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The goal of this market analysis is to investigate a company from the time it was founded, through all its ups and downs,successes and failures. This company fought against all odds and prevailed as a Phoenix,rising from the ashes. For this case study we chose Puma (Puma AG Rudolf Dassler Sport), a large German multinational company that produces high-end athletic shoes,lifestyle footwear and other sportswear. The company is perhaps best known for its soccer shoes and has sponsored such international soccer stars as Diego Armando Maradonna and Pele. Nevertheless, during the past decade Puma rised to one of the market leaders in sport-lifestyle products. This white paper will try to highlight Puma’s major product design & technical developments, strategic business innovations, restructuring,innovative marketing concepts,important phases in Puma’s growth,major financial setbacks & achievements, contributions of partnerships, associations with FIFA World Cup, football federations and clubs, Olympics, Formula One, Nascar, sport personalities and the present day condition of Puma. 2110
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Rudolf and Adolf, the two Dassler brothers started a shoe factory in 1924. realizing that there was not much market in slippers & outdoor shoes,they switched their focus to track and football shoes,a market that was just kicking off that time. Prior the 1936 Summer Olympics,Adi (Adolf) Dassler persuaded U.S. sprinter Jesse Owens (D) to use their spikes during the competition. This was the first sponsorship to an African-American (Edwina Ings-Chambers, 2004). owens won four gold medals and Dassler shoes received a great reputation. Due to personal conflicts, the Dassler brothers split their business in 1948. Adolf renamed the former Dassler shoe company into Adidas whereas Rudolf (A) created a new firmthat he called Ruda and later named as Puma. The two brothers had become competitors. Since 1996 Puma has intensified its activities within the United States where it claims a market share of 8%. Puma’s goal is to be “ The most desirable sport lifestyle company” (Tkacik, 2001). Through innovative design, co-branding and partnerships with celebrities and well established designers, Puma has elevated their brand image so that it now competes with fashion brands as well as their traditional rivals in the sportswear industry.Puma has sponsored international stars like Brazilian football legend Pele (B), U.S tennis star Serena Williams, alongside international and national league teams such as Hotspur and Italy’s 2004 world cup winning side. Puma made strongest associations in sport in the 1950’s to 1980’s, with footballers and athletes around the globe but the brand faded in late 1980’s and early 1990’s(Anonymous, 2007). In mid 1990’s,Puma fought to gain its lost territory through continued development of a number of grassroots initiatives, including the annual Puma cup and a street soccer tournament in USA based on the european model(Pesky,1995).In 1996, to help its brand positioning Puma turned to Gyro Worldwide, a well known advertising agency (DIni, 199). Puma also appointed specialist youth agency Iris to handle a series of international through the line initiatives, including direct marketing campaigns. Iris worked alongside Gyro Worldwide.In 1997-98, Puma had undergone a brand rebuilding of sorts under the new management in different department such as sales, marketing, operations, and distribution. Chief executive Jochen Zeitz who joined in 1992, busied himself discontinuing unprofitable models and cleaning up distribution (Tkacik, 2002). Puma merged the sports with fashion, starting a partnership with designer Jill Sander in 1998 with a footwear collection. It was a strategy to reignite interest in the brand linking with designers from Sander to Philippe Starck(Anonymous, 2007)
A
The goal of this market analysis is to investigate a company from the time it was founded, through all its ups and downs,successes and failures. This company fought against all odds and prevailed as a Phoenix,rising from the ashes. For this case study we chose Puma (Puma AG Rudolf Dassler Sport), a large German multinational company that produces high-end athletic shoes,lifestyle footwear and other sportswear. The company is perhaps best known for its soccer shoes and has sponsored such international soccer stars as Diego Armando Maradonna and Pele. Nevertheless, during the past decade Puma rised to one of the market leaders in sport-lifestyle products. This white paper will try to highlight Puma’s major product design & technical developments, strategic business innovations, restructuring,innovative marketing concepts,important phases in Puma’s growth,major financial setbacks & achievements, contributions of partnerships, associations with FIFA World Cup, football federations and clubs, Olympics, Formula One, Nascar, sport personalities and the present day condition of Puma. 2112
The rise of the Phoenix Strategic corporate affairs
B
Phase 1” Restructuring: 1993-1996” In 1993, Puma was extremely poorly positioned in the industry and was one of the most undesirable sports brands in the world. The company was about to get bankrupt. In hopes of revitalizing the company, Puma’s board of directors appointed the company’s 30-year old marketing director, Jochen Zeitz as CEO. Phase I of Puma’s long-term corporate plan started. The aim was to establish a solid financial footing. In the first phase of this plan, Zeitz led a severe, four-year long campaign of cutting costs, in which he nearly halved the payroll -to 367 employees and closed the production plants in Germany,outsourcing production to Asia. In addition, Zeitz bought back licensing rights in the U.S. allowing him better control over brand image and reputation(Geiger, 2005). By this time Zeitz had realized what many others in the industry had as well, that nearly 80% of customers did not wear the shoes for their intended purpose(Tomlinson, 2004). Thus, Zeitz decided to market the Puma brand as a more fashionable alternative to th competitive mainstream “sports wear giants”. He considered that increasing the aesthetic and marketing appeal of the products instead of the performance characteristics would highly benefit Puma’s development within the intended target market. Consequently, in 1997 Zeitz decided to embark a new marketing strategy in the second phase of his company repositioning. Puma achieved the fourth consecutive year woth positive results in operations. The restructuring phase reached completion in 1997. it posted record revenue of 37 million euro;company recorded positive cash flows and paid off all the debts.
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Strategic & financial performance analysis
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Phase 2” Investment: 1997-2001”
Phase 3” Momentum:2002-2005”
In the second phase of Zeitz’s repositioning plan, he aimed to reinvent Puma as a fashionable shoe brand. Puma merged sports and fashion and started a co-operation with designer Jil Sander. Puma and Jil Sander jointly launched a footwear collection. Puma became sponsor of Serena Williams as well as the official Corel WTA Tour sponsor. In the entertainment field, Puma successfully placed products in hollywood movies such as”City of Angels” and signed music sensation “KORN”. In the World Cup, Puma appeared on the feet of 23% of the players that made an appearance. Pumaalso signed boxing star Oscar De La Hoya and the French striker Nicolas Anelka who later became the world’s second most expensive football player. Five Puma track & field stars took the title of World Champion during the 1999 IAAF World Championchips Sevilla, Spain: Collin Jackson UK
The company continued its charge forward through implementing the third phase of its plan beginning in 2002 in which it aimed to become the most desirable”Sports lifestyle brand”. Puma continued exploring the potential of its brand by increasing the brands desirabilitty and turning this increased desire into groth in a multitude of international markets. Phase III saw the Puma brand emerge as one of the most influential in the world,transforming from an alternative brand to a global icon with broader desirability(Zeitz, 2004). the bran’s message was refined and its voice was clarified. In the process Puma created a new market segment in sports lifestyle. Puma announced a collaborative partnership with world-renowned designer Philippe Starck. The revolutionary footwear collection by Puma and Phillipe Starck launched in autumn 2004. Puma AG and the Mild
C (110m hurdles), Wilson Kipketer, Denmark (800m), Christopher Kosgei, Kenya (3000m steeplechase), Tsiamita Paraskevi, Greece (triple jump). In the same year Noah Ngeny, Kenya set a new 1000m world record (2:11.96) in Puma spikes. Puma started opening its first retail concept store in Santa Monica, California. In 2000, Christy Turlington and Puma jointly launched the Nuala yoga inspired collection. Nuala instantly, attracts high-end retailers, which brought Puma to the forefront of women’s active wear. Puma further launched www.puma.com,featuring regional e-commerce and became one of only a handful of web-domains becoming profitable within its first year of operations. In this phase, growth at Puma was remarkable, with sales increasing by 30% every year between 1997-2003. In 2004, the company’s earnings were 257 million euro on sales of 1.53 billion euro,a significant step up from the losses seen in 1993 when Zeitz took over the leadership.
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Seven Renault F1 team signed a multi-year contract. Puma introduced the revolutionary All-InONe’UniQT’ for the Cameroon football team at the 2004 African Cup of Nations. The new‘UniQTi is the successor of the ground-breaking Puma sleeveless shirt worn by the Cameroon football team at the 2004 African Cup of Nations. In 2005, Puma’s marketing strategy centered on core campaigns such as “Hello”, “New Stuff” and SOoo Fast, which portrayed its product in a way that was endemic to the brand. Whether showcasing Puma sports or lifestyle stories these campaigns were an authentic view into the qualities of playfulness, uniqueness and innovation that embody Puma. The innocence of the “Hello” tag line covered Puma’s openness as a brand. This campaign acted as an introduction to the brand’s voice and was only the first step of revealing a deeper message. Puma introduced the award winning “New Stuff” campaign (C) in 2005 as a way to showcase its design leadership. New Stuff print and TV executions highlighted the newest Puma styles and commitment to provide customers with innovative sport lifestyle product.
D
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Phase 4” Expansion: 2006-till today” In 2006, Puma launched Phase IV of its long-term oriented business plan. To kick-off Phase IV, Puma started majority joint ventures with former license partners in Japan, China/Hongkong, Taiwan, Argentina, Turkey but also established fully owned subsidiaries in India and Dubai for the Middle Eastern region.Phase IV, focused on category and geographic expansion, the ultimate brand mission remained to develop an iconic brand that resonates across a broadening spectrum of consumers. By maintaining a connection with the core values of: inclusiveness, innovative design, sophistication, and individuality. In 2006, Puma became kit supplier for twelve nations (Italy, Czech Republic, Poland, Switzerland, Paraguay, Saudi Arabia, Iran, Ghana, Angola, Togo, Ivory Coast, Tunisia) ` for the World Cup in Germany. Throughout the tournament Puma had gained 56% brand visibility, making Puma the most prominent brand in terms of visibility. In 2007, this strategy was executed by the balancing of credible performance advancements in categories such as running and motorsports, where Puma’s partners enjoyed resounding victories, and brand defining concepts such as “I’mGoing” and Urban Mobility”.
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