欢迎来到留学生英语论文网

当前位置:首页 > 论文范文 > Marketing

The History Of Manufacturing And Sourcing Marketing Essay

发布时间:2018-02-23
该论文是我们的学员投稿,并非我们专家级的写作水平!如果你有论文作业写作指导需求请联系我们的客服人员

Crocs is a designer, manufacturer, distributor, worldwide marketer and brand manager of footwear for men, women, and children. Crocs goal is to become the global leader in molded footwear design and development. Crocs specializes in designing and selling design and sells a broad offering of footwear, apparel, gear and accessories that utilize its proprietary closed cell-resin, called Croslite.

History

Crocs was organized as a limited liability company in 1999 and began marketing and distributing footwear products in the U.S. under the Crocs brand in 2002. At the beginning, Crocs was willing to target only water sports enthusiasts, but the comfort and functionality of the products appealed to a more various group of consumers. It enabled to promote the footwear for a wide range of activities and to reach a wider range of consumers.

Crocs developed sales infrastructure, strengthened senior management team, and worked out relationships with a range of retailers in the U.S.

At the beginning of June 2004, Crocs considerably developed all aspects of operations in order to take advantage of an attractive market opportunity.

From 2002 until 2007, business grew hugely through acquisitions. In 2006, Crocs associated with Jibbitz, which produces unique charms specifically suited to fit into Crocs shoes.

In 2007, Crocs associated with:

-        Ocean Minded, which produces sandals especially for the beach, action and adventure market;

-        Bite, LLC ("Bite"), a manufacturer of performance shoes and sports sandals sold worldwide in five categories, including, golf, adventure, healthy lifestyle, travel and water sports;

-        and YOU by Crocs™, a women's fashion line that combines the comfort of Croslite with  fashionable styles - 24 designs including various boots, slides, and high heels.

During 2002-2008 Crocs considerably increased production capacity, warehouse space and inventory in an effort to satisfy demand.

From 2008 Crocs is observing low growth and the popularity of Crocs footwear is not growing since then as rapidly as it has in the past. This situation is mostly due to the current economic crisis, which forces Crocs to reduce operating costs.

Product

Crocs shoes combine fun colors and innovative design. The company manufactures new and exciting molded footwear products that feature fun, comfort and functionality. It creates innovative, soft, lightweight, non-marking, slip and odor-resistant shoes. Crocs shoes reduce peak pressure on the foot, muscular fatigue while standing and walking and relieve the musculoskeletal system.

The strong point of Crocs is to offer an innovative shoe unlike any other footwear already available on the market.

Crocs believes that the trademarks, patents, and other intellectual property rights are important to the brand, the success and the competitive position. For Crocs having distinctive marks that are readily identifiable is an important factor in creating a market for the goods, in identifying Crocs, and in distinguishing the Crocs' goods from the goods of the competitors.

Beginnings

At the very beginning of Crocs' activity, in 2002, the company was offering one single model of shoes available in six colors.

However, it has quickly developed its range of products and if in 2006 it was still offering a limited number of 25 models, in 2007 it was yet over 250 models and over 270 models in 2008 (including Ocean Minded, YOU by Crocsâ„¢ and Bite footwear models).

Now

Due to the increasing number of Crocs' products the company divided them into three categories:

Everyday product range - composed of fully molded products, which are closest to the core products and targeted widely to several distribution channels.

The style product range - more fashionable shapes targeted towards higher-end department stores.

The sport product range - sport inspired products intended for active end uses like boating, walking, and hiking)

Development strategy

The company has developed its Croslite products and has created a variety of new styles and products to reach more clients' expectations. It made that through the acquisitions of new brand platforms such as Jibbitz, LLC ("Jibbitz") and Ocean Minded, LLC ("Ocean Minded"). The company intended to continue branching out into other types of footwear, bringing a unique and original perspective to the consumer in styles that may be unexpected from Crocs.

Crocs decided also to build a stable year-round business and to offer more winter-oriented styles' shoes which allowed them to increase the sales and to win the loyalty of its customers.

To make its products more popular Crocs decided to incorporate traditional materials such as textile fabric and leather into production of the shoes, continuing at the same time to utilize Croslite for the foot bed, sole and other key structural components.

Another step to make its products more popular (especially among the youngest clients) was to establish licensing agreements with Disney, Nickelodeon, Marvel, DC Comics and Warner Bros., and introduce a limited edition line of footwear and Jibbitz charms featuring such popular characters as Cinderella, Ariel, Mickey Mouse, Sponge Bob Square Pants, Dora the Explorer, Spiderman and Batman.

The company introduced as well Crocs at Work line that offers Crocs shoes targeted towards healthcare and food industry professionals and developed Crocs Rx line, which offers five models, the Relief, the Silver Relief, the Cloud, the Silver Cloud and the Silver Fox, targeted towards consumers who require specialized footwear that provides relief from certain medical conditions, such as diabetes, plantar pain, heel pain, metatarsalgia, achy feet and post-op conditions.

To design its new footwear Crocs is using its in-house design team as well as recognized footwear design experts.

As part of the strategy, Crocs is streamlining the supply chain network and expands the sales of the products into new locations in the international scale.

Crocs considers other opportunities to acquire or make investments in other businesses and products that could enhance the manufacturing capabilities, complement the current products or widen the markets or customer base. The pursuit of acquisitions may divert the attention of management and cause Crocs to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.

Actions

Crocs is a company that is especially sensible to the environment and cares about the sustainability of its activity.

It organized the first-of-its-kind recycled footwear donation program which consists on giving back by the customers their worn-out Crocs shoes in order to be recycled into new shoes and then to give them to people in need.

Another of its brands "Ocean Minded" takes an active role in protecting the oceans and beaches by cleaning them up, supporting the Surfrider Foundation and making many others environmental efforts. What is more, Ocean Minded utilizes recycled and recyclable materials whenever it is possible and is encouraging environmental awareness and responsibility the action sports industry.

Sale's points

Crocs owns sale's points throughout the U.S. and in 128 countries. Crocs sales its products through domestic and international retailers and distributors and directly to end-user consumers through webstores, company-operated retail stores, outlets and kiosks.

Crocs enjoys a wide range of distribution channels, including department stores and traditional footwear retailers as well as a variety of specialty channels. There are also small branch sales offices in Hong Kong, Taiwan, Korea, Australia, Puerto Rico, Hawaii, California and India. Crocs leases kiosks domestically and internationally with fixed monthly rents subject to certain covenants with contingent rents based on percentage of revenues. Crocs also rents out retail space at 8 domestic and 62 international retail stores and 30 domestic and 2 international outlet stores. The short term and long term leases expire at various dates throughout the year 2026. The company also still hold a lease on facilities in Quebec City, however, as a result of the restructuring efforts during 2008, have shut down these facilities and taken the appropriate lease termination charges.

Domestic Sales

In 2008, sales in the U.S. accounted for approximately 44% of total revenues, compared to 52% in 2007 and 68% in 2006.

In the U.S., there are 148 Crocs branded retail store locations, including Company-operated kiosks and retail stores located among others in New York, Boston, Chicago, or Maui. Lot of products are sold through webstores as well through a broad range of sporting goods and department stores and the specialty retailers.

Crocs does not sign any long term contracts with any of the retail customers, and sales to the retail customers are generally on an order-by-order basis and are subject to rights of cancellation and rescheduling by the customer.

International Sales  

In 2008, international sales constituted approximately 56% of total revenues, in comparison to 48% in 2007 and 32% in 2006.

Outside of the U.S. there are over 314 Crocs branded retail store locations, including 131 Company-operated retail stores in many locations as Canada, Finland, United Kingdom, Singapore, Hong Kong, Japan, China and the Netherlands. Also kiosks and webstores abroad are doing well in sales.

Generally, Crocs is utilizing similar retail sales channels to those in the U.S.

In international locations, Crocs utilizes sometimes sales agents and buying groups to service the retail customers.

In Crocs' belief a direct sales presence in major international markets and being not dependent on the distributors is preferable to get better margins and to have more control on the marketing and distribution of its products. Since the 31st December, 2008, direct sales concern 31 countries.

However, Crocs utilizes also third-party distributors as well.

Wholesale and Distributor Sales

Approximately 76.5% of the net revenues in 2008 were obtained from sales to the wholesale customers and distributors in comparison to 91% in 2007 and 89.8% in 2006. Among the Crocs' principal wholesale customers there are national and regional retail chains, department stores, sporting goods stores and specialty retailers, such as Nordstrom, Finish Line, Dicks Sporting Goods, The Sports Authority, Dillard's, The Forzani Group and Journeys.

It is important to notice that no single customer overrun more than 10% of the revenues.

The company possesses well developed domestic and international wholesale customer channels.

Distributors are used only in select markets where Crocs considers them as more preferable to the direct sales. In markets where the third-party distributors are used, these distributors buy products following to a price list and are granted the right to resell the products in a defined territory, usually a country or group of countries. The typical distribution agreements have terms between one and four years, are terminable on 60 days' notice prior to the end of the term or on six months' prior notice at any time, and require the distributors to meet a minimum sales number. The agreements with distributors do not contain contractual rights of returns or price protection features. For defective products, quality issues, and shipment errors on an exception basis at the sole discretion of the management, Crocs will accept returns from wholesale and distributor customers. It may accept as well returns from the wholesale and distributor customers, on an exception basis at the sole discretion of management, for the purpose of stock re-balancing to ensure that the products are merchandised in the proper assortments. What is more, at the sole discretion of management, Crocs may provide markdown allowances to key wholesale and distributor customers to facilitate the "in-channel" markdown of products where it has experienced less than anticipated sell-through.

The domestic accounts are primarily serviced through the internal sales force, which focuses on selling the appropriate mix and quantity of the products to the retail accounts. They ensure the products are displayed effectively at retail locations and educate the retailers about the Crocs brand and the quality of the products.

There are any long term contracts with the retail customers, and sales to the retail customers are generally on an order-by-order basis and are subject to rights of cancellation and rescheduling by the customer.

If the company is not able to fill the customers' orders in a timely manner, the sales of the products and the relationships with those customers may suffer, and this could have a material adverse effect on the product sales and ability to grow the product line.

Kiosks  

Crocs' kiosks are decorated bright colors, these dispose of an efficiently used retail space, and an limited initial capital investment. Crocs believes kiosks provide an effective marketing for its products.

In the kiosks customers can choose through a wide range of the products; in that way vendors can more effectively interact with potential consumers, inform and advise them. Crocs hopes, that kiosks improve the brand awareness among consumers and local retailers.

    Crocs is willing to keep opening and operating additional kiosk sites in select and frequented locations. The kiosk opening is depending on the economic situation and the demand for the products.

Retail stores

Company-operated retail stores are designed with colorful displays and are meant to effectively promote and sell the new and existing products. In those retail stores the vendors can inform and advise customers in order to develop the brand awareness.

Crocs  is willing to continue to open additional Company-operated retail stores in the future.

The retail store opening is depending on the economic situation and the demand for the products.

Outlet stores

The outlet stores are moving profitably older products in an orderly fashion.

Crocs is willing to open more Company operated outlet stores in early 2009.

The outlet store opening is depending on the economic situation and the demand for the products.

Internet  

Crocs currently offers its products in domestic and international markets through webstores.

The internet presence helps to inform and make aware consumers about the products and brand.

Crocs keeps developing the web-based international marketing to continue to make the consumers aware of the possibility to get the full product range on the market-specific websites.

Manufacturing and Sourcing

Crocs' strategy is to maintain a flexible, globally diversified, low-cost manufacturing base. Crocs' products are manufactured in the facilities in Mexico and Italy. The company is cooperating with third-party manufacturers situated around the world.

Due to Crocs' own manufacturing capabilities, the company has changed rapidly the production along with the flexibility. These changes allow to quickly respond to orders for high-demand models and colors throughout the year, while outsourcing enable to capitalize on the efficiencies and cost benefits of using contract manufacturing.

  Thanks to this production strategy Crocs will continue to reduce the production costs, increase overall operating efficiencies and cut production and development times in order to better serve the retail customers

   In 2008 approximately 17% of the footwear products were manufactured at Crocs' operated manufacturing facilities in Mexico and Italy and from the facilities in Brazil and Canada. The remaining 83% of the footwear products came from Chinese and Bosnian third-party manufacturers. In 2008, the Chinese largest third-party supplier produced approximately 49% of the footwear unit volume.

Crocs has no written supply agreements with the primary third-party manufacturers in China.

During 2008, Crocs strengthened its manufacturing capacities at the Mexican operated facilities and with the third-party manufacturers and cut the Canadian and Brazilian manufacturing facilities in order to adjust the production capacities and cost structure to decreased demand and declining revenues.

Distribution and Logistics

Crocs continues to improve the distribution and logistics network that will streamline the supply chain increasing the speed to market.

Crocs keeps strengthening the global distribution centers and warehousing, allowing to reduce fixed costs.

In 2008, approximately 24% of the products were shipped from the internal and third-party manufacturers directly to the customer.

The other 76% of the products were fulfilled from the 21 distribution locations strategically located throughout the world. Distribution centers operated in Australia, Colorado, Finland, the Netherlands, India, Japan, Mexico, Shanghai and Singapore as of December 31, 2008.

Company-operated distribution centers had approximately 1,368,000 square feet of space.

Crocs also cooperated with third-party operated distribution centers.

The third-party centers were located in Brazil, Colorado, Dubai, Hong Kong, Korea, and Taiwan. These distribution centers gave approximately 744,000 additional square feet of space.

Crocs is able to satisfy the rapidly changing business requirements thanks to the flexibility of the combined total of 34 distribution locations and 2.1 million square feet of space. It allows Crocs to support the current level of revenue and any growth of the brands.

Competition

The global casual footwear and apparel industry is highly competitive.

Crocs does not compete directly with any single company concerning its entire range of products, parts of its business compete with companies such as, but not limited to, Nike Inc., Heelys Inc., Deckers Outdoor Corp., Sketchers USA Inc. and Wolverine World Wide, Inc.

The retail locations also compete with footwear retailers such as Macy's Inc., Nordstrom Inc., Dicks Sporting Goods Inc., and Collective Brands Inc.

The principal elements of competition in this industry are brand awareness, product functionality, design, quality, pricing, marketing and distribution.

Due to its unique footwear designs, Croslite, and the expanding product offering and distribution network Crocs is high ranked in the casual footwear and apparel industry market.

However, some companies in the casual footwear and apparel industry have much better brand awareness, financial, distribution, and marketing resources than Crocs currently has.

Furthermore, new players in the market took advantage of the unique designs and resulting success of the footwear products to introduce imitation products that are similar to Crocs', and Crocs' products are facing competition from these new market entrants.

New competitors entered into the casual footwear due to the recent encouraging growth in this market and it leads to an increasing competition from established companies. Some competitors are offering products that are highly similar, in design and materials, to Crocs-branded footwear. Moreover, new companies enter the markets more easily thanks to the access to offshore manufacturing.

Crocs' competitors are the leading athletic and footwear companies, branded apparel companies, and retailers with their own private labels.

Risk

The footwear industry is depending on different factors. These are cyclical variations, strengthening, contraction, and closings, as well as fashion trends, rapid changes in consumer preferences, the weather effects, general economic situations, and other factors affecting demand.

These factors prevent to forecast consumer demand well, and if demand for Crocs' products is overestimated, the company may be forced to liquidate excess inventories at a discount to customers, resulting in markdowns and lower gross margins.

On the contrary, if consumer demand is underestimated, inventory shortages could be done, which can result in lost potential sales, delays in shipments to customers, strains on the relationships with customers and reduced brand loyalty.

Moreover, because the product line is limited, Crocs' products may be affected by cyclical downturns in the footwear industry, changes in consumer preferences, and other factors affecting demand, which may prevent to precisely forecast the production needs, worsening these risks.

Some substantial cash requirements occur in the U.S., but a majority of the cash is generated and held abroad. Crocs may have problems to repatriate such cash on favorable terms or in a timely manner, because repatriation of such cash is subject to limitations and may be subject to significant taxation.

If Crocs keeps bringing down operating losses and requiring cash held in international accounts for use in the U.S. operations, a failure to repatriate such cash in a convenient and cost-effective manner could negatively affect the business, financial condition, and results of operations.

Moreover, the laws of certain foreign countries may not protect intellectual property rights to the same extent as do the laws of the U.S.

If there is no possibility to completely protect the rights or resolve intellectual property conflicts with others, the business or financial situation could be negatively affected.

Crocs relies on trade secrets, confidential information, and other unpatented proprietary information related to the formulation of Croslite and product development, especially where it is not believed patent protection is appropriate or possible.

The risk of misappropriation of the trade secrets, confidential information and other unpatented proprietary information could occur if using third-party manufacturers and compounding facilities.

The agreements used to try to protect the intellectual property, confidential information and other unpatented proprietary information may not efficiently protect them and may not be adequate to prevent unauthorized use or revelation of such information.

Crocs is depending on third-party manufacturers, it may have problem in maintaining adequate supply of goods to satisfy sales demand, and may experience interruption in the supply chain. The sales may decreased due to any shortfall in the supply of the products and a negative impact on the customer relationships may occur.

Crocs has signed no long-term supply contracts with most of these third-party manufacturers, including the third-party manufacturer that produced the majority of the footwear products. They may unilaterally dissolve their relationship with Crocs at any time or try to increase the prices they charge Crocs. Therefore Crocs is not assured of an uninterrupted supply of products of an acceptable quality and price from the third-party manufacturers.

The manufacturing of the products from the proprietary closed-cell resin, which named Croslite, requires the use of a complex process, and Crocs may be exposed to difficulty in producing footwear that satisfies the high quality control standards.

Crocs has any formal purchase agreement with the providers of the elastomer resins - purchase on a purchase order basis. If the suppliers were to stop production of these materials - Crocs would not be able to obtain suitable substitute materials in time to prevent interruption of the production cycle, if at all.

Crocs may also have to pay very higher prices in the future for the elastomer resins or any substitute materials used, which would grow the production costs and could have a very negative impact on the margins and results of operations.

Independent manufacturers manufacture a majority of products outside of the principal sales market - products must be transported by third parties over large geographic distances.

Moreover, manufacturing delays or unexpected demand for the products may require to use quicker, but more expensive, transportation methods such as aircraft, increases in the price of petroleum products (cost of fuel is a significant in transportation costs) which all could negatively affect the profit margins.

Crocs is dependent on sales of a small number of products, and the absence of continued market demand for these products would have a significant negative effect on the operating results.

Crocs cooperates with third-party manufacturers located in foreign countries; runs manufacturing facilities located in North America, Brazil and Italy; and sells the products to retailers outside of the U.S. Foreign manufacturing and sales activities are depending on various risks, including the following:

·   tariffs, import and export controls, and other non-tariff barriers such as quotas and local content rules;

· delays associated with the manufacture, transportation and delivery of foreign-sourced products due to increased security concerns;

·    increased transportation costs due to distance, energy prices, or other factors;

·  foreign currency fluctuations, for which Crocs does not currently engage in any material hedging transactions;

·    restrictions on the transfer of funds;  

·    changing economic situations;  

·   restrictions, due to privacy laws, on the handling and transfer of consumer and other personal information;

·    changes in governmental policies and regulations;  

·     political unrest, terrorism, or war, any of which can interrupt commerce;  

·     expropriation and nationalization;  

·     difficulties in managing foreign operations effectively and efficiently from the U.S.; and  

·  difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions.

Furthermore, manufacturing activity outside of the U.S., including the production of the products by third-party manufacturers, particularly in China, is also depending on risks of poor infrastructure, shortages of equipment, and labor unrest. Once the products are manufactured, Crocs may also suffer delays in distributing the products due to work stoppages, strikes, or lockouts at the ports where the products arrive. The consequences of such labor disruptions could be product shortages and delays in distributing the products to retailers. These factors and the failure to properly respond to them could prevent from obtaining satisfactory supplies of quality products when needed, resulting in reduced sales and harm to the business.

Crocs purchases products and supplies from third parties in U.S. dollars and receives payments from some of the international customers in foreign currencies. The cost of these products and supplies sourced overseas, and payments received from customers, may be marked by changes in the value of the refering currencies. The products could become less competitive or have an negative effect on the profitability due to price increases caused by currency exchange rate fluctuations. Currency exchange rate fluctuations could also disrupt the business of the third-party manufacturers that produce the goods by making their purchases of raw materials more expensive and more difficult to finance. Foreign currency fluctuations could have a material negative effect on the results of operations and financial situation.

上一篇:Malaysia Dairy Industriess Background 下一篇:Strategic Analysis Of The Gap Inc Marketing Essay