Vans is a footwear manufacturer who specializes in designing and creating skateboard shoes and related apparel such as clothing. It is a well renowned company based in Santa Ana, California and is owned by the VF Corporation. The company was founded on March 16th, 1966, under the name “The Van Doren Rubber Company” by brothers Paul and James Van Doren, as well as Gordon C. Lee. Initially, the company sold only three types of shoes, which, back in those days, was only priced between US$2.49 and US$4.99 which is very different to the prices in the present day.
After 22 years of business, Paul Van Doren and Gordon C. Lee sold the company to the banking firm McCown De Leeuw & Co. for a fee around US$74.4 million and in 2004, Vans announced it would merge into the VF Corporation.
Vans has two markets in which they aim to sell to. The first of these markets is the skating industry and the second is the fashionable youth.
In terms of the skating industry, it is one of the world’s best in terms of quality and efficiency. The shoes’ strong grip, deep sole and irrepressible stitching means that it is any skateboarders dream. According to the ranker.com, it is ranked number one in “The Best Skate Shoe Brand”, followed behind by the footwear powerhouse, Nike, and Etnies.
In terms of the second market in which they target, the fashionable youth, Vans isn’t as illustrious as in the previous market mentioned. One of the few reasons for this is that the market is much more saturated and so it is much harder to become a market leader when there are so many options for the consumers to choose from as well as the trends changing constantly. Another reason is that the Vans shoes as well as the clothes are moderately priced, meaning that they aren’t overpriced neither are they cheap. This negatively affects Vans as in the present day, the fashion has drifted towards the more expensive brands of shoes and clothing like Gucci and Balenciaga. This hasn’t always been the situation as a few years ago, when Vans released their checkerboard design shoe, it was a huge hit within the fashionable youth which resulted in a huge increase in sales. Even in recent times, the creation of the new “Old Skool” shoe has resulted in a similar reaction to that of the checkerboard shoe as it was an absolute necessity to have amongst the youth. However, as stated before, the fashion trend nowadays is to have the most expensive shoes and clothing which has caused Vans to slightly drop off the radar.
1.3 Market Offering And Value Proposition
Vans’ market offering is absolutely anything the company provides in order to meet the needs or wants of their consumers. A few of the market offering ranges from their store locations, their online store, their signature brand name and logo, professional sponsored athletes and their high quality shoe.
As mentioned before, Vans’ two main target segments are skaters and the fashionable youth. The value proposition of Vans is designing and manufacturing a shoe which is of high quality in order to meet the needs and wants of consumers who are skaters as well as manufacturing shoes and clothing which are able to penetrate the fashion industry.
Finally, the want which is being satisfied is producing a shoe which is comfortable and reliable and allows for an efficient skating experience. Vans also satisfies skateboarders needs by designing a safe yet stylish shoe which gives the skater additional grip which will reduce the risk of injury. In terms of the fashionable youth, their want is to also have a comfortable shoe as well as comfortable clothing, but both of these products must be attractive in the sense that it can be worn on occasions other than skateboarding.
2. Internal Analysis
An internal analysis is an evaluation of the strengths and weaknesses of an organization that are based on the factors within its domain. This section of the report will be based on the internal analysis of Vans and will look into their current marketing strategy, their marketing mix and their strengths and weaknesses.
2.1 Position in market
Vans was acquired by the VF Corporation in June 2004 for “$396 million”. In the last quarter of 2017, Vans shoes and apparel sales have risen by “35%”. This aided the company to increase its forecast of 2018 sales growth by “15%”. Also, it experienced a “19%” global revenue growth in 2017, in comparison to its competitor Nike, which had a revenue growth of “6%”. The revenue growth enabled it to grow the business by “30%”. All these figures translate into strengths and depicts that Vans holds a strong position in the sneakers market.
2.2 Current marketing strategy:
Marketing strategy is the rational decision that helps the company to create customer value and attain profitable customer relationships. The marketing strategy of Vans is to select the customers it wants to serve, therefore market segmenting. In market segmentation the consumer markets can be divided into divisions based on four variables, namely, geographic, demographic, psychographic, and behavioral. Geographic segmenting is a division of the market based on geographic units such as nations, regions, etc. Demographic segmenting relates to a division through variables like age, income, religion, etc. Psychographic segmenting is based on lifestyle and personality, and Behavioral segmenting concerns divisions through occasions, loyalty status, etc.
As mentioned before, Vans specializes in producing outdoor, extreme sports such as skateboarding, surfing and snowboarding shoes and apparel. These products are mainly used by athletic people who play extreme sports like these and hence, Vans targets a younger, sporty male demographic. Vans has also developed into manufacturing other product lines for women and children. Apart from the extreme sports apparel, the “Old Skool” line has also been very popular, due to its affordability and its fresh style, and has started a new trend in 10-24 year old target consumers, making Vans an essential street fashion brand. This can be assimilated into demographic and psychographic segmenting. Demographic segmenting as Vans produces products that are designed to meet the tastes and sensibilities of teens and young adults. Furthermore, because the shoes are premium quality, to maintain this, the costs rise thereby increasing the price of the products and hence Vans mainly attracts upper class and upper-middle class people. For example, the prices of different Vans shoes ranges from around €60 to about €420. It can also be said that Vans uses psychographic segmenting because the use of accessories for extreme sports depends on the lifestyle of the people. Extreme sports like surfing and snowboarding are not performed by everybody and consequently buying apparel and shoes for these sports depends on one’s lifestyle and hobbies.
The associations are positive and are considered strengths because Vans manages to produce the products suited for a specific targeted customer group and manages to attract these customer bases. As it is using market segmenting, it has a clear target segment and hence can help Vans to understand their customers’ needs and wants and make further updates to the shoes and apparel according to the latest trends.
2.3 Marketing mix:
Marketing mix is the set of tactical marketing tools- product, price, place, and promotion— that the firm blends to produce the response it wants in the target market.
Refers to the goods-and-services combination the company offers to the target market (page 77). Vans’ predominant products are footwear and sports apparel. Apparel includes different types of clothing like shorts, shirts, jackets etc., for both men and women. They also sell accessories like belts, key-chains, socks, backpacks etc. Lastly, they also have some product lines of shoes for men and women such as “the Slip-on”, “the Authentic”, “the Old Skool”, “the SK8- HI”, and “the Era”. However, they do not sell a variety of shoe product lines compared to its competitors, Nike, which sells around 27 different lines. Nevertheless, even though there are limited product lines, Vans excels in the quality department. Vans Old Skool was also the first sneaker to add leather panels, which improved the durability and the quality of the shoe hence growing customer trust in the company and therefore increasing customer loyalty towards the brand.
The amount of money customers must pay to obtain the product (page 78). Vans aims to target the upper class, upper-middle class people and fashionable youth. Vans has positioned itself as a known, reliable and high quality brand, which strengthens the customers trust and encourages them to pay more. As mentioned before, the price of Vans shoes ranges from €60 to €420. In order to maintain its position and reputation, Vans constantly updates its products and innovates its designs to live up to the trends. One of the strategies that Vans implements is the ‘limited edition’ strategy. Since purchasing the products from this scheme is associated with being stylish, it attracts the fashionable youth and therefore Vans prices the products involved in this limited edition scheme extensively. These products sell quickly and in return generate higher revenues for Vans. For example, the Vans x NASA limited edition sold the shoes for approximately €130 per shoe and was sold out immediately after release.
Includes company activities that make the product available to target consumers (page 78). The headquarters of Vans is situated in Costa Mesa, California, United States. It commenced with one Vans store, which produced shoes and sold them directly to the public. As of 2015, it had 310 stores around the world and about 410 stores in USA. It sells shoes worldwide through its stores, retailers and online platforms.
Refers to activities that communicate the merits of the product and persuade, target customers to buy it (page 78). As Vans has a recognized name in the international market, the company participates in numerous sponsorship events in order to retain this brand name. Also, in order to appeal to the youth, Vans promotes products through social media. This platform is mainly used by youth and thus advertising through social media – such as Instagram, Facebook and Twitter helps Vans grab the attention of the youth. Currently, Vans has about 14.8M followers on Instagram and 18M on Facebook. Social media helps Vans not only to promote their products, but also promote their events and share photos and videos about the content of cultural sports. This technique has indeed been successful as according to Business Insider, Vans Old Skool was the third most popular sneaker on Instagram in 2018.
2.4 Strengths and weaknesses
Strengths relate to the internal abilities that may aid a company to accomplish its objectives. Primarily, Vans focuses on segmenting the market and hence they can obtain a better overview of their customer-base, focus on their needs and wants and can adapt to the changes quickly and when required. Secondly, Vans produces high quality products. Producing high quality products increases the longevity of the product, satisfies the needs thereby increasing the efficiency and helping Vans achieve their brand recognition and help build brand loyalty. Brand recognition helps Vans to stand out as the customers can distinguish and identify the features and attributes of Vans. Brand loyalty helps customers become committed to Vans and causes repetition of customers, which leads to higher profits. Lastly, the creation of innovative designs. Creation of innovative designs is a differentiator and helps grab the customers attention as the designs are unique and original and hence making the products desirable.
Despite having several strengths, Vans has some weaknesses. Weaknesses are the internal restraints that limit a company’s capability to achieve the objectives. One of Vans’ biggest weaknesses is unsuccessful repositioning. After establishing a solid position in the skating industry, Vans wanted to target the market of the fashionable youth. However, there are many companies in that market and hence it gives the customers plenitude of substitutes to choose from and since Vans does not specialize in fast fashion, it is difficult to adapt to the changing trends compared to the other companies. Secondly, Vans also offers a limited variety of product lines of shoes compared to its competitors. This is a disadvantage as customers can choose from a variety of products in other companies whereas in Vans they are restricted to the few limited options that are offered.
3. External analysis
External environment is basically all the external factors outside of the firm that might affect the marketing of the business. The external environment will be analyzed in macro and micro environment level.
As already mentioned before, Vans is a sports brand well-known for skateboarding related shoes and apparel. The major competitors in the sports goods market are for example, Nike, Adidas, Converse and Puma. Among these, the biggest competitor of Vans is Nike, which is one of the most widely spread sports brand over the world. Recently, Nike has launched a skateboarding line called “NIKE SB” which is specialized in skateboarding shoes and clothing.
The most important difference between those companies and Vans is that they are only professionally specialized in skateboarding gears, while others produce shoes and apparel for different sports in general. Vans’ technology in producing skateboarding shoes has developed throughout the years which made more durable shoes suitable for such dynamic activity. As Vans’ primarily targeted customers are skateboarders, their footwear is ideal in a functional aspect. Another aspect to take into account is the design of the shoes. Vans unique shoe design is one of the points that the brand takes pride in. Especially Vans’ iconic model, “old skool”, is their most sold shoe model that strongly represents their brand identity. While other companies, have a wider range of designs and different types of shoes compared to vans that pursues supporting few of their main models. In this sense, other brands can target a wider scale of customers by providing them with choice alternatives.
The macro-environment consists of six different societal forces which affect the company. These are: demographic, economic, natural, technological, political and cultural forces.
The first force is demographic force. recently, there has been an increase in the number of female skateboarders compared to the past, when skateboarding was mostly a male sport as it is a wild and dynamic sport, Vans has acquired a generality from any gender of people as a casual footwear.
Secondly, for the economic environment, as mentioned before, vans’ main targeted customers are middle to upper class people who have strong purchasing power. Also as the GDP of major marketplaces of vans is in increasing tendency it is supposed that there will be greater number of consumers willing to pay for high quality brand footwear.
The third force is about ecological or natural environment. Vans has admitted that their operations have certain impact on the environment as they produce waste, use water and energy from fossil fuels which inevitably contribute to climate change. Therefore they are now promoting a project called “Green Sole Operations”, which attempts to gradually change the way they create products by for example changing the packaging materials or using leather certified by LWG.
The fourth force is the technological force. However, after analyzing the Vans brand, we do not think Vans will have a great impact on their opportunities and threats from technological environment.
Political forces are the fifth point to be analyzed. As Vans entered the Asian market, the issue of counterfeit goods has always been crucial to the brand. In many Asian countries where vans expanded, a clear government act to restrain the fake goods market is not present and this became an unexpected competitor since the fake products are much cheaper than the real ones.
Lastly, the cultural forces will be studied. In the recent years, the fashion trend of the young generation has changed toward a casual and sporty style which also known as “Street wear”. The “street wear” or “street style” culture originated from the Californian skate and surf culture which Vans specifically represents in their brand identity. For this reason, Vans can be seen as one of the forerunner brands of the recent fashion trend.
Opportunities refer to those qualities in both macro and micro environment which contribute to the improvement of a brand’s market value and shares. In this part of the report, we will identify the main opportunities of Vans.
Expand in the Asian market
In recent years, extreme sports as skateboarding or surfing has been gaining more and more awareness from young people throughout the world. Even though primarily these sports were mainly diffused in western regions like Europe and the US, skateboarding culture has now entered the Asian countries. This new tendency of interest in active sports influenced the fashion market in Asia. Nowadays, people consume skateboarding sneakers not only for sports but also as fashion item regardless of their gender or age. For this reason, penetration of Vans in the Asian market should be seen as a successful opportunity to expand their business since the brand has been already recognized in the western market.
Variety in design and sport
As mentioned earlier, Vans is a brand with a long history in manufacturing skateboarding footwear and apparel, and has been consistently attracting consumer attention for a long-lasting design of their iconic model, “old skool”. However, if Vans will try to focus on some sports which are popular recently in order to follow the rapidly changing market taste and produce the shoes or clothes that fit the new sports, it will be a great contribution to enhance the brand value. Also, Vans having a limited choice of design in some ways can be considered as an advantage since it can represent company’s firm faith in their unique design. However, as the fashion trend is changing rapidly, introducing various innovative models would be a refreshing approach to attract attention of young people.
There are also few factors that could have an impact on Vans by threatening its marketing strategy.
As stated previously, Vans has a number of competitors in the same segment as Nike or Adidas which could intimidate Vans’ business in certain markets. Since other rival brands are focusing more on releasing new models every season, the attention of consumers is easily captured. However, it might be harder for Vans to collect new customers as they are only focusing on upgrading the quality of the existing models without reacting to the trend.
Also, like most of the international brands, fake products are threatening the market share of the company. These fake goods are not only alike the original product but they are also sold at much cheaper price. Nevertheless, the fake products are now spread over the markets that are almost impossible for the company to control which is why this can be considered as a huge threat for Vans.
4.1 Strategic Issue for Vans
After observing Vans’ main strengths, weaknesses, opportunities and threats, it has become clear that Vans’ most preoccupying strategic issue is to remain a strong competitor in the ever-changing fashion industry, and to not lose its FSA of brand recognition in the skating and extreme sports segments. Vans is no longer the brand that it used to be. Some people in England on the website The Tab have claimed that “Not only have Vans been officially declared dead, but skaters are actually calling people out for culturally appropriating them.” This shows that Vans is in a turbulent episode trying to appeal to both the fashionable youth while also appealing to the skaters, a previously nonexistent problem.
As mentioned previously, Vans’ Iconic strength lies in their solid reputation for producing long lasting, comfortable and trendy shoes for skaters and the fashionable youth, something they have found increasingly difficult in the last couple of years with the surge of new brands moving into both previously mentioned markets. Example of such brands are Converse & Billabong. To fight this, Vans has brought in many collaborations with other iconic brands in the youth fashion segment such as “Vans X Thrasher” & the previously mentioned “Vans X NASA”. These have reinforced Vans’ positioning in the current Skateboarding and fashion markets.
These collaborations have also helped reduce the company’s weaknesses, which lie mainly in its difficulty to respond quickly and swiftly to the ever changing trends in the segment. These also enable Vans to keep their variety of products at a smaller amount than other firms such as Nike and Adidas by giving a sense of reasoning behind the small number of shoes on sale, emphasizing on the uniqueness and the peculiarity of their apparel.
4.2 Growth Development Strategy
Following the Ansoff Model, Vans would be likely to pursue a market penetration strategy in order to acquire a larger market share in its already existing markets; the fashionable youth & skateboarders. Vans has already shown initiative in this strategy by placing itself as a valuable sponsor at many urban sport events as well as many extreme sports events such as the “Vans Triple Crown of Surfing”, the skateboarding “Vans Park Series 2019 Pro Tour Season “or the “Vans BMX Pro cup Series”. Furthermore, Vans has increasingly oriented itself towards the non-sporty fashionable youth with events such as “Classic and City” events, promoting local artists and designers as well as “critically acclaimed musical” performances. Vans also orientates itself towards this segment with collaborations such as “Vans X Led Zeppelin”
Vans continues to pursue a market penetration strategy in terms of its product offerings. Vans’ new collections still remain under the same type of apparel and therefore illustrates Vans’ will to increase its market share by offering similar products to its existing markets.
Vans has also reinforced its orientation towards the skaters as seen in their latest TV advertisements and with the Vans “QZP DX Silhouette”.
4.3 Choice of potential countries for Market Development Strategy
In the case of a market development strategy, Vans would decide to move into countries where the youth indulge in fashion and where skating is a prevailing way of life. From this main idea, we came up with a shortlist of 4 countries which Vans could choose to enter next. These countries are Nigeria, New Zealand, Argentina, and Morocco
The criteria Vans would use to establish a shortlist of countries is the following. Firstly, the country must have a large youth demographic as that is Vans’ main customer segment. Secondly, the country must have a reasonably open way of life, where the youth and skaters can express themselves freely with their apparel, and be able to practice their activities, skateboarding, modern art, drawing, music etc. with no repercussions. Thirdly, the presence of many skateparks, ocean coasts or mountains would be optimal as Vans would be able to offer all its products in the same country. On top of that, if there was an opportunity for Vans to create or to sponsor an event promoting their goods and the practices that come with it, that would be extremely beneficial to the them. Furthermore, the presence of so called “influencers” or already prevailing artists and skaters that could become brand ambassadors will enhance Vans’ reputation and performance in this country.
- From this criterion, we first look at the country of Nigeria. Nigeria has the strongest GDP of the African continent. To complement that, Nigeria has a population median age of 17.9 years and 19.61% of its population in the 15-24 Y/O bracket. This means that Nigeria’s demographics are very attractive for Vans as the bracket from 15-29 years old is Vans’ target market.
- The advantages with New Zealand are that the country possesses a wealthy population, an open environment and more importantly, it possesses a Skiable mountain range seen with Mount Whakapapa, an abundance of skate parks and loads of ocean water all around it. This means that Vans can offer all its skiing, surfing, skateboarding and BMX goods all in the same country. This translates into an important business opportunity.
- Looking closer into Argentina, we have acknowledged that skateboarding is a major way of life in the bursting city of Buenos Aires, making Vans a potential hotspot for the skateboarding community. Furthermore, the presence of a large amount of street art shows that Argentina and its capital Buenos Aires have a significant rebellious youth which may be strongly attracted by Vans apparel.
- Finally, our last country is Morocco. The reasoning behind this lies in the huge increase in skateboarders the country has seen in the last 5 years. This huge increase highlights potential in the country. The fact that Morocco has the 6th highest GDP in the African continent also emphasizes potential.
Hence, we shall now proceed to a process of elimination to find the one best country.
- Despite Nigeria’s promising demographics, the country’s corruption, poverty and crime mean that the consumers’ tendency to buy expensive Vans footwear and apparel is minimal. Furthermore, skateboarding and surfing, even though they are growing, are to no extent major ways of life in Nigeria, further hindering Vans’ business opportunities in Nigeria.
- Vans’ main risk in Morocco is having a product offering where the price of goods exceeds the reservation price of Moroccan consumers. Therefore, even if skateboarding and surfing are increasing in this country, the first factor outweighs the latter.
- Moving on to Argentina, skateboarding is only a prevailing way of life in Buenos Aires, therefore meaning that the rest of the country presents no real business opportunity for Vans. Furthermore, Red Bull© is a prevailing force in Buenos Aires and may indirectly threaten Vans’ opportunity in the capital.
- On the other hand, New Zealand seems like the perfect place for Vans to set up shop. It has all 3 climates in which Vans operates in, a large and free social networking system and way of life, and a large youth population of 627,400 which is around 7%. New Zealand is a wealthy country and customers would be willing to invest in Vans’ apparel.
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