Problem Statement
The key issues in the Vans: Skating on Air case are how to drive the next stage of growth for the company. To arrive at this answer, management must consider which product categories Vans should participate in, which distribution channels Vans should be in and how to integrate into the places their customers want to be. 2.SWOT Analysis :
Strengths:
- Well-recognized Lifestyle Brand
- Strong Distribution Channel: Items Sold in 12,000 Domestic Locations (2002) Good price & Good Quality
- Broad Product Mix
- Very experienced/Proven CEO
Weaknesses:
- Business Lines too Scattered
- Lifestyle Brand Turns off Certain Segments
Opportunities:
- Increase Brand Awareness through More Digital Exposure – Product Placement
- Become a First-mover in New Extreme Sports Offerings
- Sponsor More Televised Competitions
Threats:
- Competition from Large, Medium and Smaller Companies Looking to Gain/Steal Market Share
- Imposter/Counterfeit Goods Produced
Abroad:
- Smaller niche brands gaining market by using the Vans business model
Potential Solutions
Vans should continue to sustain Skate-Shoe market share and even try to grow Skate-Shoe market share by focusing marketing on under 14 year olds. (Segmenting-Age)Product Placement – Create another Fast Times at Ridgemont High moment.
Acquisition – Acquiring one of their competitors. Going after a smaller niche competitor is an “easy ” way to grow market share. Overall AssessmentSkate-Shoes are Vans’ core competency . The Skate-Shoe market is $800MM and 85% of Vans’ sales are from this product line. They have a commanding market share and should be able to grow. This will be difficult because you are not guaranteed to have a cult hit. Recommend because growing market share through a bolt-on acquisition seems like it could be the easiest option to achieve, however it will necessarily help Vans achieve its goal of “getting to the next stage of growth”. Strategic Fit (Core Competencies)Vans knows this market. By focusing on the under 14 age group, the company will be able to keep customers longer because of their age. Fits perfectly with their lifestyle branding.This is a nice fit for Vans because it strengthens their core product offering and allows them to grow market share.
Attractiveness
This option provides a natural fit for the company’s core competencies. Dogtown and Z-Boys only made $1.2MM at the box office. (Flixter, 2013) It is very difficult to gauge how much this movie contributed to the bottom line in terms of product sales.
- Gaining 1-2% market share of $800MM is great way to grow the balance sheet.
- Acquiring competition could mean less competition for Vans. Noteworthy Risks
- Could lose out on other product lines by focusing too much Skate-Shoe market.
- The company could tie-up a lot of money in production of a feature film or spend too much on product placement opportunities.
- Does not guarantee next stage of growth.
- Will be costly to the company.
- Does not anticipate competitive reaction.
Recommendation
Vans should attempt to acquire a niche competitor that will improve the existing portfolio and enhance the Company’s value. If Vans can acquire a niche competitor the Company will be able to add market share in the Skate-Shoe market, an $800MM market in 2002. Currently, Vans has a 46.9% (Exhibit) market share in the Skate-Shoe market. Acquiring Sole Technologies is the perfect option for the company, because it owns other niche brands and has over 4.0% market share . Assuming the price is right, pursuing bolt-on assets is the easiest way f or the company to add value. Inheriting distribution channels from the competitor add an additional benefit to Vans. By acquiring competition the company can also leverage how they integrate into the places their customers want to be because they will have a broader market to engage customers. In conclusion, acquiring competition is an excellent option for getting the company to the next stage of growth.
