
46
92,999
Source: National Statistics Office
The middle-income class could be defined as those
families with annual income ranging from P148,307 to
P1,207,122 in 1997; P178,468 to P1,449,295 in 2000; and
P203,109 to P1,651,632 in 2003. For 2007, the range
should be from P251,283 to P2,045,280.
Source: Trends and Characteristics of the Middle -Income
Class in the Philippines: Is it Expanding or Shrinking? By
Romulo A. Virola, Mildred B. Addawe and Ma. Ivy T.
Querubin
Region 1997 2000
Average Average Average Average
Income Expenditure Income Expenditure
PHILIPPINES 123,168 99,537 144,039 118,002
NCR 270,993 217,840 300,304 244,240
CAR 112,361 86,924 139,613 110,338
Ilocos 102,597 83,307 120,898 95,755
Cagayan Valley 86,822 68,556 108,427 88,655
Central Luzon 133,130 105,558 151,449 120,003
Southern
Tagalog
132,363 104,002 161,963 135,043
Bicol 77,132 67,012 89,227 77,287
Basically, based from research, urban women with higher education
belonging to a higher economic status delay marriage. Therefore, Havaianas Aqua
is planning to target those who are single because of the more opportunities given
for them to be more active in activities, like particularly in our case, water sports
activities, going to different beaches and other aquatic activities.
Median Age at First Marriage by Background Characteristic
BACKGROUND
CHARACTERISTIC
1993 1998 2003
RESIDENCE
Urban 22.3 23.0 22.9
Rural 20.7 21.0 20.9
REGION
NCR 24.0 24.0 23.8
CAR 22.3 24.0 21.5
I 22.2 21.9 22.1
II 20.4 20.3 20.9
III 21.5 22.1 22.1
IV 21.4 22.1
IVA 22.7
IVB 21.0
V 20.8 21.5 21.4
EDUCATION
No Education 18.9 18.7 18.2
Elementary 19.6 19.8 19.6
High School 21.1 21.5 21.2
College or higher a a a
WEALTH INDEX
QUINTILE
Lowest 19.7
Second 20.6
Middle 21.5
Fourth 22.8
Highest 24.6
TOTAL 21.4 22.1 22.0
a - omitted because less than 50 percent of women married for the first time before
reaching age 25
Source: National Demographic and Health Survey: 1993, 1998 and 2003
Another component in the proposed target market is the age group which we
Havaianas Aqua is advertising to. The group is planning to focus on teenage girls
and female yuppies or female young adults, aged 13-29. Younger generations and
young adults during their leisure time tend to participate more in different sports
activities since they are more active and are usually more physically-capable to do
different kinds of activities. The proposed product caters to water sports enthusiasts
or those active in going to different beaches to enjoy different aquatic activities.
The group assumes that more consumers will be coming from this age range
because of the number of activities that they do and the higher amount of
activeness that they give. A huge factor in the target market is the proposed target
gender, which are females. Since our product, Havaianas Aqua, focuses on
functionality and design, the group believes that women could be the best market
to cater to. It is functional for women because Havaianas Aqua would enhance the
comfort and ensure safety of the feet in aquatic environments. Women tend to be
more careful of their feet so that it would not get cut, bruised or even smell bad. For
design, women are more attracted to the vibrant colors and images that would very
well relate to our company’s advertisements. Also, the company’s advertisements
are much seen on fashion magazines that are usually read by women. The product
would also focus on the design to adhere to the company’s trend of creating fashion
statements through footwear. Basically, the different concepts of Havaianas Aqua
would draw more attention to the female population rather than the male
population.
5-Year Interval Population
Year Both Sexes MALE FEMALE
2000 76,504,077 38,524,267 37,979,810
2005 85,261,000 42,887,300 42,373,700
Source: National Statistics Office
Population by Age Group, by Sex and by Region: 2000 (proposed target age)
Age Group Both Sexes Male Female
10-14 8,949,614 4,541,197 4,408,417
15-19 8,017,298 4,017,830 3,999,468
20-24 7,069,403 3,522,518 3,546,885
25-29 6,071,089 3,053,616 3,017,473
Source: National Statistics Office
B. Psychographics
Social Class Class A & B
Age Group Teenagers and People in their 20s
Activities Studying (School), Working (Office), Going out for
social gatherings and events, Social networking,
Shopping, Sports Activities, Out of town trips
Interests Latest fashion trends, Sports, Travelling, Leisure and
Recreation
Opinions “Being fashionable is cool”, “I want to be in the
trend”, “I should get the most out of my money”, “I
have to look and feel good”, “I want to have fun and
just be carefree”
Personality Characteristics Wants to be ‘in’, Fashion-forward, Practical, Modern,
Active, Fun-loving, Sociable, Strong decision and
purchasing power
Havaianas Aqua particularly targets female teenagers to young professionals
of Class A & B. They are those who seem to afford having a work-leisure balance in
their lifestyle. They can be really busy with school or work but they still find time to
have fun and a bit of rest and relaxation once in a while. They go to the mall, party
with their friends, do sports and even go out of town especially during long weekend
holidays. They are active and fun-loving. These people are also the ones who have
tendencies to follow trends as they feel the need to be sociable. Psychology says
that within this age range that people strive to look for their own identity and a
certain group they can belong to. Moreover, these people have a strong decision
and purchasing power so they can go buy almost anything they want. Though
teenagers still get their money from their parents, they relatively have full freedom
with their purchases. Young professionals, on the other hand, do not have much
responsibilities to pay for so they still can spend their earned money for their own
whims.
The group then see that these people are the ones most likely to buy and
actually use Havaianas Aqua. As they go to the beaches of nearby towns and
provinces, they can wear these aqua shoes and totally enjoy the water as they
would not bother about their feet getting hurt from the rocky and slippery surfaces.
They can be completely carefree and just have the fun they want. Furthermore,
they can wear these ultra fashionable aqua shoes to match their equally stylish
swimsuits. Havaianas Aqua would surely be a perfect fit for chic and trendy girls
who just love to have fun.
C. Behavioral
Occasion Beach Trips, Water Sports Activities
Benefits Sought Quality, Comfort, Function, Added Protection, Fashion,
Trend, Social Status, Antibacterial Feature
User Status Potential User / First Time User
User Rates Heavy User
Brand Loyalty Hard Core Loyals (buy all the Havaianas products of
every design and color always/most often) Soft Core
Loyals (buy one or two pairs of Havaianas always/most
often)
Loyalty Status Absolute / Strong
Readiness Stage Interested
Attitudes Toward
Product
Positive, Enthusiastic, Interested
Even though the need for aqua shoes would probably arise during Summer,
Havaianas Aqua places itself as a product for any season. Essentially, Havaianas
Aqua is a key footwear item for beach trips since this is the primary setting for this
product. However, it also acknowledges an arising need for this footwear not only in
beach settings but also in other settings where water sports may be carried out.
Add to that, Havaianas Aqua also presents itself as a need for those who regularly
go to the beach or those who regularly engage in water sports.
Females, being generally fashion-conscious, go for athletic footwear that
would offer both function and style. Following the trends become vital for females
since this translates what the mass population believes as fashionable. Moreover,
many females choose their brand of footwear based on its prestige and popularity
since this would equate to social status and quality. With their increasing awareness
of developments of new technology, comfort, protection and other plus features
have become more of a clincher for footwear purchasing decisions. Havaianas Aqua
aims to nail down the market of those who seek or are not even aware of these
benefits.
Havaianas Aqua intends to tap further into Havaianas’ already existing strong
cult following. It presents itself as another choice to satisfy any other concerns that
they might have from their regular flip flops.
D. Geographic
Country Philippines
Region National Capital Region (NCR)
Cities Manila, Mandaluyong, Marikina, Pasig, Quezon, San Juan,
Malabon, Navotas, Valenzuela, Las Piñas, Makati,
Muntinlupa, Parañaque, Pasay, Taguig
City or Metro Size 636 sq. km.
Population Density 15,617 per sq. km.
Climate Tropical Climate
The proposed geographic segment for Havaianas Aqua is the Philippines,
specifically the National Capital Region (NCR). The National Capital Region’s cities
are ‘Highly Urbanized,’ with ‘1st class’ income classification as described by
NSCB. NCR is also the center for Philippine commerce and includes the cities
of Manila, Mandaluyong, Marikina, Pasig, Quezon, San Juan, Malabon,
Navotas, Valenzuela, Las Piñas, Makati, Muntinlupa, Parañaque, Pasay, and
Taguig.
City Province City Class Income
Class
CITY OF MANILA NCR, CITY OF MANILA, FIRST
DISTRICT
Highly
Urbanized
Special
CITY OF
MANDALUYONG
NCR, SECOND DISTRICT Highly
Urbanized
1st Class
CITY OF MARIKINA NCR, SECOND DISTRICT Highly
Urbanized
1st Class
CITY OF PASIG NCR, SECOND DISTRICT Highly
Urbanized
1st Class
QUEZON CITY NCR, SECOND DISTRICT Highly
Urbanized
Special
CITY OF SAN JUAN NCR, SECOND DISTRICT Highly
Urbanized
1st Class
CALOOCAN CITY NCR, THIRD DISTRICT Highly
Urbanized
1st Class
CITY OF MALABON NCR, THIRD DISTRICT Highly
Urbanized
1st Class
CITY OF NAVOTAS NCR, THIRD DISTRICT Highly
Urbanized
1st Class
CITY OF
VALENZUELA
NCR, THIRD DISTRICT Highly
Urbanized
1st Class
CITY OF LAS PIÑAS NCR, FOURTH DISTRICT Highly
Urbanized
1st Class
CITY OF MAKATI NCR, FOURTH DISTRICT Highly
Urbanized
1st Class
CITY OF
MUNTINLUPA
NCR, FOURTH DISTRICT Highly
Urbanized
1st Class
CITY OF
PARAÑAQUE
NCR, FOURTH DISTRICT Highly
Urbanized
1st Class
PASAY CITY NCR, FOURTH DISTRICT Highly
Urbanized
1st Class
TAGUIG CITY NCR, FOURTH DISTRICT Highly 1st Class
Urbanized
Source: National Statistical Coordination Board
The Philippines is an ideal market for Havaianas Aqua because of its
long summers and the presence of many beaches. The National Capital
Region is ideal for the proposed target market because all of its cities are
urbanized and has total population of more than 9 million. NCR also has an
annual growth rate of 2.25% and has around 2,132,989 households.
National Capital Region (2000)
Total Population 9,932,560
Ave. Annual Growth Rates 2.25% (1990-2000)
No. of Households 2,132,989
Average Household Size 4.62
Land Area 636 sq. km.
Population Density 15,617 per sq. km.
No. of City / Municipality 16
No. of Barangays 1,694
Source: 2000 Census of Population
VI. Marketing Objectives
A. Overall Marketing Objectives
Havaianas Aqua aims to introduce aqua shoes as part of the Havaianas
brand. Aside from flip-flops, the Havaianas brand is well known for beach and
casual footwear that is both durable and comfortable. Taking advantage of this, the
group aims to take part in the athletic footwear industry that provides aqua shoes.
The goal of Havaianas aqua for the next 3 years is to establish aqua shoes as a
staple beach casual wear for women ages 13- 29.
In terms of sales, the group expects the aqua shoes to be profitable and have
a increase in sales by the end of the third year. Havaianas is already a well known
and established brand in the Philippines. With the introduction of Havaianas Aqua,
Havaianas will add to their already existing market and have more than flip-flop
customers as their regular clientele.
The current competitions for aqua shoes, Nike, Adidas, and Speedo, are not very
aggressive in terms of advertising their aqua shoes line. On the other hand,
Havaianas aqua will stick with Havaianas’s current promotion strategy and will offer
the brand to the cities of the National Capital Region: Manila, Mandaluyong,
Marikina, Pasig, Quezon, San Juan, Malabon, Navotas, Valenzuela, Las Piñas, Makati,
Muntinlupa, Parañaque, Pasay, and Taguig.
Objectively, for the first 2 years, Havaianas Aqua will focus on establishing the
product. For the third year, the group expects that Havaianas Aqua will be ‘picked
up’ by the Philippine market and thus, the company can start distributing the brand
to other urbanized cities in the country.
B. Specific Objectives and Targets (3 years)
2010 2011 2012
Market Share 0.2% * 0.2% * 0.2% *
Sales Php
873,602,650.96
Php
889,501,813.30
Php
905,682,855.69
Profit Php Php Php
221,687,013.08 221,751,277.70 206,189,748.74
Distribution SM, Robinson’s,
Ayala Malls,
Powerplant
SM, Robinson’s,
Ayala Malls,
Powerplant
SM, Robinson’s,
Ayala Malls,
Powerplant, Local
malls in provinces
Area NCR NCR NCR, Cebu,
Palawan
*Based on Terry S.A. Inc. (Havainas Philippines)
Based on the Terry S.A. Inc. income statement for year December 31, 2008,
sales reached Php205,018,894 for 2007 and Php231,337485 for 2008. Comparing to
Nike’s 2008 sales and market share on clothing and footwear retailers of
Php2,000,000,000 and 2.2% respectively, we have established the market share of
Havainas Philippines, which is 0.2%. For the next 3 years, we are expecting the
company to maintain its market share of 0.2%.
The group is proposing to sell the aqua shoes for Php 1,699 for solid colored
aqua shoes and P1,999 for printed aqua shoes, so the median price is about Php
1,849. Based on our survey, 60.98% of the target market size is willing to buy
Havaianas Aqua. The target market size for 2010, 2011 and 2012 are 774,800,
788,901 and 803,252 people respectively. So given the percent of buyers, target
population and the median price, the group developed an objective sales growth for
2010-2012. There is also a computed cost given the expected cost of sales,
operating expense and advertising expense. Therefore, there is a developed income
for the next 3 years.
For the next two years, Havainas Aqua will be focusing on retail stores in
NCR, specifically at malls where a big number of people go to and also we will focus
on high-end malls. For 2012, Havaianas Aqua will be selling at local malls in the
provinces. As for area, the focused target area is NCR since all the factors the group
is considering for the proposed target market is found mostly from people located in
NCR. For 2012, the company will be expanding its network to Cebu and Palawan
since they have many islands and beaches that tourists go to. Cebu and Palawan
are also considered as highly urbanized areas.
Basically, Havainas Aqua is promoting casual beach footwear that is both
durable and comfortable. Havainas, our company, will sell these aqua shoes with
variations of design every season, just like what they normally do with their flip
flops. Havainas Aqua will be distributing to selective areas only, mainly high-end
and highly-urbanized markets. The group also expects the loyal consumers of
Havaianas to still support the proposed product, but it will be attracting new users
as well. As for advertising strategies, the group will continue with what Havainas is
doing right now – through word of mouth, sponsoring events and magazine
advertisements.
VII. Overall Marketing Strategy
“To active and fashion-forward teenagers and young professionals who frequently
go to the beach and engage in water activities, Havaianas Aqua is the aqua shoes
that will give the right covering and protection for your feet while keeping you chic
and trendy. With Havaianas Aqua, you can walk, swim and play on the beach
confidently, safely and in style.”
The aqua shoes that are currently available in the market seem to be
primarily targeted for water sports enthusiasts who of course need much protection.
These shoes normally just come in plain colors with barely any design at all. They
are just but aqua shoes. Though the athletes may not be really concerned with the
shoes’ overall look, they are not just the ones who need aqua shoes to protect their
feet. Practically everyone who goes to the beach need them including people who
are very much concerned with how fashionably they look like.
Havaianas is particularly known for its colorful and vibrant trendy flipflops
and so is how the aqua shoes would look like. Unlike the ‘usual’ aqua shoes,
Havaianas Aqua would be offered in a diverse range of styles, prints and colors so
as to cater to the varying preferences of people. They would be made through the
powerful combination of the authentic premium Havaianas rubber and a special
kind of fabric that will surely ensure comfort, warmth and protection for one’s feet.
The soles would be hard enough on the outside for extreme protection but would be
very soft inside for greater comfort. They could also have removable straps for
flexibility of the user’s preferences and the product’s functionality. Being very chic
and trendy, we want people not to just wear Havaianas Aqua on the beach but even
on normal days as well. They could indeed be very reliable especially during the
rainy season. As for the packaging, they would come in a clear transparent plastic
box so people can readily see them with their fabulous designs that are absolutely
worth noticing. There would also be a shoe bag so users can conveniently bring
them to the beach or wherever.
Promotion-wise, Havaianas Aqua will stick with the current strategies of the
brand. Advertisements would be placed in teens, young women, fashion, travel and
sports magazines. They could also sponsor school fairs and parties and even water
sports competitions and events. The brand will reach out to our prospected
customers by being involved with the events their customers go to and products or
media that they use, still no television or radio ads. Hopefully, the shoe line would
still be made known by word of mouth or even through bandwagon as celebrities
and the high end populace wear them. Such people are known to sport branded
clothing and footwear and since Havaianas is a popular high end flipflop brand, they
are likely to try them on and influence more people.
So as not to be far from competition, Havaianas Aqua would be sold for
Php1499 to Php1999 depending on its style and design – the simpler and not
printed ones for Php1499, the printed and more colorful for Php1699 and the special
and limited seasonal designs for Php1999. They may be indeed quite pricey but
they would surely be worth all your cents being the fashionable and reliable aqua
shoes that they are.
These aqua shoes would still be distributed by Havaianas main distributor in
the Philippines, Terry S.A. Inc. and would be sold in all the Havaianas retailers in the
country. For the flagship and other big stores like All Flip Flops in Bonifacio High
Street, Havaianas Aqua would have an accent wall of
beach background. Such wall would have floating shelves
displaying the current styles of the shoe line. For all the
others where Havaianas is just consigned, Havaianas Aqua
would be displayed in racks or maybe even a small wall,
depending on the store’s policies and arrangements.
VIII. The Marketing Mix
1. Product
Figure 3.1.1. Logo
The Havaianas aqua shoes product name will be Havaianas Aqua. As with
previous Havaianas products, the brand name is followed by the product design
name. The logo, as shown in Figure 1, shows the Havaianas brand name and the
product design name, Aqua, in a wavy script.
a. Product Strategy / Positioning
“To active and fashion-forward teenagers and young professionals who frequently
go to the beach and engage in water activities, Havaianas Aqua is the aqua shoes
that will give the right covering and protection for your feet while keeping you chic
and trendy. With Havaianas Aqua, you can walk, swim and play on the beach
confidently, safely and in style.”
The scorching hot sand, slippery and rocky surfaces, as well as strong waves in the
beach often prove to be a problem for women’s footwear. For the modern woman,
these problems may be solved by aqua shoes. However, the styles and colors
available are unable to suit their tastes. Havaianas Aqua shoes give women aged
13-29, a more fashionable alternative to the current aqua shoes available in the
market today. It gives their foot proper protection but with style and comfort.
b. Product Description / Features / USP
i. Product Description
The Havaianas brand is known for its colourful and vibrant flip-flops. The brand
represents three Fs: Fashion, Function, and Fun. The Havaianas brand is not limited
to the beach or swimming pool. They are versatile and can be worn on different
occasions.
Havaianas Aqua comes in seven different styles and ten colors. Each style comes in
solid colors and both solid colors with printed patterns. These styles are
comfortable, durable, versatile, and stylish.
They are made of sports mesh fabric, microfiber nylon fabric, neoprene, rubber outsoles and insoles.
The sports mesh provides a breathable and cool feeling for the feet. The microfiber nylon fabric gives
the aqua shoes the flexibility it needs. The neoprene fabric is commonly used for wetsuits in scuba
diving and wading boots for fishermen for its warming effect. Medical support braces also use
neoprene. (See appendix for Neoprene Color Chart)
Havaianas Aqua Coast
Solid and/or
Printed
Garter strap to
hold the shoe in
place
Available in 10
colors
Havaianas Aqua Pearl
Solid colors: white,
pink, black
Havaianas Aqua
Breeze
Solid and/or
Printed
Cool breathable
design
Shoe loop for easy
clothesline
hanging
Available in 10
colors
Havaianas Aqua
Cabana
2-tone colors
Cool breathable
design
Havaianas Aqua Coral
Solid and/or
Printed
Havaianas Aqua
Stream
Solid and/or
Printed
Diagonal garter
strap
Havaianas Aqua
Shore
Solid and/or
Printed
Criss-cross garter
design
Shoe loop for easy
clothesline
hanging
Havaianas Aqua will follow Havaianas’s current range of sizes. Its smallest size in US size is 3 and its
largest is size 10.
Brazil US
Women 33/4 3
35/6 4/5
37/8 6/7
39/0 8/9
41/2 10
ii. Features
Havaianas Aqua are aqua shoes that gives its users’ feet protection while keeping
them chic and trendy, not compromising their style. Havaianas Aqua is still stylish
and versatile enough to be used even when not on the beach. It features 10
different colors: red, yellow, green, blue, orange, violet, brown, black, white, and
gray. Havaianas Aqua’s insoles are equipped with anti-bacterial properties that will
keep bacteria that causes odor to accumulate. It is also very soft to provide comfort
to the user’s feet. The shoes’ rubber outsoles on the other hand, is hard enough on
the outside for maximum protection.
iii. Unique Selling Proposition
Compared to other brands like Nike, Adidas, and Speedo; Havaianas Aqua’s shoes
offers style, comfort, protection, and durability to its users. Though concentrating
more on style, Havaianas Aqua does not compromise the athletic aspect of aqua
shoes and presents adequate qualities similar to those of well-known aqua shoes
brands. Havaianas will prove to be ‘Fashionable yet reliable aqua shoes.’
c. Packaging
Every Havaianas Aqua shoe will come with the tag shown in Figure 3.1. The tag has
a black base color similar to the original Havaianas slippers tag. It’s made out of
matted carton paper and it will feature the aqua shoes’ style name, size, and seal of
authenticity.
Figure 3.1.2. Shoe Tag
Front Back
The Seal of Authenticity is the quality assurance that Havaianas provides to
its consumers that what they’re buying is genuine Havaianas. It also assures the
buyer that the product is imported and made from Brazil.
Figure 3.1.3. Style name
Logo
Figure 3.1.4.
Havaianas Aqua would come in a clear plastic box (Figure 2) to emphasize
the shoes’ colourful design. The clear plastic box also represents water, which
coincides with the primary function of aqua shoes. The box’s length is 3.5 in x 10.75
in and has a width of 5 inches. Havaianas Aqua will not only come in a clear box,
but also in a shoe bag so it can be conveniently brought anywhere. The shoe bag is
made of nylon fabric in a shade of blue and designed with different sizes of circles
forming a sun with the Havaianas Aqua logo at its center. (See Figure 3.1.4.)
Figure 3.1.2.
10.75 in
3.5 in
5 in
Size
Seal of Authenticity
Figure 3.1.3.
Figure 3.1.4. Shoe Bag
2. Pricing
12 in
9 in
a. Pricing Strategy
Our group will mainly use value-based pricing and pricing strategies based on
competitors. Our group will focus on good-value pricing strategies as our product
offers a fair price for both good quality and service. Also, value-added pricing will be
used as our product offers added features with corresponding charging of higher
prices.
A pair of Havaianas Aqua will have a suggested retail price of Php 1,699.00
for shoes with solid color designs and Php 1,999.00 for shoes with printed
designs. The prices of shoes with garters do not differ from those without since
the cost of the garter is only minimal. Compared to our competitors, Havaianas
Aqua offers a fair price, not the cheapest, but not the most expensive as well.
The prices we have set only range from Php 1,000-2000 since based the survey
we have conducted, 88% of the respondents are willing to spend only Php 1,000-
2,000 for aqua shoes and 83% of the respondents are also willing to spend only
Php 1,000-2,000 for Havaianas Aqua.
The prices set are also cheaper compared to most of our competitors since
Havaianas Aqua is neither specifically athletic shoes nor specifically casual
shoes. Our proposed product is mainly casual shoes bordering athletic, so it
doesn’t serve a specific purpose unlike for example Speedo which best serves
swimmers or athletes, thus having a more expensive price since they offer
special technology in their water shoes for the athletes.
Havaianas Aqua shoes with printed designs are set with higher prices since it
offers a variety of patterns and designs which customers can choose from.
Havaianas, our main company, has an existing pricing strategy of charging
higher prices for printed designs of flip flops, thus our group plans to follow this
kind of strategy of setting higher prices for shoes with printed designs compared
to those shoes which have solid color designs only.
These prices are priced fairly since Havaianas Aqua has a good quality given
that our group would be using materials that are already guaranteed to have
best features, like the Havainas rubber formulated to have extreme comfort and
durability. Even if the demand for aqua shoes is low, our group depends on the
existing loyalty and support of customers with the trusted brand of our company.
Also, based on our survey, most of our correspondents are willing to try out
Havainas Aqua due to the trusted brand and quality of products that our
company offers, which mainly gives us enough reason to set a fairly high price
for our proposed product. There would be a standard suggested retail price for
all stores.
Retail price (solid colors): Php 1,699.00
Retail price (printed): Php 1,999.00
b. Detailed Product Costing
MATERIAL COST (a pair of aqua shoes)
Rubber Outsoles Php 61.63
Insoles Php 96.00
Sports Mesh Fabric per foot Php 128.16
Microfiber Nylon Fabric per sq.foot Php 60.00
Neoprene per sq.foot Php 411.36
Nylon Lycra for the strap per
3inches
Php 35.40
TOTAL MATERIAL COST Php 792.55
COST HAVAIANAS AQUA (pair)
Materials Php 792.55
Packaging (clear plastic box) Php 239.52
Cost of Production Php 100.00
TOTAL PRODUCT COST Php 1,132.07
The cost of the specialized synthetic rubber was computed from the financial
statement of Terry S.A., the distributor of Havaianas here in the Philippines. The
other costs of the materials were computed from the research based on the usual
materials used to make aqua shoes. The cost of production was based on the
researched article about the cost of production of Havaianas flip flops.
c. Index vs. Competition
COMPAN
Y
PRODUCTS
Nike Php 1,695
Classic
Aqua Socks
Adidas Php 1,995
Boat CC
Speedo Php 2,399
Hydro
Trainer
Water
Php 959
Wave
Walker
Zip
Php 863-
959
Surfwalker
2
Php
1,535
Aqua
Jane
Php
1,151
Shore
Cruiser
Php
1,535
Aqua
Jane Slip-
Php
1,679
Hydro
XP Pro
Shoe Water
Shoe
Water
Shoe
on Water
Shoe
Keen Php 1,920
Roatan
Php
4,800
Cimarro
n
Php 3,840
Madrid
Ballerina
Php
3,840
Madrid
MJ
Php
3,600
Sienna
MJ
Php
4,320
Erin
Ballerina
Havaiana
s Aqua
Php 1,999
Coast
Php
1,999
Shore
Php 1,999
Breeze
Php
1,699
Caban
a
Php
1,999
Coral
Php
1,999
Stream
Php
1,699
Pearl
3. Place
a. Distribution Strategy
Havaianas Aqua will be using the same distribution strategy of Havaianas since they
will be sold in the same retail stores as the flip flops. It will be distributed by Terry
S.A. Incorporated, the brand’s exclusive distributor in the Philippines and the only
one authorized to market the brand. Terry S.A. was acknowledged to be the Best
International Distributor for 2008 by Sao Paulo Alpargatas so it is more than assured
that they will also effectively distribute Havaianas Aqua. The retailers are carefully
selected and screened by both Terry S.A. and Sao Paulo so as to ensure the brand’s
integrity and protection of trademark hence, the quality and authenticity of the
products would be well guaranteed.
Unlike the other brands that sell aqua shoes, particularly Nike and Adidas,
Havaianas Aqua won’t be pulled out after the summer season but rather would be
available all year round, with its styles and designs to be updated regularly. It is the
shoe’s premise that they would be stylish enough for them to be used not only for
athletic and beach-related summer activities but also for casual day-to-day wear so
it should really be available throughout the year. Furthermore, with our problem of
global warming and climate change that causes unpredicted rains and
thunderstorms here and there, Havaianas Aqua should readily be at the line of sight
in times of need like this. Accessibility would be a key factor in the distribution so as
to fit the active and busy lifestyles of the target market.
b.
Distribution Scheme and Trade Channels
From the production in Sao Paulo Alpargatas in Brazil, Terry S.A. have the exclusive
rights to distribute Havaianas Aqua to the authorized retailers in the country, which
will then make the shoes available to the market. Currently, there are 116 of them
and presented below is the breakdown of the number of stores per region.
As per the terms and agreements of the distribution, the availability of the shoes in
the retail outlets will depend on the orders placed by the stores themselves.
Therefore, there is a probability that not all of these retailers would be offering
Havaianas Aqua. Strategically, though, they would be made most available in the
outlets near the beach like those in Boracay and the huge stores in all urban areas
in the country, specifically Metro Manila, Cebu and Davao, where its target market
is more likely to be found – teens and young professionals of Class A and B, who
frequently go to the beach.
4. Promotions
a. Overall Promotion Strategy
Being an established pioneering brand in the Philippines, the brand name Havaianas
already serves as a major promotion strategy for the new product line, Havaianas
Aqua. Given the success of the promotion efforts of Havaianas Flip flops, Havaianas
Aqua will also bank on the same promotion strategies. However, since aqua shoes
are relatively unfamiliar to the general public, as shown through this paper’s survey,
Havaianas Aqua aims, at the same time, to increase awareness of such a product
and to create value for the modern Filipina women. Such awareness efforts would
project the features and benefits of Havaianas Aqua that would lead to its role as a
necessity given various environmental conditions – sandy, wet, rocky etc. Having
said that, it also follows Havaianas Flip Flops’ promotion strategy of showcasing
itself as a casual footwear for any occasion.
Havaianas Aqua would be largely promoted through artistic print ads strategically
placed in locations frequented by its target market. There would clearly be no
promotion initiated by Havaianas Aqua itself through television and radio
advertisements. Much like Havaianas Flip Flops, it would sponsor or partner with
events that are generally related to the image Havaianas Aqua seeks to exude.
Lastly, Havaianas Aqua would take advantage of Havaianas Flip Flops existing
means of promotion such as their website, facebook account, stores, implicit
celebrity endorsements and havaianas’ cult following, the “Havies” or
“Havianaticos”. Moreover, this would be deemed effective since the survey study
shows that most people know of aqua shoes through print ads and word of mouth.
b. Advertising
Print Advertisements
Following how Havaianas Flip Flops started promoting its product line, Havaianas
Aqua would also focus more on advertising through print ads. Such print ads would
either feature artistically designed and colorful layouts of its aqua shoes or photos
of models or awareness-related concepts. Print ads showcasing colorful layouts
would help associate Havaianas’ aqua shoes line to Havaianas’ image as a colorful
and fun brand. In this way, Havaianas’ aqua proves itself to be go-to for fun,
fashionable and colorful designs. Print ads showcasing photos of models aim to
identify the lifestyles of Havaianas Aqua’s target market. Print ads showcasing
awareness-related concepts would be presented through quirky antics
demonstrating just why Havaianas Aqua is a must have. Some of these could
imbibe a sense of fear to relate to the primary benefits that aqua shoes or
Havaianas Aqua would bring. These print ads would be in the form of posters,
tarpaulins, magazine advertisements, billboards and wall designs. Magazines where
Havaianas Aqua ads would be placed will be Mega, Preview, Cosmopolitan and
Preview.
Word of Mouth/ Bandwagon
Through loyal consumers of the existing Havaianas Flip Flops, Havaianas
Aqua hopes to depend on the word of these “Havianaticos”. Given that they already
have an online community for Havaianas and a Havaianas Mailing List, Havaianas
Aqua would use these systems to disperse information and other promotion.
Moreover, Havaianas Aqua would hold gatherings or events especially for this fan
base so as to assume them the role of opinion leaders for the new product line.
They would also be constantly updated regarding the product line. Havaianas
Aqua will not have any official celebrity endorser. Rather, it would count on
celebrities’ participation in events or product launchings as an implicit product
endorsement itself. It would also rely on being casually mentioned/worn by
celebrities. Havaianas Aqua would then bank on spreading how it was used by these
personalities through other forms of media like fashion blogs, the Havaianas
Facebook account, and magazines.
Source: Make Your Own Havaianas 2009, Havaianas Philippines Facebook
Account
Bianca Gonzales, TV personality, at the MYOH 2009
Source: Make Your Own Havaianas 2009, Havaianas Philippines Facebook
Account
Infomercials
In the events to come, Havaianas Aqua would provide infomercials regarding
the benefits of aqua shoes. In this way, the public would be familiarized with the
existence, usage, and value of aqua shoes. Consequently, it would also capitalize on
Havaianas Aqua as the pioneering brand for aqua shoes by showing its edge as a
youthful, fashionable, and popular brand.
Infomercials would also be shown inside select Havaianas stores.
Website
As the internet is the most accessible and reliable source to Havaianas
Aqua’s target market, Havaianas Aqua would also have its own part in the
Havaianas’ website. Aside from the general information it would give regarding
aqua shoes and Havaianas Aqua as a new product line, it would also include the
line’s different designs. Furthermore, the website would allow its visitors to look
over designs in a 3D way. They would have the advantage of being able to go over
the designs at different angles by simply hovering the mouse pointer over them.
c. Consumer and Trade Activities
Havaianas Aqua ads will be placed in strategic locations catering to its target
market. Promo materials would be placed inside malls where Havaianas stores and
authorized resellers are located. In some activity centers, Havaianas Aqua would
have exhibits or programs presenting the different designs of its product line.
Furthermore, ads could be placed inside Rustan’s department stores.
Since the location of the Havaianas flagship store is also the area for Havaianas
Aqua’s target market, it is sure to have even greater promotion in Bonifacio High
Street. By greater, it would be by means of having sculptures and wall designs of
Havaianas Aqua along that area.
d. Merchandising/ Point of Purchase Materials
In all the Havaianas’ existing stores, Havaianas Aqua would have attractive window
displays. These window displays would highlight Havaianas Aqua as an emerging
beach casual footwear staple. Since Havaianas retailers are different types of
stores, ranging from exclusive Havaianas retail outlets, to shoes and clothing stores,
department stores, sports shops and even spas, hotels and resorts, they would be
offered with different proposals as to how their Havaianas Aqua displays would look
like.
As for other authorized resellers, Havaianas Aqua would also have attractive
window displays depending on its deal with the reseller. Havaianas stores and
authorized resellers would have a special wall/shelf dedicated to Havaianas Aqua.
The design of the wall would vary depending on the season. Since Havaianas Aqua
are not just expected to be used for the beach, the wall designs would depict
varying setting concepts. For example, the wall design could be a beach setting for
the summer season while for the rainy. Along with these would be quirky little trivia
notes pushing the need for Havaianas Aqua. An example of a trivia note would be as
follows.
- DIP IN. SLIP IN. NEOPRENE!
- It’s not the heat of the sun. It’s the heat of the sand! Walk, walk, burn!
Neoprene won’t take any of that! Your lovely footsies should have the best
tender love and caring it deserves! Neoprene provides great protection
against the cold and the heat! Whether it’s the chilly breeze or the scorching
heat, neoprene assures just the needed insulation for your feet!
- Havaianas Aqua is made with this neoprene to ensure your feet just won’t
stand out from the crowd. They’d also stand the heat, rain, wind and many
more!
- Shake it. Move it. Anywhere you want it!
- Walk. Run. Skip. Hop. Jump. Gallop. Dance. If only you really could at the
beach, right? Alas, going bare or flip flops aren’t enough. Rocks, pebbles, sea
urchins, crustaceans and the list goes on! They’re just all out to get our feet!
- Protect and Conquer!
- You thought you could totally protect your feet by slipping on some rubber
shoes? Wrong move! The sand just
won’t let you. A little here. A little there.
Sand just keeps getting in your shoes!
And in your nerves!
For the small boutiques and shops with very
limited space, this barrel-like rack may be
used. It stands alone and may be placed
beside the flip flops rack.
In Rustan’s department stores, Havaianas Aqua would have its own “center island”
that would be similar to the window displays found in Havaianas stores as
mentioned.
Figure 3.4.1 Window Display
Figure 3.4.2 Rack for Authorized Resellers with small boutiques
Figure 3.4.3 Havaianas Aqua Wall for All Flip Flops Stores and
Authorized Resellers
4 feet
6 feet &
8 inches
4 feet
1 foot
e. Publicity/ PR/ Events
As for Havaianas Aqua’s promotional events/ activites, it would sponsor school
events specifically universities. Such universities would be those where Havaianas
Aqua’s target market would be in. Opportunities in being involved in school events
would be getting exposure to this demographic and establishing itself as a youthful
product line.
Aside from that, Havaianas Aqua would hold its own fashion show and also partner
with other designers/ brands that have the same target market to be in their fashion
shows. Such efforts would be essential in assuring that Havaianas Aqua is a
fashionable choice. It would show that it would actually complement different
clothes and styles. Moreover, partnering with different designers/brands also help in
enhancing the image it’s creating to its target market given that these partner
designers/brands also uphold the same advocacy. This advocacy would be geared
to the modern, fun, and fearless Filipinas however diverse their lifestyles may be.
These fashion shows would not necessarily be confined to the beach. It could also
be anywhere within the metro like the Rockwell Tent.
Havaianas Aqua would also have product launchings through sponsorships in beach
parties/events and water sports events or competitions. Such beach parties/ events
would be those organized by television networks specifically ETC, Studio 23 and
MTV. The mentioned television networks are known for hosting parties that offer
wide media coverage. Moreover, they are sure to bring in the target market for
Havaianas Aqua.
Also, Havaianas Aqua would hold its own launching beach party to bring focus to
this new product line. This event expects to invite lots of celebrities from different
industries to the event. Moreover, it would emphasize on the theme of fun and
sporty Filipina empowerment.
Source: Camsur Watersports Complex Official Website
Source: MTV Philippines, MTV Summer Break with Coca Cola Event
IX. 3-Year Financial Forecasts
1. 3-year Sales Projections (volume/sale)
YEAR 1 YEAR 2 YEAR 3
SALES VOLUME 472,474 pairs 481,072 pairs 489,824 pairs
MEDIAN PRICE Php 1,849 Php 1,849 Php 1,849
SALES VALUE 873,602,650.96 889,501,813.30 905,682,855.69
The sales volume was computed by multiplying the percent of those willing to
buy our product which is 60.98% and the target market size. The sales value was
computed by multiplying the computed sales value and the products’ median price.
2. Detailed Marketing Budget and Marketing Timetable
MARKETING CHANNEL
YEAR 1 YEAR 2 YEAR 3
PRINT ADS 3,000,000 2,500,000 4,000,000
BILLBOARDS 2,500,000 2,000,000 3,000,000
WEBSITE AND ONLINE PROMOTIONS
1,720,000 1,720,000 1,720,000
EVENT PROMOTIONS
6,000,0000 3,000,000 6,500,000
OTHER PROMOTIONAL ACTIVITIES
1,500,000 1,300,000 1,600,000
TOTALBUDGET 14,720,000 8,720,000 17,220,000
3. 3-year Media Schedule
Year 1
Marketing Activity JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Online & Internet
Billboards
In-store Promo
Year 2
Marketing Activity JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Print (Mags, Tarps Posters)
Online & Internet
Billboards
In-store Promo
Year 3
Marketing Activity JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Online & Internet
Billboards
In-store Promo
To start Havaianas Aqua’s first year, it will have its own launching
beach party. Other event promotions will still depend on potential clients,
sponsorships and upcoming events. All marketing activities will be ongoing
the whole year round till its third year since Havaianas Aqua is still building
on consumer awareness of its product line. The promotions will be
heightened during summer vacations and rainy seasons to further promote
the function of the product.
In Havaianas Aqua’s first year, it is expected that consumers would
have a clear idea of aqua shoes and the market position of Havaianas Aqua.
It is geared towards creating knowledge and demand of its product line. Still,
for the first year, the focus would be in Metro Manila. In its second and third
year, it is anticipated that there would be possible competitors that would
follow or challenge what Havaianas Aqua. Havaianas Aqua then needs to be
consistent in its marketing activities so as to defend its position and market
share. Also, Havaianas Aqua aims to strengthen advertising beyond Metro
Manila such as those authorized resellers. This would most probably be in
highly urbanized areas such as Cebu and Davao.
4. 3-year Pro-forma Income StatementsYEAR 1 YEAR 2 YEAR 3
SALES 873,602,650.96 889,501,813.30 905,682,855.69
COST OF SALES 518,147,008.78 527,577,043.59 537,174,265.74
GROSS PROFIT 355,455,642.18 361,924,769.71 368,508,589.95
OPERATING EXPENSES
124,048,629.10 136,453,492.01 150,098,841.211
ADVERTISING EXPENSES
9,720,000 3,720,000 12,220,000
NET INCOME 221,687,013.08 221,751,277.70 206,189,748.74
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