Flyknit Athletic Footwear Company | EssayIvy.com

Flyknit athletic footwear company

FLYKNIT ATHLETIC FOOTWEAR COMPANY
Contents
Executive Summary ...................................................................................................................................... 3
Situational Analysis ...................................................................................................................................... 3
Target Customer............................................................................................................................................ 4
Competition................................................................................................................................................... 5
Strengths, Weaknesses, Opportunities and Threats (SWOT). ...................................................................... 6
Macroeconomic analysis ............................................................................................................................... 9
Market Segmentation .................................................................................................................................. 11
Product ........................................................................................................................................................ 12
Price ............................................................................................................................................................ 12
Distribution ................................................................................................................................................. 12
Promotion .................................................................................................................................................... 13
Projections................................................................................................................................................... 13
Categorized budget information.................................................................................................................. 13
Conclusion .................................................................................................................................................. 14
References ................................................................................................................................................... 15
Research Nester. (2018). Athletic Footwear Market: Global Demand, Growth Analysis & Opportunity
Outlook 2023. Research Nester. Retrieved on August 22, 2018 from
https://www.researchnester.com/reports/athletic-footwear-market-global-demand-growth-analysis-
opportunity-outlook-2023/242 .................................................................................................................... 15
Tynan, Caroline, A. and Drayton, Jennifer. (2010). Market Segmentation. Journal of Marketing
Management,Vol 2(3). https://doi.org/10.1080/0267257X.1987.9964020 ................................................. 15
Grand View Research. (2018). Athletic Footwear Market Size, Share, & Trends Analysis Report By
Category (Running Shoes, Sports Shoes, Aerobic Shoes, Walking Shoes, Trekking Shoes), By Gender, By
Retail Channel, And Segment Forecasts, 2018 2025. Grand View Research. Retrieved on August 22,
2018 from https://www.grandviewresearch.com/industry-analysis/athletic-footwear-market ................... 16
List of Tables and Figures
Figure 1…………………………………………………………………………………P4
Figure 2…………………………………………………………………………………P8
Table 1…………………………………………………………………………………..P13
Executive Summary
FlyKnit Athletic Footwear Company is a newcomer in the athletic footwear industry and seeks to
grow into the largest market share holder in the industry. This is by exploiting existent gaps in
the industry; pricing and quality. The company seeks to ensure that all its products are made
from the best quality raw materials and priced accordingly to ensure that regular everyday
individuals will be able to purchase the shoes without necessarily straining their pockets. The
company will use intense marketing campaigns to gain an audience with the consumers and build
a strong customer base within its first years which it will continuously grow. The company’s
management will consistently update the firm’s strategies and policies according to internal and
external changes in order to enable the firm to keep up with trends in the industry. The
company’s main short-term goal is to attain a stable 10% market share by its fifth year in the
industry with the long-term goal being having over 50% market share by their fifteenth year and
being able to fully finance its operations within the country and expansion to foreign markets.
Situational Analysis
The global footwear market in recent years has grown exponentially and is expected to keep the
same trend and develop even more in the coming years. The industry was valued globally at
around $64.3 billion in 2017 with an expected average growth rate of about 5% from 2018
through to 2025 (Grand View Research, 2018). The general market shift from conventional
performance sneakers to be used in sports to more luxury brands wanting to get involved in the
market and diving head-first into the industry has been a major cause for the rather unexpected
growth of the industry. Sneaker sales in the past year rose by 10% (Stych, 2018) which signals
the rise of a new market that if exploited could bear rich profits.
It is with this aim that FlyKnit Athletic Footwear Company was born; to produce quality and
affordable athletic footwear for the everyday person. The industry has recently witnessed a
significant increase in the price of sneakers over the past couple of years (Elder, 2015). Despite
this happening the market still thrives due to the fanaticism and overall hype and excitement
surrounding the products. We therefore decided to come into the market to avail the same quality
products with a premium feel but a lower price point to appeal to consumers without the extra
dispensable income to spend on exorbitantly priced shoes. The nature of the sneaker market in
North America; being the largest market for athletic footwear as exhibited by its 30% revenue
share in 2017 (Grand View Research, 2018), makes it the perfect location for the company as the
already established sneaker culture will help in the company’s development.
The company will focus on stylish designs that will be versatile in that the consumers can wear
them both on the field as their primary athletic shoes and off the field as casual footwear. The
versatility, differentiation of the shoes from other companies and their availability at our
particular pricing point will be the main features that appeal to our target consumer audience
Target Customer
The traditional market that consumed athletic footwear was limited to people who were actively
involved in sports and fitness. With the recent paradigm shift in the market and with the
evolution of the products the industry’s potential has outgrown what people perceived of it with
more luxury and everyday designs of athletic footwear being conceptualized and produced each
day.
FlyKnit focuses on capitalizing on the expanding market potential by designing casual and
relaxed shoes that appeal more to the everyday consumer. The shoes will not focus on
performance but rather on comfort, quality and durability; the hallmarks of a great everyday
shoe. The designs will appeal more to the younger and trendier population considering how the
sneaker culture has peered into their daily lives through the influence of pop culture.
The rise of athletic footwear has encouraged men to be more outgoing in their shoe purchases
thus making them an untapped market for athletic footwear sales (Morley, 2017). Men are also
more involved in sports as compared to women and as a consequence more men will be inclined
to purchase athletic footwear. This however does not close out the women from being involved
in the market as they are conventionally more inclined to purchase more shoes. The company
will therefore focus majorly on the men followed by women and finally children.
Competition
The shoe industry, moreso the athletic footwear market, is intensely competitive with Nike
having the lion’s portion of the market share followed by Adidas and Puma in second and third
place respectively.
Source: Statista: The Statistics Portal. https://www.statista.com/statistics/278834/revenue-nike-
adidas-puma-footwear-segment/
There is an immense growth in the demand for athletic footwear due to factors such as increased
popularity of sports, rise in the amount of disposable income, increased awareness on matters
pertaining to health and fitness and many more (ResearchNester, 2018). This increase in demand
has fueled the increased competitiveness in the market. New firms are investing in the industry
with the hope of reaping the benefits due to come from the industry while the already existing
firms amp up their operations in an effort to maintain and improve their market share. This
improvement comes in the form of more designs of products, intensified marketing, competitive
pricing and higher quality products.
FlyKnit Athletic Footwear Company seeks to compete with the more established firms by
providing high quality products at a fraction of the price that the existent companies charge. This
will be established by using more efficient production methods that focus on optimizing resource
use, using more efficient and user-friendly distribution channels and powerful and informative
marketing to get through to consumers. Combining these strategies will enable the company to
eat into the other firms’ market share and gradually work its way to the top.
Strengths, Weaknesses, Opportunities and Threats (SWOT).
This is a strategy used to critically analyze the business with a view to maximizing on the
opportunities, both internal and external, in order to exploit its full potential. In involves an
intense scrutiny of the business operations and environment while looking for ways to increase
efficiency and maximize profits (Esita et al, 2014).
Strengths
The company has a strong management that is dedicated to accomplishing the firm’s objectives
and making it as profitable as possible. Competent management in an organization has proven to
be a major reason behind an organization’s success (Reh, 2018). It is therefore imperative that
the managers remain dedicated to ensuring consistent growth and development in the
organization.
The organizational policies and strategies have also been specifically designed for the company
rather than borrowing a leaf from other companies. Suiting the strategies to the company will
enable it to grow at its own pace and fully maximize the opportunities available at every level of
development. This will also ensure that the company does not strain its resources thus enabling it
to maximize its budget despite the constraints as it is a young company.
Weaknesses
The company is young and as such does not have a lot of experience in the market. Despite the
intense research carried out it is nearly impossible to truly know how to navigate the vast number
of situations possible in the industry. This will therefore give other already established firms a
competitive advantage. The lack of capital due to the firm’s young age is another weakness. This
will limit production capacity due to the lack of funds to purchase large amounts of raw material
and benefit from the economies of scale. It will also constrain the firm’s labor capability as they
will be limited to fewer workers.
Opportunities
The consistent market growth poses the greatest opportunity to FlyKnit Company. This is
because the growth in the market shows that there is a chance to increase sales due to the ever
increasing number of customers available. The competitiveness will also prove to be a challenge
to the company this forcing them to continually get out of their comfort zone and think out of the
box in order to stand out and effectively differentiate their products from the rest of the market.
The presence of free trade between America and most of the countries in the world also provides
an avenue through which distribution of the shoes to other countries around the globe will be
made much simpler. The shoes will also be made affordable due to the absence of extreme taxes
and tariffs thus compelling consumers to buy the shoes. This will increase the company’s market
share and drive the profits even higher. It will also create an avenue through which the company
can diversify production in future by creating more production plants in other countries with
even cheaper labor costs and where operations are less capital intensive. This will enable them to
drive the prices even lower while at the same time maintaining the same quality and premium
feel to their products thus handing them a competitive edge over the other firms.
Celebrity appeal and pop culture has fueled the sneaker hype over the past couple of years and as
such partnering with renowned artists and athletes will increase the products’ mass appeal. This
strategy will enable the company to advertise itself and insert itself into the conversation when
athletic footwear is brought up. These celebrities will also promote the product in their
appearances whether on television, print or radio thus increasing brand awareness and popularity
which are important to ensure the success of the business.
Threats
The major threat to the company is the presence of intense competition in the industry. The other
firms have already grounded themselves in the industry and established their brands creating a
fierce loyalty among their customers. Disrupting the status quo in the market will be extremely
difficult as it will necessitate proving that FlyKnit’s products are much superior to the other
firms and creating enough differentiation to warrant the consumers switching from their
conventional brands to ours. This will only be achieved by creating more innovative and trendy
designs, using high quality raw materials and properly pricing the goods. Marketing will also
play a huge role in disrupting the market’s current status as it will create awareness of the brand.
The threat of new competitors is however less concerning to the firm as we believe that our
business model and system is organized in a superior fashion when compared to other new
companies.
Macroeconomic analysis
This will enable the business understand its external environment and identify opportunities
brought about by the existence of these macroeconomic factors. We will utilize the PEST
Analysis in order to understand the political, economic, social and technological factors
surrounding the business that prove to be imperative in determining the success of the business.
This is because recognition on the importance of environmental factors in ensuring the long term
development and sustainability of a business is increasingly being encouraged in management
(Gupta, 2013).
PEST Analysis
Political
Environment
Economic
Environment
Technological
Environment
Social
Environment
Figure 1
Political environment
The government is the major determinant of how the country’s economy will fair and influences
policies on taxes, tariffs and trade agreements. America has a positive outlook on trade, both
internally and externally. The government’s taxation policies on companies aren’t too harsh and
as such FlyKnit will be able to operate at a profit while still paying its legal dues to the
government. The government’s free trade agreements with other countries will enable the
company to expand distribution to other countries through exports and even later on expand
production to these countries.
Economic environment
The country’s economy is growing at a constant rate which means that the company will not
suffer due to the country’s economic failure. This will also ensure that the company has
subsidiary services such as banking and financing availed to them easily and at friendly interest
rates. These services will aid in the growth of the company thus enabling it to become more
profitable and obtain more market share. America’s per capita income is also increasing which
mean that there will be an increase in the amount of disposable income available for individuals.
This will further improve the company’s growth due to the presence of an even larger market to
supply the shoes to. The country’s superior currency exchange rate to most other countries will
however prove to be detrimental to the business when it comes to exports as the products will be
too expensive in most of the countries they wish to export to. This limits the firm’s export
options and delays the opportunity to exploit foreign markets.
Social environment
There is a general trend of athletic footwear being more appealing and acceptable to the masses
therefore this will prove to be core in ensuring that there is a constant market for the company’s
products. The increase in awareness on issues pertaining to health and fitness has also played a
role in improving the status of athletic footwear in the country and increasing demand for the
products. The increase in popularity of sports and sport personalities in the country and globally
has driven the increase in demand for athletic footwear. FlyKnit will ride on the wave of these
factors to increase their popularity and increase market share.
Technological environment
The rampant growth of technology will enable the company to develop more efficient methods
of production that aim at optimizing resource usage. We will also be able to come up with more
innovative designs that will appeal to the masses. Distribution channels will also improve due to
the use of the internet to drive online sales in the country as well as globally.
Market Segmentation
This is the process of identifying distinct market groups that will enable the company to
specifically target the company’s marketing operations (Tynan and Drayton, 2010). It will make
marketing operations more efficient and cost-effective. FlyKnit’s consumer target will be
segmented according to:
1. Gender- male and female
2. Geographical- inside the country (particular state) or export market (particular country)
3. Psychographic- common product consumers and premium product consumers
Doing this will enable the company to design products for each of these distinct categories of
customers; it will also enable them to direct marketing efforts towards appealing to them. It will
also influence strategies such as pricing and distribution channels.
Product
We will introduce twenty designs when the company begins. These designs will be new and will
stray away from conventional sneaker designs with a view to differentiating the company’s
products from other firms. They will be targeted at the younger and trendier audience. We will
use different color schemes for the shoes in an effort to appeal to as many people as possible.
However most of the shoes will be produced in the basic colors: black, white and grey.
Price
The company will use penetration pricing strategy in an effort to attract as many customers as
possible. This will enable the company to build a loyal customer base over time due to their low
prices. Slight bumps in pricing will be enacted later on in the business after the establishment of
a loyal customer base and attaining a considerable market share.
Distribution
The main distribution channel to be used will be retail sales due to the availability of retail stores
around the country and the accessibility to consumers. The internet will also be used to drive sale
through the company’s website where customers will be able to order for shoes and get them
delivered to their houses. With time the company will focus more on internet sales as technology
is growing exponentially and with time online sales will be the primary means of conducting
business. This will include facilitation of online payment methods such as PayPal and Visa and
MasterCard.
Promotion
There will be annual audits conducted on employees and managers by a private and independent
performance auditing firm. The results of these audits will determine what employees and
managers are to be promoted and who are to be demoted or retrenched. The promotions will
come with added responsibilities and pay raises.
Promotion for the product and company will happen simultaneously and will be achieved
through aggressive media campaigns, both mainstream and social. We will however focus more
on social media marketing as it will enable us to get to a larger consumer audience while using
less capital for advertising purposes. Also the targeted audience is the younger generation that
mostly uses social media as opposed to mainstream media.
Projections
Sales in the first year are projected to be at 7000 pairs: 5000 through the retail segment and 2000
through the internet segment. This will be achieved by ensuring a vibrant marketing campaign to
create awareness of the brand’s existence. Sales are expected to increase by 30% in the first two
years and 50% in the following three years. If this takes place the company will have attained a
10% market share by the end of five years.
Categorized budget information
The company will be financed by the owners’ equity and bank loans in the first year after which
we will be able to finance operations from the retained profits. After the first five years the
company will go public and be able to attain further funding from the masses through purchase
of shares. The projected costs for the first year of operation are as follows:
Table 1: Categorized budget information
Cost
Raw materials
Factory rent
Labor
Warehousing
Distribution
Celebrity endorsements
Marketing
Miscellaneous
TOTAL
The financing for the first year is as follows:
i) Owners’ equity $4000000
ii) Bank loan $3000000 (15% interest)
Within the first year the company is expected to be able to finance its activities through sales
revenue and retaining profits.
Conclusion
FlyKnit Athletic Footwear Company as a newcomer into the athletic footwear industry will bring
the much needed competition in the industry. Through its well planned strategies and dedicated
management the company will be able to gain a considerable market share within its first years
on inception and gradually grow, accommodating trends and changes in the market, into
becoming the largest market share holder in the industry. Ensuring quality product delivery at an
affordable price point is at the center of the establishment and they will consistently maintain
marketing efforts to ensure that they establish a loyal customer base.
References
Statista. (2018). Revenue From Footwear Segment of Nike, Adidas and Puma from 2010 to
2017(in Billion US Dollars). Statista. Retrieved on August 22, 2018 from
https://www.statista.com/statistics/278834/revenue-nike-adidas-puma-footwear-segment/
Research Nester. (2018). Athletic Footwear Market: Global Demand, Growth Analysis &
Opportunity Outlook 2023. Research Nester. Retrieved on August 22, 2018 from
https://www.researchnester.com/reports/athletic-footwear-market-global-demand-growth-
analysis-opportunity-outlook-2023/242
Tynan, Caroline, A. and Drayton, Jennifer. (2010). Market Segmentation. Journal of Marketing
Management,Vol 2(3). https://doi.org/10.1080/0267257X.1987.9964020
Reh, John, F. (2018). The Role and Responsibilities of a Manager. The Balance Careers.
Retrieved on August 22, 2018 from https://www.thebalancecareers.com/what-is-a-manager-
2276096
Morley, Katie. (2017). The End of the Go-To Shoe: Men Buying More Shoes Than Women.
Telegraph. Retrieved on August 22, 2018 from
https://www.telegraph.co.uk/news/2017/06/08/end-go-to-shoe-men-buying-shoes-women/
Edler, Brandon. (2015). Why Sneakers are Getting More Expensive than Ever. Complex.
Retrieved on August 22, 2018 from https://www.complex.com/sneakers/2015/03/why-sneakers-
are-more-expensive/high-prices-new-normal
Osita, C. Ifediora et al. (2014). Organization’s Stability and Productivity: The Role of SWOT
Analysis, an Acronym for Strength, Opportunities, Weakness and Threat. International Journal of
Innovative and Applied Research, Vol 2(9), 23-32.
Gupta, Abhishek. (2013). Environment and PEST Ananlysis: An Approach to External Business
Environment. International Journal of Modern Social Sciences, 2(1), 34-43.
Grand View Research. (2018). Athletic Footwear Market Size, Share, & Trends Analysis Report
By Category (Running Shoes, Sports Shoes, Aerobic Shoes, Walking Shoes, Trekking Shoes), By
Gender, By Retail Channel, And Segment Forecasts, 2018 2025. Grand View Research.
Retrieved on August 22, 2018 from https://www.grandviewresearch.com/industry-
analysis/athletic-footwear-market

Place new order. It's free, fast and safe

-+
550 words

Our customers say

Customer Avatar
Jeff Curtis
USA, Student

"I'm fully satisfied with the essay I've just received. When I read it, I felt like it was exactly what I wanted to say, but couldn’t find the necessary words. Thank you!"

Customer Avatar
Ian McGregor
UK, Student

"I don’t know what I would do without your assistance! With your help, I met my deadline just in time and the work was very professional. I will be back in several days with another assignment!"

Customer Avatar
Shannon Williams
Canada, Student

"It was the perfect experience! I enjoyed working with my writer, he delivered my work on time and followed all the guidelines about the referencing and contents."

  • 5-paragraph Essay
  • Admission Essay
  • Annotated Bibliography
  • Argumentative Essay
  • Article Review
  • Assignment
  • Biography
  • Book/Movie Review
  • Business Plan
  • Case Study
  • Cause and Effect Essay
  • Classification Essay
  • Comparison Essay
  • Coursework
  • Creative Writing
  • Critical Thinking/Review
  • Deductive Essay
  • Definition Essay
  • Essay (Any Type)
  • Exploratory Essay
  • Expository Essay
  • Informal Essay
  • Literature Essay
  • Multiple Choice Question
  • Narrative Essay
  • Personal Essay
  • Persuasive Essay
  • Powerpoint Presentation
  • Reflective Writing
  • Research Essay
  • Response Essay
  • Scholarship Essay
  • Term Paper
We use cookies to provide you with the best possible experience. By using this website you are accepting the use of cookies mentioned in our Privacy Policy.