CB6 6th Edition by Barry Babin,Eric Harris

Exercise 4

New Balance, Out of Step?
Written by Kristen Regine, Johnson Wales University
Brighton, MA, selling men's and women's athletic shoes and apparel for running, hiking, tennis, cross- training, golf, and fitness. The company operates in 120 countries worldwide. There are 157 licensed New Balance stores in North America; 140 are independently owned and operated.1 This number does not include its three corporate stores located in Dedham, MA. The experience stores are in the Flatiron district in New York and the Pentagon in Washington, DC. The company expects to open another twelve stores over the next year.
Some of their top competitors include Nike, K-Swiss, Saucony, Adidas, and Fila USA. The NB claim is substance over style, unlike their competitors; they do not promote their products with celebrity endorsements. They have developed an "endorsed by no one" philosophy. When compared to their competitors, this might be viewed as a weakness, since brands such as Nike, Adidas, and Reebok have developed well-established brands based on the premise of using celebrities as endorsers to build brand awareness.
Their focus in the marketplace is on technology and innovation, with a wide product portfolio. In 2011, the company's products NBX and WW86 were named as "Best Fitness Buys" by Health magazine, and the MR/WR890 and MR/WR1080 shoes were selected as the "Best Neutral Shoe" by Women's Running and Running Network magazines. In such a competitive market, New Balance expects a 15% growth this year, and for the first time since 2004 expects double-digit growth globally.3
New Balance Brand Goals4
Solidify top placement within the athletic shoe market and among the key target market/core consumers with research, development, and strategic tactics that showcase NB as an innovator/cutting-edge brand in the athletic shoe category.
Reinforce the brand anthem of "Make Excellent Happen" by raising awareness to the fact that NB is invested in the consumer's performance as an athlete, comfort as an athlete, and investment in fashion as a man or woman. The idea is to market to all the needs and wants of the consumer athlete: fashion/form/function/fun.
Demonstrate a dedication to "American-made"/"made in the USA" products. (This is a critical attribute that NB is proud of and promotes with enthusiasm.)
Expand upon the brand legacy of being a runners' shoe company and grow into a holistic brand that is a leader in the athletic show category and serves not just the runner, but the athlete.
Promote a fashion-forward, functional perception among consumers that builds upon the trusted New Balance product legacy.
Judy Piktelis, the general market manager from New Balance, explained that their new experience store opened in the Flatiron district due to its historic roots in New York City to unprecedented numbers. The 4000-square-foot Flatiron store opened in August 2011. Consumers are able to see their shoes completed in an hour. "I think customers expect a lot more in their shopping experience," said Tracy Knauer, New Balance's head of marketing for retail. There's a running track, a shoemaker from Maine in a glass booth assembling shoes, and an over-the-top shopping experience. In New York, a creative tactic was utilized to drive traffic into the store: customization of the 875 shoe.5 Shoppers were even able to purchase shoes from the glass booth with an "assembled in New York" tote bag. The shoe was a sellout. This is not the first experience store for New Balance. The others are located in Beijing, Hong Kong, and Australia.
However, in New Balance's backyard and home market the company-owned store in Dedham, MA, a suburb located south of Boston,7 is showing a slowdown in sales. Dedham's demographics are mainly families (56%). Eighty percent of families own their own homes, the median age is 39 years, and the largest age group is 35-44 years old with an average household income of $80,000 per year, which is substantially higher than the national average of $51,914.8 Legacy Place was a prime target to develop a new retail center in 2009. The openair shopping center covers 675,000 square feet, featuring over 60 retail shops, restaurants, and entertainment such as a movie theater and bowling alley.9
However, the Dedham store in Legacy Place is problematic. There is a lot of competition: City Sports, Urban Outfitters, and Lu Lu Lemon Athletica. One destination in particular was always jam-packed; King's Bowling Alley.10
The Dedham New Balance store decided to start with a grassroots marketing program, since discounting was a tactic employed only twice a year for friends and family days. Their grassroots campaign included partnering with King's Bowling Alley. King's offers its patrons a trivia night, karaoke nights, all-you-can-bowl nights for $10, live music, bowling leagues, and industry nights.11 New Balance posted information in the restrooms and offered employees of King's a discount. Additionally, the marketing program included the formation of a walking club for the outdoor shopping plaza, which was sponsored by Whole Foods.
The one tactic that did require a small budget was to partner with the local Massachusetts Red Cross mobile unit where blood donors would receive a gift from New Balance.12 Recently, the company struck a deal with the Boston Red Sox to become the official apparel and footwear sponsor of the team.13 Could the Legacy Place store feature a Boston sports connection to get foot traffic moving their way? Would their grassroots marketing program develop a loyal customer? What type of experience can Legacy Place create for its customers?
What is the effect of the New Balance brand on the consumers' judgment to buy or not to buy?