MARKETING TERM PAPER ON
ASICS Submitted To Professor Dr.M. Mahmodul Hasan Faculty EMBA/MBA Program North South University
Submitted By: Group: JEENER BADSHA BUS620, Section: 04 Date of Submission: 2nd April 2016
Letter of Transmittal Date: 2th- April-2016
Dr.M. Mahmodul Hasan Professor School of Business North South University Subject: Report on marketing term paper of ASICS. Dear Sir, With due respect, we present you this report about ASICS and Marketing Management practice in the organization. Writing this report itself was truly comprehensive learning experience. We have tried our level best to complete the report with respect to the desired requirements. Kindly accept this humble effort of bringing forward our research and finding on subject matter. Sincerely yours, Group- Jeener Badsha
Rakib Al Hossain 1521824660
Nafis Irtiza
1530695060
Mohammad Maksudul Sikdar
Mohammad Ferdous Khan
1612190660
1611590660
Sakha Chowdhury 1521728660
i
Acknowledgement The special thank goes to my helpful course instructor, Dr.M. Mahmodul Hasan. The supervision and support that he gave truly help the progression and smoothness of the project submission. The co-operation is much indeed appreciated. My grateful thanks also go to the people who helped us in a various way. The help they have given, that are very great indeed. All projects work during the course period would be nothing without the support and imagination. Besides, this project work makes us realized the value of working together as a team and as a new experience in working environment, which challenges us every minute. Not forget, great appreciation go to the other group members that help us from time to time during the project. The whole program really brought us together to appreciate the true value of friendship and respect of each other. Last but not least I would like to thank my all of group members especially those who work together as friends. Still there may be some unwilling mistakes & omissions. We would like to request our respective course teacher to kindly consider our mistakes.
ii
Executive Summary This report is based on ASICS, a Japanese multinational corporation athletic equipment Company which produces footwear and sports equipment designed for a wide range of sports, generally in the upper price range. A thorough analysis was made on the company in terms of it marketing strategies and activities. Analysis was made using traditional and contemporary marketing models such as PESTEL, SWOT, Five Ms of Marketing, Box Analysis, Marketing Mix, Dynamic Pyramid, etc. There were limitations in our analysis due to a lack of scope in certain aspects. A primary limitation was our inability to visit the company physically, our primary sources were from online. The findings of the report indicates Asics strong focus on making high performance products and marketing it globally. They have a big advertising budget as a result and price their products in the upper price range. Their goal is to achieve sales by achieving and maintaining customer loyalty. This report recommends that ASICS maintains a more domestic feel in its products to differentiate it from the other top runners in the industry. It has to maintain a strong image that uphold ethical values, especially after allegations on ASICS use of sweatshops. ASICS is a successful company with a strong corporate image. It is flexible and is growing day by day. This makes it a great company to conduct study and analysis on. However, it still has a lot of scope to do greater things. The objective of this report is to be useful for future reference if any studies are conducted on the brand. The report tries to provide an insight from the marketing perspective using a wide range of models from the course of strategic marketing.
iii
TABLE OF CONTENT 1
Defining Marketing Management
1
2
Mission – Vision – Business Plan – Corporate Strategy
2
3
SWOT
6
4
PESTEL
9
5
Michael Porter‘s Five Forces
10
6
Marketing Strategy & Core Marketing Concept + Marketing
12
Segmentation 7
Marketing Mix 7P & 4C
14
8
Value Chain Model
15
9
TQM – Loyalty – Quality & Control
16
10
Brand & Branding
17
11
Box Analysis of Brand Elements
19
12
Brand Dynamic Pyramid
21
13
The Five M‘s of Advertising
23
14
Mass Communication
23
(a) Advertising Budget & Campaign Cost
24
(b) Sales Promotion and Budget
28
(c) Events & Experiences/ Sponsors/PR
31
(d) Corporate Social Responsibility
31
15
Marketing Budget and Expenditure
34
16
Pricing Strategies
38
17
Breakeven Analysis with Chart and Graph
38
18
Recommendation
40
19
Conclusion
40
20 References
41
iv
Defining Marketing Management (Theory 2000 to 2010 & Theory 2011 to 2015):
Definition of Marketing Management (Theory 2000 – 2011): Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Definition of Marketing Management (Theory 2012 – 2016 ±) Marketing management depends on the size of the business and the industry in which the business operates. Effective marketing management will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value. How the Definitions are related with Company’s Marketing Management Asics‘s marketing management relates with both the theories of 2000-2011 and 2012-2016. These theories emphasize on maintaining a sustainable growth by adding value to the customers by delivering and communicating superior customer value.
Page | 1
Vision: ―Create Quality Lifestyle through Intelligent Sport technology‖ Mission: ASICS, an acronym derived from the Latin phrase, Anima Sana In Corpore Sano - a sound mind in a sound body. Staying true to the philosophy by which it was founded, every ASICS innovation, every concept, every idea is intended to create the best product. Our mission is to become the number one brand for the sports enthusiast. To accomplish this, we pledge to continue to make the best product; striving to build upon our technological advances and pushing the limits on what we can learn from the body and its needs in athletic gear. We pledge to bring harmony to the body and soul. Corporate Strategy: 1. Provide valuable products and services through sport to all our customers. 2. Fulfill our social responsibility and help improve conditions for communities around the world 3. Share profits brought by our sound services with our shareholders, communities and employees 4. Maintain a spirit of freedom, fairness and discipline, respectful of all individuals
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Core Strategy & Business units (SBU) plan: 1. Shift to DTC mindset Change all processes from product planning to sales into a consumer-centric, DTC business model, in which we can directly communicate with our consumers. 2. Expand our consumer base Develop a deeper understanding of and expand our business in new consumer segments, such as women, youth and emerging markets 3. Become the brand of choice, not only in sports, but also in our consumers‘ daily lives 4. Communicate
a
consistent
brand
Narrate a consistent brand to our consumers worldwide, and deepen an emotional connection 5. Create differentiated innovation Create innovative
products,
services
and
processes that can provide exceptional changes in our consumers‘ lifestyles and experiences 6. Pursue
operational
excellence
Transform outdated business practices to
data-driven
processes
to
decision-making drive
improved
profitability and sustainable growth 7. Reform
our
development
and
production systems, and support the development of a sustainable society and environment 8. Develop people and the team Develop both individual and team capabilities to deliver values that exceed consumer expectations.
Page | 3
Products Category Strategy: 1. Running:-To continues delivering breakthrough innovations to excite a wide range of runners that will allow them to achieve their ultimate goals and aspirations. Achieve no lower than the No.2 position in each market globally 2. Training :Extend our Running expertise and the power of our brands into Training, delivering breakthrough innovations to excite and motivate a wide range of consumers Training for a goal 3. Core Performance Sports: To focus on delivering breakthrough innovations to excite
sports
enthusiasts
in
global
strategic
categories.
Maximize
opportunities in regional sports categories to efficiently drive business and brand growth 4. Lifestyle: As a sports brand of Japan origin, establish our heritage as a core. Be on the cutting-edge of trends to excite young people. Raise the awareness and image of the ASICS stripe through both ASICS Tiger and Onitsuka Tiger 5. Outdoor (Haglofs) Lead the evolution of the Outdoor segment and expand the business as a global, premium Outdoor brand 6. Health / Comfort: Support maintenance and promotion of healthy, safe and comfortable lives, through Intelligent Sports Technology. Expand and develop the business in Japan, keeping future global market expansion in mind.
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Function of Headquarters and Regional Strategy 1. Function of the headquarters Strengthen global management function of headquarters in each functional organization and lead global strategy development and decision-making. Reinforce governance and risk management across the group thoroughly through prompt global reporting lines. Promote the share of both best practices and other challenging experiences across the entire group 2. Regional strategy Divide the sales territory into seven regions: Japan, Americas, EMEA, Greater China, South Korea, Oceania, Southeast and South Asia, and execute each regional or country strategy in order to achieve the AGP2020 target.
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SWOT Analysis of ASICS:
Has established itself as a niche brand in sports footwear Known as a leader in innovation Global Presence which results in strong reach Sponsorship of many international teams and players, apart from being associated with international sports events Strong R&D team coming up with innovative products for apparel and equipment form different disciplines.
To increase awareness about ASICS in emerging countries Integrate the e-business in the business model to increase efficiency To become a market leader in this segment as there are limited well known players.
Diversification may lead to brand dilution Has to first create more market and awareness in countries where sports shoes shopping is not a culture.
Substitutes available at cheaper costs Increasing indirect players getting into this sports segment Competitors increasing brand awareness and penetration.
{Sikdar, 1612190660}
Strengths refer to the competitive advantages and other distinctive competencies that a company can exert in the market place. Weaknesses are constraints that hinder movements in certain directions. Opportunities primarily arise from the external environment, and refer to the chances of gaining competitive advantages. The external uncontrollable variables that can create problems on organizational performances pose as Threats to business firms.
Page | 6
Strengths: Has established itself as a niche brand in sports footwear. The Brand ASICS has found the sports customer segment as strength and develop a business model to gain the market share. Known as a leader in innovation Innovation and development are the main focal point of ASICS for better product. Global Presence which results in strong reach. ASICS available in every major market. From Japan to U.S, Europe Union and Middle East. Sponsorship of many international teams and players, apart from being associated with international sports events. Marketing management based on international sports event and celebrities. Strong R&D team coming up with innovative products for apparel and equipment form different disciplines. Business units are making different sports products as per market and industry demand by analyzing the innovative factors and implementation. Weakness: Diversification may lead to brand dilution. Many products make customer confused in buying decisions. Has to first create more market and awareness in countries where sports shoes shopping is not a culture. Japanese culture is a major issue for sports product implementation. Opportunities: To increase awareness about ASICS in emerging countries. The more people know about the Brand the more will be the sales. Page | 7
Integrate the e-business in the business model to increase efficiency. E-Business is the key in today‘s business. Threats: Substitutes available at cheaper costs Major concern for Asics is how to tackle those competitors like NIKE, ADDIDAS, and PUMA. Increasing indirect players getting into this sports segment Sports sector, there are many players and they are developing rapidly. Competitors increasing brand awareness and penetration. Competitive markets are on the high peak for major social media coverage and so many local brands are also doing well in this sector. {Sikdar, 1612190660}
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PESTEL Analysis of ASICS:
1. The country Japan has a strong democratic setup with stable macroeconomics policies. 2. Japan strong relation with US and European union create major impact on Asics growth strategy. 3. Government has embarked E-governance initiatives to improve political administrative.
1. GDP Growth Rate of Japan Is high and the per capita GDP is the highest among the other Asian nations. 2. Standard of living is very high with welldeveloped manufacturing and financial services industry. 3. Japan has an economy of growing foreign exchange reserves because of export centric products.
1. Japan has strong social welfare initiatives with low poverty levels. 2. Japan has compact cities and government initiatives to increase the population accordingly. 3. The country has a huge aging population with declining labor force.
1. The country has a strong knowledge base and leader in robotics. 2. Japan has been increasing patents and increasing R&D expenditure which is innovating factor for Asics.
1. Japan has strong environmental policies and Ozone layer protection law. 2. Japan‘s emerging technologies for reduction of CO2 emission is benchmark for other country. 3. Current challenge is to reduce air pollution and safe guard the country from natural disasters like Tsunami and earth quake.
1. Japan has legal system similar to the US and Europe which ease Asics business to go out-shore. 2. The country has a strong legal service market but has slow legal procedures. 3. Violation of human right is strictly monitored all over the country.
{Sikdar, 1612190660}
Page | 9
Michael Porter’s Five Forces Relate with Asics:
Rivalry: Competitive Rivalry (Medium to High)
Asics faces intense competition from Nike, Adidas, NB, Puma and newer players.
Nike and Adidas, which have considerably larger resources at their disposal, are making a play within the performance apparel market to gain market share in this up-and-coming product category.
Asics hence its product portfolio could be copied in the future.
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Bargaining power of suppliers (Low to Medium):
A diverse supplier base limits bargaining power. Asics products were produced by many manufacturers located across country.
The core Japanese suppliers are loyal to the company. Others component suppliers has moderate views.
Bargaining power of customers (Medium to High):
Asics's customers include both wholesale customers as well as end customers. Wholesale customers, like Sporting Goods and the Sports Authority, hold a certain degree of bargaining leverage, as they could substitute Asics products with other competitors' to gain higher margins.
Bargaining power of end customers is lower as Asics enjoys strong brand recognition.
Threat of new entrants (Low to Medium):
Large capital costs are required for branding, advertising and creating product demand, and hence this limits the entry of newer players in the shoes and sports apparel market.
However, existing companies in the sports apparel industry could enter the performance apparel market in the future.
Threat of substitute products (Low to Medium): The demand for performance apparel, sports footwear and accessories is expected to continue, and hence we think this force does not threaten Asics in the foreseeable future. {Sikdar, 1612190660}
Page | 11
Marketing Strategy & Core Marketing Concept + Market Segmentation Marketing Strategy: ASICS marketing strategy is to target high income earners The audience the company is looking to focus on in the country are professionals, the ―new rich‖, those interested in technology and those looking for ―affordable luxury‖ in the 25-35 age bracket. Those looking for sports item within a reasonable budget but one that still qualifies as a luxury piece will find something in ASICS. Realistic about competing with ―high-luxury‖ brands like Nike, Addidas, Puma and NB he adds that they aren't looking at that audience but in the pyramid of the luxury segment in the country they will feature in the upper half. Core marketing concept: Some of the major core marketing concepts are as below: Needs, wants, and demands- Needs are the basic necessities that human being requires, Citizen watch can easily satisfy human needs by offering reasonable performance sports item, whereas wants are desires for specific satisfier of these deeper needs like, the target market for ASCIS Eco Drive shoe in China are 20-50 year old middle class men who want products, which can help them realize their goals and fulfill their status in life. Target markets, positioning, and segmentation - ASICS marketing strategy is to target high income earners. The company has further segmented the high income earners into tech savvy customers and the rest. Generally the youths are more attracted towards technology and ASICS fulfills their needs with technologically advanced
stylish
performance
sports
item.
Page | 12
Marketing channels- Communication Channels e.g. Newspapers, Magazines Radio., Television, Mail, Telephone, Billboards, Posters, Fliers, CDs, Audio Tapes & Internet Distribution Channels e.g. Distributors, Wholesalers, Retailers, & Agents Supply chain. Competition- ASICS has followed a different road than its competitors. The brand offers a partial list of its international models to the domestic market. ―The market for young consumers is in increase. In the general stagnant economic climate, with salaries at often rather low levels, young people are making costly sports were purchases. Globally they are facing competition from brands like ADDIDAS, NIKE, PUMA and NB. Market Segmentation: ASICS market is high earning people and their target market can be further segmented into the following categories: Geographical region: ASICS operates mostly U.S, Australia, Europe, and North America & Middle East Demographic: High earning male and Female among the age group of 16+.
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Marketing Mix (7P) +4C
Product:
People:
Running Apparel Running shoes Sports ware Sports Accessories Women sports ware
Target Market
Corporate Executive Team surrounded by talented, trained and experienced staffs around the globe.Excellent Leadership; Qualified Scientists and worker.
Marketing Mix
Automated; Information Technology, Research & Development Sectors, Scientific Programs, Biotech, Nanotechnology
Price: Competitive Pricing Premium pricing in developed country. In middle-income countries, a flexible pricing approach had to be adopted.
Process:
Physical evidence: Place: Promotion: TV commercials, Billboards, Internet, Newspapers, Instore displays, CSR Activities.
ASICS brands are available in more than 65 countries. They are available in all sports shop and supermarkets located in different regions of the country
ASICS ensure high quality products, by giving effective sports solutions. Their top priority is safety of the consumers, that‘s why they provide highest standards of sports equipment
Page | 14
4C
Costs:
Clients:
Invest more on CSR Activities and Research and Development Sectors.
Sports ware: Different Aged People Sports equipment: Mainly Young People
Target Market
Convenience:
Communications:
ASICS‘s brands are available in more than 65 countries of the world, and they provide World Wide Contact Information for their customers.
Direct or indirect interactions with customers; World Wide Contact Information; communicating through CSR activities or through internet
Value Chain Model A value chain is a series of activities or processes which aims at creating and adding value to a product at every step during the production process. Businesses aim at enhancing their margins and thus work to change input into an output which is of a greater value than what it was at the time of entering the process. The more value a company creates, the more profitable it is to create competitive advantages. Page | 15
TQM – Loyalty – Quality & Control Total Quality management is the process of managing quality and continuous improvement and consistency (Reduction in Variation). TQ is about conformance quality and Quality in everything we do to meet customer‘s requirement. The ASICS Company has strongly positioned in the market due to high quality. They maintain the quality in every step in the processing. The ASICS company the total quality management as per the diagram below:
Page | 16
Asics Brand A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. [NSU, HSN]
Image: The brand logo of Asics [ASICS America, http://corp.asics.com/en] The name is an acronym for the Latin phrase ‗anima sana in corpore sano‘ which translates as "a healthy soul in a healthy body". [ASICS America, About Asics]. The symbol of asics is an ‗A‘ in lowercase as in A for Asics.
Image:
The
stripe
symbol
of
Asics
[Complex,
Sneakers,
http://www.complex.com/sneakers/2012/12/the-25-best-logos-in-sneakerhistory/onitsuka-tiger] The first Onitsuka basketball shoes in Japan had a tiger face design on the arch of the foot and this became the company‘s trademark. Onitsuka Tiger shoes, as they became known, were introduced globally in the 1960s with the unveiling of the Mexico 66 – the shoe that features the now famous crossed stripes design. Page | 17
Asics branding is decent in par with its competitors. It may not be as trending as Nike or Adidas, but when one sees a shoe with the tiger stripes, they will stop to ask out of curiosity ―which brand is this?‖. Their logo is very basic, which was probably their intention as the name Asics rhymes with basic. {Irtiza, 1530695060} Asics Branding
Image: Brand Positioning of Asics [Asics Brand Strategy Audit 2013, https://prezi.com/idsr_msggzvw/asics-brand-strategy-audit-2013] Asics has positioned itself a top performance and innovative product, keeping a moderate commitment to its aesthetics and trendiness. This is well illustrated in the image above. Asics is at the highest end of performance and innovation but at midlevel of fashionable and cool spectrum below Adidas and Nike. In terms of performance it is at the apex. Its top competitors Nike and Adidas are following a different positioning strategy. Nike chose to look the best, which is probably the key to its success. It is more important to be in fashion and trend in order to get most customers. Adidas also gave preference to trendiness over performance, in fact they are at the lowest end of performance spectrum. Asics positioning gives Asics advantage in terms of being taken more seriously, especially by professional athletes who demand performance and innovation over all else. But in order to sell to the mass, Asics needs to appeal aesthetically to the Page | 18
consumers like Nike and Adidas. This brand positioning indicates that Asics in only focusing a niche, that of the professionals. {Irtiza, 1530695060} Asics Brand Element Choice Criteria (Box Analysis of Brand Elements): There are six criteria for choosing brand elements. These brand building criteria can be divided into two categories: Brand Building-The elements used to build a brand and make it memorable, meaningful, and or likable. Defensive-These elements are used to defend the brand position against the attack of other brands. The elements are transferable, adaptable, and protectable. As shown in the image below, a box analysis of the brand elements of Asics has been done. From our study we have deduced that Asics to be Meaningful, Transferable, Adaptable and Protectable.
1. Memorable
2.Meaningful
How easily do consumers recall and Is the brand element credible? Does it recognize the brand element, and when—at suggest the corresponding category and a both purchase and consumption?
product ingredient or the type of person who might use the brand? Asics is an acronym referring to good health in Latin. Being a sport and exercise product, it is relevant in terms of meaning.
Page | 19
3. Likeability
4. Transferable
How aesthetically appealing is the brand Can the brand element introduce new element?
products
in
the
same
or
different
categories? Does it add to brand equity across geographic boundaries and market segments? Nike went from shoes to a diverse line of products including clothing, gears and accessories.
Asics
can
replicate
that
provided that it captures that big a market. 5. Adaptable
6. Protectable
How adaptable and updatable is the brand How legally protectable is the brand element?
element? How competitively protectable?
Shoes are now one of the most adaptable and upgradable product there is. Asics has Asics is very protectable with its trademark been introducing a variety of shoes over the logo and stripe symbol. There are no decades starting from Mexico 66 to the indications of it becoming a generic. Fuzex.
Image: Box Analysis of Asics {Irtiza, 1530695060}, Definitions: [Manual of Marketing,
http://manualofmarketing.blogspot.com/2013/09/brand-elements-
and-brand-element-choice.html]
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Brand Dynamic Pyramid
Strong Relationship
Bonding Advantage Performance Relevance Presence Weak Relationship Image: Dynamic Pyramid Analysis of Asics {Irtiza, 1530695060}
The brand pyramid is a model that illustrates the steps by which a customer establishes loyalty to a particular brand. The model can be visualized as an inverted pyramid with five levels. As one moves up the pyramid, from the narrow point to the broad base, customer loyalty increases in direct proportion to revenue potential. As the image above shows, the five levels are:
Page | 21
Presence: The customer is aware of the brand and recognizes the name, but may have no particular opinion or emotional attachment to the brand. Usually it indicates that the product has been present for 0-2 years.
Relevance: The customer is evaluating a brand in relation to other similar products or services. Relevant products have been usually present for about 2-5 years.
Performance: The customer will begin to set certain expectations and may develop a real sense of the brand‘s identity. A life span of 5-10 years.
Advantage: The brand has proved itself superior to competitors and the customer may begin to feel an emotional connection with the brand. A life span of 10-15 years.
Bonding: The customer has established a bond with the brand and is likely to remain a loyal customer. Consumers at this level of the pyramid may actively promote the brand to their family and friends. [Zideate, Brand Pyramid]. These brands have been around for atleast 15 years or even more. Asics falls under this category as it has been present from 1949. It has its own set of loyal customers who refer to the brand to their family, friend and associates. { Irtiza,1530695060}
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Five ‘M’s ASICS
ASICS - Mass Communication Mass marketing is distinguished from direct marketing in terms of the distance between the manufacturer and the ultimate user of the product. Mass marketing is characterized as having wide separation and indirect communication. A mass marketer, such as ASICS, has very little direct contact with its customers and must distribute its product through various retail outlets alongside its competitors.
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Advertising Budget & Campaign Cost
Figure Out Which Categories ASICS Need To Include in Your Marketing Budget. In order to keep the advertising budget in line with promotional and marketing goals, a business owner should start by answering several important questions: 1. Who is the target consumer? 2. What media type will be most useful in reaching the target consumer? 3. What is required to get the target consumer to purchase the product? 4. What is the relationship between advertising expenditures and the impact of advertising campaigns on product or service purchases?
Here are some potential categories that you might need to consider: Paid Advertising
Search, PPC, social media advertising, lead generation, display, TV, radio, print, direct mail
Page | 24
Branding & Creative
Software, hardware, IT, equipment, stock photo/video, freelancers, fonts, printing, off-site shoot travel, supplies
Website
Website design/development (or re-design/development), updates, maintenance, integrations, improvements, registrar/hosting, stock photo/video, fonts.
Content Marketing
Content creation, AV equipment, design, video production, publishing tools, analytics, file management, stock photo/video/audio, freelancers, marketing automation, monitoring services, webinars, social media tools.
Public Relations
PR services, research/contact services, reputation marketing, events, award fees, dinners, swag, outside agency retainer fees.
ASICS budget structure, might consider these categories Product Marketing Competitive analysis, focus groups, user testing, launch events, advertising/PR, product-specific content marketing, demo videos Events If your company puts on regular events — either for employees or for customers — you should have a separate budget category strictly for event costs. Don‘t forget to include costs like travel for speakers and décor for the venue. Personnel Salaries, benefits, training, special events, bonuses, swag, parking.Make sure to include anything provided to employees, such as training or paid parking privileges.
Page | 25
Table: Annual Budget for Advertising for ASICS { Khan, 161 1590660 }
Page | 26
Digital Marketing Budget Allocation Your Digital Marketing Budget
$16,000 per month
SEO - Search Engine Optimization
$3,200 per month
PPC - Pay Per Click
$4,800 per month
Social Media
$4,800 per month
Email Mobile Content
$800 per month $1,600 per month $800 per month
Table: Annual Budget for Digital Marketing Budget for ASICS { Khan, 161 1590660 }
Page | 27
Sales Promotion for ASICS Setting the Total Sales Promotion Budget One of the hardest marketing decisions facing a company is how much to spend on promotion. How does an ASICS decide on its promotion budget? There are four common methods used to set the total budget for advertising: the affordable method, the percentage-of-sales method, the competitive-parity method and the objective-andtask method.'' Affordable Method A common 'rule-of-thumb' used by many companies is the affordable method: they set the promotion budget at the level they think the company can afford. ASICS start with total revenues; deduct operating expenses and capital outlays. and then devote some portion of the remaining funds to advertising.
Feedback measurements for brands {Khan, 161 1590 660}
Page | 28
Feedback measurements for brands Unfortunately, this method of setting budgets completely ignores the effect of promotion on sales. It tends to place advertising last among spending priorities, even in situations where advertising is critical to the firm's success. Percentage-of-Sales Method In the percentage-of-sales method, ASICS set their promotion budget at a certain percentage of current or forecast sales. Competitive-Parity Method Other companies use the competitive-parity- method, setting their promotion budgets to match competitors' outlays. They watch competitors' advertising or get industry promotion-spending estimates from publications or trade associations, and then set their budgets based on the industry average. Objective-and-Task Method The most logical budget-setting method is the objective-and-task method, whereby the company sets its promotion budget based on what it wants to accomplish with promotion. The method entails: (1) defining specific objectives; (2) determining the tasks needed to achieve these objectives; and (3) estimating the costs of performing Setting the Promotion Mix ASICS must divide the total promotion budget among the main promotion tools advertising, personal selling, sales promotion and public relations. It may also have to decide just how much of its promotions will involve direct marketing. Creating Brand Loyalty Personal selling also allows all kinds of relationships to spring up, ranging from a matter-of-fact selling relationship to a deep personal friendship. The effective salesperson keeps the customer's interests at heart in order to build a long-term relationship. Finally, with personal selling the buyer usually feels a greater need to listen and respond, even if the response is a polite 'no thank you'. Relative importance {Khan, 161 1590 660}
Page | 29
Relative importance of promotion tools in consumer versus industrial markets
Sales Promotion Budget for ASICS
Page | 30
Figure: Sales Promotion Budget {Khan, 161 1590 660}
Item
Cost
Percent
Total
Total
Shipping
Shipping
Profit per
Total
Per
Markup
Sold
Revenue
Charge/
Cost/
Item (incl.
Income
Item
Item
shipping)
Item
Soccer
$10
100.00
1,500
$30,000
$10
$5.75
$14.25
$21,358.00
% Running
$11
75.00%
1,800
$36,225
$10
$5.75
$12.88
$23,167.88
Clothing
$13
65.00%
2,000
$42,900
$10
$6.25
$12.20
$24,400.00
Shoes
$5
90.00%
5,000
$47,500
$5
$3.50
$6.00
$30,000.00
Training
$4
90.00%
4,242
$32,239
$5
$3.25
$5.35
$22,688.40
Total
$188,864
$121,614.28
Events & Experiences/Sponsors In the world of sports, athletes and timekeepers share a lot in common. That is why ASICS proudly organize it‘s all events. Every year, the two weeks are reserved for the US Open Tennis Championships. This is the season-ending Grand Slam event in men‘s and women‘s professional tennis; it is the highest profile tennis tournament of the year. With court-side clocks tracking match time and stadium scoreboards to display match results, ASICS plays an integral role every year at the US Open Tennis Championships, and ASICS match time displays have recorded the match time of some of the longest Grand Slam matches in history. We are also proud to be the official sponsor of Arthur Ashe Kid‘s Day, as well as the Exclusive Timekeeper and Official Sponsor of the Western and Southern Open, and the Connecticut Open at Yale. Asics CSR Policy: To help consumers‘ lead sustainable lifestyles, we provide sporting and lifestyle products and services that contribute to the well-being of our planet and the global community.
Page | 31
The ASICS CSR Policy comprises four CSR Principles and nine CSR Objectives. We remain committed to implementing these CSR Objectives according to our Corporate Philosophy while upholding the CSR Principles.
Page | 32
Sustainability Targets In fiscal 2011, we adopted ASICS Group Key Sustainability Targets and Footwear Business Targets that reflect the outcomes of the joint research project undertaken with MIT from 2010 to 2012. Our targets encompass the entire value chain with an emphasis on reducing environmental impacts throughout the manufacturing process. In fiscal 2012, we made progress in upgrading the labor practice management system, adopting an industrial index, and reducing the environmental impacts
of
processes
manufacturing through
design
innovations. For 2013, we must achieve through
greater an
strengthen
progress
action
plan
our
chemical
management
system
to and
increase the use of eco-friendly adhesives
in
production
processes. To drive CSR and sustainability initiatives toward our focal points and targets, the ASICS Group has operated a CSR
&
Department
Sustainability since
2004.
It
currently comprises a global team and regional teams as well as contacts who engage with internal
and
external
stakeholders. Establishing Relationships of Trust with Stakeholders At ASICS, we fully realize our company‘s responsibilities and our role within the world around us. Our business operations are supported by a variety of stakeholders. Embedded within our founding philosophy is the recognition that a corporation is a public entity. We therefore respect our stakeholders‘ expectations and interests. The Page | 33
environmental and societal conditions affecting our world clearly require our attention. We acknowledge this as a joint responsibility that involves us as well as each of our stakeholders in a collaborative effort. Our various stakeholders play an important role in raising topics of concern and areas of mutual interest. We recognize these as potential sources of business opportunities. By listening, learning and engaging in open dialogue, we are establishing relationships of trust and reciprocity
as
well
as
mutually
beneficial partnerships. Marketing Budget & Expenditure: ASICS always try to moves into new markets and grab consumer attention shifts to social and they always hunt for creative marketing with limited budgets compared to the other famous Brands like Nike and Adidas. ASICS tries to spend money in all possible media and channel to reach the target customer. They always try to set minimum budget try to proper utilize of it. They always estimate logically and project of costs required promoting their products. This estimation will typically include all promotional costs, marketing communications like website development, advertising and public relations, as well as the costs of employing marketing staff, utilizing office
space
and
various
research
activities.
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TV Adds: Asics focus more on TV adds. They prefer with ads running on channels such as ESPN, Comedy Central, Discovery and the Food Network, among others. In 2015 they spend USD 5 million for running shoe brand dabbled on TV adds. Magazine: ASICS also invest to post their ads on magazine. According to Gary Slayton, Asics VP-marketing communications Print remain an important outlet for the ads. Invest on Famous athletes: With its improved corporate performance company then released a specialized shoe that is highly stable on grass surfaces and in Australia signed a top-level cricket player who also appears in fashion magazines. Then the brand jumped to first place overall in the Australian sport shoe market. This incident can be concluded they invest lot of on famous athletes or brand person. ASICS slow and steady upward growth approach has created a strong brand with a halo effect casting its glow on other elite athletes and enthusiasts in many sports that cross train with their shoes to stay in shape. Invest on Events: As this is a Tradition and very effective promotional marketing effort is to invest in an event that largely appreciated by the society. ASICS is also doing the same thing. They do invest in various Sport Programs. They increase in marketing spend in the run-up to the London 2012 Olympics. Asics has also appointed Pitch PR as its UK agency as it looks to strengthen its position as the country's top-selling specialist running brand. ASICS has been successful creating fun, relevant experiences at key running events like the New York City Marathon and more. With this embedding strategy at live events, they can set up tents, work grass roots and press the flesh with real people and collect valuable data about features and benefits.
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For promotion to their Product ASICS divide their Marketing Activities in to 3 Parts and according that they invest: their investment divided into following part 1. Advertising 2. Sales promotion 3. Branding.
10 50 40
Advertising Sales Promotion Branding
For advertising Purpose they invest their entire marketing budget in following categories:
TV Ads 10
30
20
Magazine print Event Sponsor
20
20
Invest on Famous Athelete Social Media
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ASICS Consideration of Budget and Marketing Planning:
Ensure that the needs and points of view of territories and DTC business are adequately represented with regards to budget planning.
Ensures marketing planning is guided by local consumer insight.
Leads territory marketing managers on budget and marketing planning process. Manage the territory marketing budget, ensuring forecasting and billing accuracy, on-demand reporting and communication with Finance.
Responsible for the right toolkits and assets being delivered to territories in a timely manner. Provides leadership on local execution.
Track Running KPIs (NPD, brand tracking, etc), competitive activity and retail trends to draw insights from which to draw recommendations for management to drive the business.
Fixed Cost: Fixed Cost is the cost which is incurred for a period within certain output and turnover limits, tends to be unaffected by flection‘s in the levels of activity. For ex: rent, rates, salaries etc. Variable Cost: Variable Cost which is tends to vary with the level of activity. In this case purchases are variable Cost. Contribution: The value of sales less variable costs.
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Pricing Strategies:
Asics maintain competition based pricing strategies. In the sports goods and gears market there, is much price differentiation, in general, among the different companies due to the highly competitive nature of the industry. Price is a very important factor due to the nature of the products. Quality is also more important. However, the purchasing capacity of the consumer is also an important consideration. Therefore, it is important for the companies to charge a reasonable price for their product. Break-Even: Breakeven point is that point at which total contribution is equal to fixed cost and neither a profit nor loss is made.
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Here we find the ASICS Approximate Costs in 2013:
Item Cost of Sales service Interest Cost Insurance Cost Income TAX Bank Charges Depreciation Material
Fixed(million Variable (million $) $) 138,901 965 201 279 6,309 8,700 27,892 34,525 12,032 12,032 81723 160,113
Sales in Japan in 2013: 272,590 USD (million) Contribution: 272,590 - 160,113 = 112477 Breakeven Point: 81723/ (112477/272590) = 199325 USD (million)
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Recommendation: As an international power, I think it can be difficult for ASICS to build customer loyalty with a brand that has become so broad and expanded geographically all over the world. Athletes and fans ASICS‘s customers value loyalty and take pride and comfort in what they know and who they support. Just like favorite teams and players, athletes and fans want to support those who they connect with. I would recommend to ASICS that they concentrate on creating more of a domestic feel to their products and brand. ASICS has long struggled publicly with activists claiming that they operate sweat shops with unsatisfactory working conditions in foreign countries. ASICS executives have adamantly denied these allegations but still a common criticism of ASICS is their treatment of foreign workers. Performance of the company has shown a strong potential in the performance of the company since all the ratios are favorable for a better performance. And the set targets by the management are easily achieved if they stay focused since they have the capacity. Technical analysis also supports a buy decision, because looking on the past performance of the ASICS Inc. share against the market index. It has shown that ASICS can outperform the market returns and now that it had gown down, it is left with the upside given plans that are being put in place. Since ASICS has become so big, it can be challenging to maintain that connection with their customers. Conclusion: ASICS is a very successful company, a true market growth shown in ASICS Growth Chart. Company‘s approach to marketing, advertising and getting feedback from the customers and provides an effective model on which others can learn. Also, ASICS is a very flexible company that feels and reacts to all shifting trends in its market. Though the company has certain issues to resolve, it is still a socially responsible company with strong image.
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References: Annual Report 2014 Year Ended March 31, 2014. Google Search. Philip Kotler marketing management 15th edition.
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