Puma SE, branded as Puma, is a German multinational company that designs and manufactures athletic and casual footwear, apparel and accessories, which is headquartered in Herzogenaurach, Bavaria, Germany. PUMA is the third largest sportswear manufacturer in the world.The company was founded in 1948 by Rudolf Dassler. In 1924, Rudolf and his brother Adolf Dassler had jointly formed the company Gebrüder Dassler Schuhfabrik (Dassler Brothers Shoe Factory). The relationship between the two brothers deteriorated until the two agreed to split in 1948, forming two separate entities, Adidas and Puma. Both companies are currently based in Herzogenaurach, Germany. In the 1960's Puma became famous for advanced production technique of vulcanization (a technique which bonds the sole and shaft of the shoe). This led to a more enhanced performance.
The ‘60s saw world famous athletes like Pelé and Portuguese football star Eusebio winning events and Puma was continuously in the spotlight. Puma's world famous jumping cat logo - introduced to the world in 1967- was the brainchild of a cartoonist from Nuremberg, Lutz Backes. This logo was amended in 1979 to a puma jumping across the corner of the word PUMA. This is now seen on all Puma shoes and apparel and is a mark of quality and superb attention to detail.Puma was in the spotlight in 1968 when athlete Tommie Smith and John Carlos, post Tommie's gold medal win at a 200 m running event, raised fists in a power salute as a sign of protest against apartheid, racism and discrimination towards African Americans. The 70s, 80s and 90s brought a lot of fame to the Puma brand as athletes sporting Puma products continued to successfully win their games. Puma drew world's interest for innovative marketing in 1996 when Linford Christie showed up at a press conference wearing contact lenses with a white Puma cat emblazoned on them. The 2000s focused mainly on Puma's expanding line of football related products. Also Usain Bolt was primarily responsible for Puma being in the limelight during these years. Puma continues to make a name for itself in 2014 with the release of the evoPOWER football boot and the appearance of its innovative football products at the Brazil FIFA World Cup.
2.2 CASE STUDY
The case study is Puma had a very poor image that show decrease in a market share and how the company will pushing for a strategic decision to improve its image.
2.3 OBJECTIVE OF THE RESEARCH
1. Learn how the leader make decision to improve their company
3.0 LITERATURE REVIEW
Leadership is the ability of an individual or a group of individuals to influence and guide followers or other members of an organization.
Leadership involves making sound and sometimes difficult decisions, creating and articulating a clear vision, establishing achievable goals and providing followers with the knowledge and tools necessary to achieve those goals. Leaders are found and required in most aspects of society, from business to politics to region to community-based organizations.
Jochen Zeitz, CEO PUMA Company
Jochen Zeitz was born on April 6, 1963 in Mannheim, Germany. Rather than following in his family's footsteps and becoming a medical doctor, Zeitz attended the European Business School. In 1986, he graduated in International Marketing and Finance, after having studied in Germany, France, and the United States. He began his professional career with Colgate-Palmolive in New York and Hamburg. In 1990, Zeitz joined PUMA and in 1993 was appointed Chairman and CEO of PUMA, becoming the youngest Chairman in German history to head a public company at the age of 30
First we go to macro about environmental factors.Lack of social acceptance of Puma brand from the upper class customers who were not willing to wear the brand because they considered to of poor quality and were sold “dirt-cheap” Puma's brand was compromised and this a affected it's value for example Rudi's son wanted puma products to reach all the customers of all social back ground and this move was seen by the upper class people as some thing below them and they can not be seen wearing the same brand as people on welfare recipients. In order for pumas brand to be accepted as a high quality brand of value, force puma to change and improve its brand so that it can be socially accepted by customers.
Change in customers taste and style for example there was high demand for supports ware and fashion apparel tend that was oriented toward high value and lifestyle products, this change in customers demand influenced pumas to changed it's brand image to meet the customers growing demand
Demographic change in soccer market for example their was a high demand to respond to needs of both kids playing on local pitch and nationals soccer team playing professional at international level that required high quality brand and in order for puma to tap in to these demographic change puma needed to improve its brand image.
Market change of 1980 when sports brand became more dynamic and consumers taste diversified into new and more exciting high price that make products more desirable this forced puma to change its brand image so that they can charge high price as customers associate high prices with quality of brand or product and the more highly charged the more desirable the brand.
Introduction of niches in the market offered attractive growth rates both incumbent and new market players for example skateboarding markets, golf sports, sports equipments for out door activities made puma change its brand image, for example for puma to enjoy this attractive growth its brand has to be of high quality.
Merging of manufactures to form one big group for example Rosso joined forces with several other manufactures in northern Italy to form Genius group this was seen as a threat because this means more resources and strong financial stand and this led to high fragmented global market and for puma to survive in a highly fragmented market it needed to change its brand image. Puma's brand was disreputable and had lost specailised sports dealers in its distribution network in order for puma to gain its distribution network it had to improve on its brand image
Puma had collaboration with some of the famous designers from different cultural back ground for example puma's new projects were developed under the supervisions of trendsetters like Yashuiro Mihara and Jil sanders which are strongly influenced by kickboxing. This cooperation and collaboration opened a new wide market for puma for example where high fashion meets sportswear, for example this collaboration led puma to produced high quality brand that suppers starts like Madonna were happy to be spotted wear puma brand and this made many fashion and brand wearer buy more of puma products.
PUMA X YASHUIRO MIHARA Shoes
Puma launched new collections which blended with sports, lifestyle and fashion for example puma curato shoes, unala cropped woven women's ware which are very sport fashionable and trendy, such causal sportswear became like very day kind of wear for certain age group for example the young starts who identified themselves with puma logo and style, this made it easy for puma to target and reach the right market as at the right time as puma knew it's market and customers well
Innovations. puma carried innovations at each part of the process for example puma worked with engineering teams of Jordan grand prix Racing to learn about new materials like carbon fire which are then built into pumas shoes like shudou shoes, this innovation enabled Puma to produced high quality sportswear that were so desirable that puma gain a lot more customer that puma became looked upon as a trend starter in the footwear market for other companies like Nike and Adidas as follow. Puma has an advantage in footwear, apparel and accessories because it a lot easier for puma but fashion know who with the help of designers and the CEO of puma has the understanding of fashion “the new combination of elements of past” in which when puma spots a new trend instead of making a new brand, puma uses it old brand to design and this counted for 10% of footwear, apparel and accessories based on the old design and this also made puma a trend starter.
Puma outsourced all productions and raw material procurements in European were to expensive and raw martial were cheap in Asians countries , this allow puma to reduce it's working capital and allow puma to shorten the production and enable full quality control of input factors
Puma had knowledge and experience, this is one of pumas major strength because according to the case study Zeitz's understanding of fashion as “the new combinations of elements of the past it easy for puma to produce products without having to design for scratch rather than use its heritage, this made it easy for Puma to re-launched older products for example the retro look where some parts were taken from 1970/1980 collections were re-launched after adding modern elements such as fit or color way shoes
Puma has good planning and timing for example puma for example puma entered the sports market two years before its revival in order to maximize profits and this gave puma enough time to prepare for up coming demand, Puma had gain market experience and gave customers the impressions of always being in the sports market.
Puma participated in various marketing campaigns to arose customer brand awareness for example it sponsored big events, chose music television channel which was known for its young audience who tired to differentiate themselves and targeted them with puma adverts, for example Puma use the MTV and Music Mongol as Jazzy to promote footwear and other apparel this made lead to the popularity of puma brand and in the last five years saw increased sales as the brand was considered “rebellious and stylish “ as two most desirable attributes as compared to it's competitors.
Acquisitions of other company for example puma acquired Swedish company Tretorn, Europe's third largest manufacturer of tennis ball from Proventus for €23 million which the contributed to €45 million in sales and puma was able to allocate its over head cost of distribution functions
Puma had a shareholder New Regency which put puma in several successful Hollywood movies such as devil and high crime this benefited puma massively from generous product placement. This new regency made it easy for puma to reach it market audience through movies, adverts that portrays the image of puma as a company
Technologically puma created a web presence that fit its imaged for example its home page displayed different adverts from Jamaica line. Interactive stories transported readers into managers' thoughts during his 96 hour business tripe around the world wearing pumas casual and business attire. A project promoted on the internet was the “top winner thrift” A collection of 510 unique and individual shoes was created and sold at premium prices all over the world.
Puma is the first virtual sports company according to pumas mission statement and uses Virtual Warehouse Management System. According to Jochen Zeitz, CEO of puma “Virtual” actually may be the wrong word. One should probably say a “virtualized” company, where location doesn't really play a role anymore. It's totally independent from location and how you do business, and move things forward. Take product development, for example.
It's actually divided among all the three hubs, with certain development functions in Germany, certain in the U.S., and others in Hong Kong.
They each complement each other and work together. It's all integrated through proper IT, so no matter where you are, you can access the same kind of information and add to the entire development chain.
Broad consumer appeal. Puma offer a very diverse product line for everyone and this accounts for the broad customer appeal because there is product for everyone. In the spring collection of 2003 did carter for both male and female for example Nuala product line with cropped woven pants and Nuala Nylon coat for women as well as Kings ss soccer shirts that catered for both men and women.
Puma also ventured into Action sports line for emerging sports like BMX skateboarding and downhill mountain biking creating platinum series offering causal footwear and apparel and accessories for such events
Relational market asserts. Puma has got greater bond with its customers this has forged a working relationship work with customers to manufactures highly unique and customized brands for example in the case study puma promoted the “top winner thrift” a collection of 510 unique and individual shoes that were created out of recycle cloths from Jeans and ties, with the purchase of such items, customers allowed to enter puma's exclusive community on the web.
Supplies to meet the various demands of consumers. Puma's major supplier was Yue Yuen, the largest supplier of footwear, so when the demand for particular footwear goes up Puma is more readily meets the demand from constant supply of branded products from YueYuen.
Intellectual market asserts. Puma has great in depth knowledge regarding customers needs and preferences for example puma has gained knowledge and credibility in sportswear and equipment, this was a results of many years of trading on the same product line and which made it very easy to have competitive advantage over others fashion industry, this knowledge made it easy for puma to re-launch products that customers most prefer to have.
- Jochen Zeitz (1993-2011)
I use the internet to get some information about PUMA company like the history and background of PUMA company. I also get some information and fact from the internet like PUMA website and others website. I also download some picture from the internet to put in this assignment.
I use this method to get some information about PUMA like what are they want to do in 2018, new objective of the company. I also know from the newspaper that Usain Bolt is get sponsorship from PUMA. I get the information is from METRO,Sinar Harian and Foreign newspaper like USA Today.
To analyze this study, I used the SWOT Analysis method. SWOT analysis is a study of an organization on the internal strengths, weaknesses, external opportunities and threats of an organization. SWOT analysis also helps researchers to better understand the situation in an organization. Here I list SWOT analysis for PUMA
Strengths in the SWOT Analysis of Puma:
High Growth rate: Puma has been witnessing high growth rate. Puma achieved 12.8% increase in sales in the second quarter of 2016. Puma had witnessed a revenue of €3.39 billion in 2015 which increased from €2.97 billion in 2014. This shows a growth rate of 14.14%. This shows healthy growth rate and now they have been focussing on expanding aggressively which might result in higher growth in the coming year.
Marketing and Sponsorship: Puma spends heavily in promoting its brand throughout the world via sponsorship. Over the period of time, it has had the pleasure of many legends added to its list. These include the likes of Pelé, Eusébio, Johan Cruyff, Diego Maradona, Clyde Frazier, etc. The current list has international footballers Sergio Agüero, Antoine Griezmann, Marco Verratti, Yaya Touré, Olivier Giroud, Gianluigi Buffon and Marco Reus. It also sponsors the athletic track champion Usain Bolt. Puma was also one of the official sponsors of FIFA football World Cup of 2014.PUMA sponsors Arsenal FC and Borussia Dortmund, National football teams of Italy, Switzerland, Austria, Ivory Coast, Ghana and Uruguay and Olympic Handball Champion Denmark. In Track & Field, PUMA sponsors the Jamaican, Cuban, and Barbados Athletic Associations. In order to support its women's business, PUMA endorses fashion icons Rihanna and Kylie Jenner. This shows a few of its rich variety of clientele that it boasts off.
Research and Development: Puma brand is very innovative and has a very rich Research and Development team. We know that footballers mostly use screws in their boots for better friction while running. These screw boots were first launched by Puma and they received great acceptance in the football world.
Brand equity: PUMA distributes its products in more than 120 countries and employs around 11,000 people worldwide. Its mission is: “To be the Fastest Sports Brand in the world”. In 2015, Puma came out with a retail concept “PUMA Lab”, initially launched with Foot Locker in 2014, both in the U.S. and in the first location in Europe. During the year they began collaborating with other well-known retailers with the aim of improving the presence of the PUMA brand in their stores, better communicating their product promise on site, and thereby achieving a sustained sales increase.
They're currently focussing on the women's side as they believe that the female is the future. PUMA is a pioneer in this segment and they have set standards for years with the success of their models and collaborations with designers. And they are now strengthening their strategic focus on the female target group. A key element of this strategy is the partnership they have developed jointly with the international star Rihanna as a brand ambassador and creative director. They introduced the first shoe styles inspired by Rihanna. The Creeper is Rihanna's first sneaker under FENTY label. The shoe received a great deal of attention on social media and in the press and the first colour options were sold out within hours.
FENTY shoes by Rihanna
Weaknesses in the SWOT analysis of Puma :
Competition: This segment is very competitive and Puma is facing heavy competition from Adidas and Nike. With their high revenues and disposable incomes they have kind off created a tough entry barrier for Puma to become a big player.
The above graph clearly shows the massive difference in the revenues of Puma with its competitors.
Financial Strength: Puma had an annual revenue of €3.39 billion as of 2015. While its competitors have a much higher revenue giving them much more scope for innovation and research and development. Nike had approximately €27.3 billion revenue in 2015 and Adidas had €16.92 billion revenue in 2015. This leaves Puma with less financial aid to expand and sponsor teams and individuals compared to its direct competition. This also allows more financial stability to its competitors that can focus more on innovation and bring in new technology shifts in the sporting industry.
Market Share: Puma holds around 7% of the market share while its competitors like Nike has 31%, Adidas has 16% and Reebok has 6%. This also shows that Puma has a long way to go.
Wage Dispute: Puma has disputes regarding wages among its workers which sometimes lead to strikes and production suffers. This needs to be solved and addressed accordingly.
Opportunities in the SWOT analysis of Puma :
New target markets: Puma can focus more on new emerging markets in Asia and look for expanding its market share significantly. They can focus on the changing patterns in these industries and cater to the masses accordingly. According to CAGR in Apparel and footwear industry, the highest growth expected is in Vietnam, Saudi Arabia, India, Colombia and then Mexico. Puma should focus on increasing their sales in these territories.
New Product line: Puma can think of moving away from the sporting the only type of company can also focus to produce apparels in the lifestyle section and make new customer market. If possible can also venture into new businesses so as to develop new competition in the other markets.
More Sponsorships: Although Puma sponsors a lot of sporting events and backs many celebrities and sporting icons it is not enough when compared to its competitors. It needs to increase its presence, even more, to stay in the competition and gain more market share. This will come a long way in making its brand present and will result in an increase in sales and thereby increase profits.
More Disposable income: People's income have increased a lot compared to the last decade. They have also shown a considerable interest in trading up to buy premium goods across all the sectors. Puma can tap this opportunity and convert these potential customer base to get more sales.
Threats in the SWOT analysis of Puma :
Economic Condition: Changing economic conditions in the world is very nasty. The people have ended up caught up in changing times. This might hamper the Puma's decision to open new stores across the globe and might become a big hurdle in their way of expansion.
Fraud Products: There are a lot of people that create fraud products and copy famous brand and sale at a lower price. This hampers the original brand and results in decline in their sales. There's not much one can do to stop them from copying.
Newspaper Harian Metro, 18th January 2018.
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