The Brand Management Efforts of a Niche Specialist: New Balance in the Athletic Footwear Industry

Abstract

Introduction One per cent per year--the overall US market share growth goal recently stated by New Balance CEO Jim Davis (Steven David, Product Marketing Manager, New Balance, personal interview, August 18, 1998). Such a goal would be quite modest for one of its larger publicly owned competitors. But for New Balance Athletic Shoe, Inc, a privately-owned manufacturer in the highly-competitive athletic footwear industry, this represents a significant management challenge. No longer can the company be content to serve its loyal base of baby boomers (40- to 55-year-olds), it now must court Generation X (25- to 35-year-olds). This study illustrates the management efforts of a niche specialist, New Balance Athletic Shoe, Inc. Based in Boston, Massachusetts, USA, New Balance is a privately-held corporation whose 1998 estimated revenues of $550 million amounted to less than industry leader Nike spent on advertising in that year. While particular interest is paid to the branding efforts of New Balance, its efforts are analyzed in comparison to those of the three market leaders, publicly-owned corporations Nike, Reebok, and Adidas. This case study is comprised of five sections. The first section provides a brief overview of theory. The second section highlights the current status and trends of the athletic footwear industry in the United States. Using theory, the third section presents a summary of the management practices of Nike, Reebok, and Adidas. Based on this analysis, the fourth section provides a detailed account of how New Balance manages its to differentiate itself from its competitors. The case study concludes by offering conclusions about the management efforts of a niche specialist in a fiercely competitive industry. While derived from the athletic footwear industry, these conclusions are also salient for the broader sporting goods industry. An Overview of Brand Management The effort to create and manage brands is a practice widely studied by marketers throughout the world. Keller (1998) defines a as a name or symbol attached to a product that allows for differentiation from similar product offerings. For example, both the Nike name and the ubiquitous swoosh logo are components of the overall Nike brand. The goal of management is to continually build on the strength associated with a brand, thus developing strength, or equity. The set of assets (both positive and negative) that consumers attach to a particular constitute brand (Aaker, 1991). Many researchers have undertaken efforts to dissect equity into different components and dimensions. Perhaps the most widely-accepted model for understanding equity was presented by Aaker (1991), who suggested equity is comprised of five components: 1) Brand awareness 2) Perceived quality 3) Brand loyalty 4) Brand associations 5) Other proprietary assets The remainder of this section will focus on describing these five components as a basis for analysis of management practices in the athletic footwear industry. Brand Awareness Brand awareness is the starting point in the development of equity. It represents the consumer's ability to recall a name when given a product category (Aaker, 1991). For example, when a person is asked to name a of basketball shoes, they are more likely to mention Nike, Reebok, Converse or Adidas than they are to name LA Gear or Spalding. According to Keller (1998), awareness is important to strategy for three reasons. First, awareness of the ensures the enters the consumer's consideration set when looking to make a purchase. Second, awareness can affect choices within the consideration set. If one has a larger presence through advertising, it may be considered more favorably. …