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A NEW BALANCE

GENDER BASED MARKETING

Mette Sofie Gervig DT11 International Marketing Characters: 43.235 Supervisors: Halil P. Tokmak Allan R. Kruse


A NEW BALANCE GENDER BASED MARKETING

Design Technology and Business Københavns Erhvervsakademi By Mette Sofie Gervig Final exam, May 2013


INDEX

1.0 Introduction 1.1 Problem statement 1.2 Delimitation 1.3 Methodology

1 2 2 3

2.0 Theory 2.1 Trend theory 2.2 Consumer behavior theory

4 4 6

3.0 Internal analysis 3.1 History 3.2 Brand platform 3.3 Marketing mix in Denmark 3.4 Store segmentation 3.5 Customers: VALS model x Adoption/innovation curve

8 8 8 9 10 11

4.0 External analysis 4.1 Competitors: Positioning map 4.2 Micro-environment: Porter’s 5 forces analysis 4.3 Macro-environment: PEST-analysis

12 12 13 14

5.0 Partial conclusion: Internal and external analysis

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6.0 Proposed solution 6.1 Obejctives 6.2 Strategies 6.2.1 Ansoff’s growth strategy 6.2.2 Push/Pull strategy 6.3 Adapted Marketing mix 6.4 Implementation plan 6.4.1 The action wheel 6.4.2 Gantt chart

17 17 17 17 17 18 21 21 21

7.0 Discussion 8.0 Conclusion 9.0 Contextualization 10.0 Oral exam 11.0 Bibliography 12.0 Appendices Appendix no. 01: Birthrate in Denmark 1998-2012 Appendix no. 02: Tøjeksperten stores in Denmark Appendix no. 03: Retail prediction: From multichannel to hyperchannel

23 24 26 27 27 27 27 28 28


 

1.0 INTRODUCTION The latter years sportswear has become very popular items in everyday wear. Especially in Denmark a sporty-cool look has become a trend in both men and female fashion. The look comes in various combinations, but the most prominent is sneakers applied to everyday wear. There has been a step change in seeking solace from the shoes that hurt us. Casual Friday has evolved into Casual Everyday. One of the companies that has benefitted from this trend is New Balance. Especially the Danish women have applied the brand to their wardrobe. To be more precise; 70% of New Balance’s lifestyle shoes are sold to women. This number is very interesting because it is the exact opposite to similar brands working in the industry. New Balances biggest competitors, Nike and Adidas, both sell bigger amounts of men shoes. Because of the high prevalence among women the shoes are now being perceived as feminine. Tendencies within consumer behavior indicate that men are going to get an increased strategic importance as a consumer group. Therefore it is interesting to examine how a company like New Balance, where a large proportion of consumers are women, can reach out to and gain more male consumers. Men and women are very different in their buying behavior, it will be interesting to examine exactly in which ways and how to benefit from these differences.

 

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1.1 PROBLEM STATEMENT What characterizes men’s buying decision process and how will it be possible for New Balance to adjust their marketing mix in order to meet male consumer preferences? • How is men’s buying behavior different from women’s?   o In order to fully understand the buying behavior among lifestyle consumers and male consumers in particular,  I will explore and clarify which factors that can lead to a purchase and furthermore look into how a trend occur and develop.     • How is New Balance’s currently positioned and how intense is the rivalry in the industry? o I will analyze New Balance's current marketing mix, in order to examine how they act on the market today. Furthermore I will make an external analysis of the industry and the external factors that can affect the position of New Balance. The findings will be summarized in a SWOT analysis. •

Which changes in New Balance’s current marketing mix will be appropriate to gain more male customers? o I will evaluate which adjustments of the marketing mix that will be suitable for New Balance to make in order to adapt to male consumer preferences. The evaluation will be based on gender based buying behavior and furthermore the level of rivalry in the industry.

1.2 DELIMITATION My focus will be on New Balance’s lifestyle shoes. I have chosen to limit my geographical focus to the Danish market, to be able to create the most suitable branding strategy possible. Due to the object of gaining more male consumers I will predominantly focus on these when conducting my analysis of New Balance’s current activities.

 

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1.3 METHODOLOGY I have chosen a combination of qualitative and quantitative methods to strengthen the credibility of the assignment. Thus I have based my approach on comprehensive theories and statistics combined with empirical methods in the form of field research and qualitative interviews. This way I have made an effort to expose as many facets of the project as possible. Due to the scope of the assignment I have chosen not to include end-user interviews and similar qualitative studies. Instead my methodology predominantly focuses on psychographic segmentation. I have chosen this focus because I find that this method exposes the most important facets of the problem statement, while still allowing me to solve the issue within the limits of this assignment.

 

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2.0 THEORY In this section I will include Georg Simmel (German philosopher and sociologist) and Henrik Vejlgaards (Danish trend sociologist) trend theories. This I will do in order to better understand where and how trends occur and possibly how to benefit from these processes. As the main object of this assignment is to see how New Balance can reach male consumers more effectively than they currently do, I will also use gender based consumer theory to understand how male consumers should be targeted compared to female consumers. To understand these differences in decision-making I will among others include Paco Underhill’s gender based consumer theory, which states that the gender differences in buying behavior originate in genetic differences. 2.1 TREND THEORY In 1904 Georg Simmel published an article named "Fashion" (Simmel 1904) that concerned two contrasting forces of fashion; conformity and individuality. He observed that, “It unites them of a social class and segregates them from others. The elite initiates a fashion and, when the mass imitates it in an effort to obliterate the external distinctions of class, abandons it for a newer mode – a process that quickens with the increase of wealth” (Simmel 1904, p 130). In the article we also see several historical references to this trickledown process, where the upper class sets the trends by wearing the latest expensive fashions shown in the couture houses, the middle class imitate it, which makes the upper class look for something new because they want to distinguish themselves from the lower classes. Currently the fashion elite is not necessarily the same as the monetary elite, but the process is still present. A trend can now also occur at other levels of society, because fashion is now available for most social classes. An extension of the trend term is necessary. This is what the Danish trend sociologist Henrik Vejlgaard has done. Vejlgaard writes in his book “Anatomy of a Trend”, that the contemporary trend process has gone from solely concerning the “trickle down” effect to also concern “Bubbling up” and “Trickle across” effects (Vejlgaard 2008, p. 191). TRICKLE DOWN An example of the trickle down effect is when trendsetters wear something and the mass market imitates it, because they think the person is cool. Trendsetters can be celebrities as musicians, actors, athletes, politicians, tv-hosts and CEOs but also common people with a great taste. The Internet and more specifically blogs have made it possible for non-celebrities to show off their style and be assessed by others. If you are creative and do it well you can become trendsetter, unlike earlier where magazines with celebrities where the most used space to seek inspiration. It is common for

 

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companies to use this process in branding by using the trendsetters in advertising or sponsor them. BUBBLING UP This effect has to do with how mass market and subcultures affect high-class trends. Many designers seek inspiration on street level. An example of this is how punk culture inspired Versace to use safety pins in a dress in 1994 and Louboutin’s use of studs as details on the shoes. TRICKLE ACROSS The trickle across process can take place in a variety of ways. An example of trickling across is seen in the current trend in Denmark where athletic wear mixed with casual wear is very present. In trendsetting, consumers also have a tendency to be influenced more by those in their everyday surroundings as opposed to persons outside their segment. In other words, they seek inspiration from people within their peer groups instead of searching in an upward direction as with the trickle down process. Earlier on trends were situated in a societal model, with more rigid and wealth based divisions than is the case in most modern western societies today. Production optimization has made it possible for clothing chains to make products at much lower costs and thus offer products at a much lower price than earlier and this makes fashion available for all levels of society. This has affected the trend triangle so it has more levels than earlier. Whether people adopt a trend or not is not based on if they can afford it anymore, now it is based on level of innovation and desire to change.

UPPER  CLASS

TRENDSETTERS EARLY  ADOPTERS

MASS  MARKET

EARLY  MAJORITY LATE  MAJORITY & LAGGARDS

 

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2.2 CONSUMER BEHAVIOR THEORY The objective of this assignment is to figure out how to gain more male customers; therefore I will in this section include prominent experts in the field of studies on how men and women differ in their behavioral patterns. The findings I will use to examine to what extend New Balance’s current marketing mix is suitable in relation to men. Furthermore I will use the findings to develop a new marketing mix solely focused on the male audience. The below findings are generalizations; it is the reality for many – but not all. Due to the assignment subject, the primary focus will be on men. The book “Consumer behavior in fashion” uses a distinction between the two terms; sex roles and gender. “Sex refers to biological differences between men and women, whereas gender is a social construct” (Rabolt 2009, p. 169). This distinction will be used in this theory section. GENDER Gender is a norm that society sets. “At a very young age children learn the differences between boys and girls. Often gender differences are reinforced by others with the first baby gift of pink or blue.” (Rabolt 2009, p. 169). What characterizes masculinity and femininity is very different depending on culture. The norms of the two genders change over time – now women wear pants, which was out of question only 60 years ago. At the same time men now seem to have a greater interest in fashion and are more concerned about their appearance. Especially in Denmark men and women continuously move closer in terms of gender roles. In some families it is the woman who goes to work and support the family while the man stays at home with the kids. Anyhow, there still are some areas within interests and expertise that we associate with each gender. In sports especially bicycling races have a masculine aura because it concerns body endurance. SEX ROLES Paco Underhill (retail anthropologist) explains in his book “Why we buy - The science of shopping” how men and women genetically have two very different basic building blocks: “Guys are genetically disposed to be hunters, so they walk to the woods and are unsuccessful unless they can kill something reasonable quickly and drag it back home and through the mudroom. Women are gatherers who get immense pleasure out of the act of looking” (Underhill 2009, p. 102). He tries this way to explain the reason why men and women are acting so different in shopping situations. Men act fast and go straightly for their “prey”. “They usually do not like asking where things are, or any other questions, for that matter.” (Underhill 2009, p. 103). If they do not find what they are looking for they simply leave the store. Men like to get their information firsthand, preferably from written materials, instructional videos or computer screens. On the other hand if they do find what they are looking for, the only thing that can stop them from buying is if it does not fit. Women take their time examining, comparing and asking the sales staff questions about the products in order make the “right” decision. Pace Underhill has conducted a survey concerning how price sensitive the sexes are. The result is that women are much more price sensitive than men, as Underhill describes it; “For a man, ignoring the price tag is almost a measure of his virility.” (Underhill 2009, p. 104). Men do not like to shop, but they like to spend.

 

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The same pattern of buying is described in by Emilia van Hauen (sociologist) in her article “Køn er også en kvalifikation” (van Hauen 2013). She states that our sex is a participatory factor in which ideals, values and norms we operate after – and that it directly affects our consumption and relations. She also describes how women through shopping strengthen their social relations, compared to men whose primary wish is to solve a problem. The way men operate she describes as “Grab’n’Go”, they go straight for the product, pay and then they are out again. As a counterpart to this women want to make sure they find the best solution, one that is acceptable by all members of their immediate environment, thus they go through more stores and products. Van Hauen concludes the article by stating that to gain most from your efforts this should be incorporated in your daily activities. Men are more likely than women to end their purchases quickly and therefore spend less time shopping. This is accomplished by visiting the same stores from time to time. This makes them very loyal customers but only to a few stores. It is worth noting that the interest in fashion and brands is present in many male consumers. Half of all men purchase branded products. The right brands help shaping consumer identity, and are a time-and energy-saving help in the purchasing situation. When you know what each brand "stands for" and signals to the surrounding world, you are free from having to interpret a lot of "unnecessary" information in the store (Bakewell 2004).

 

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3.0 INTERNAL ANALYSIS The onset for my analysis is an understanding that brand success is affected by more than just product line. I will thus conduct my analysis focusing on three main areas; Internal strategies, industry competition and external macro environment. These three areas are rarely strictly distinguished from one another, but for analytical reasons and to ensure a certain level of clarity I will treat them as somewhat distinct areas. All the findings will be summarized in a SWOT-analysis. 3.1 HISTORY New Balance is an American footwear manufacturer. It was founded in 1906 as a manufacturer of arch supports and orthopedic shoes. In 1960 they designed and manufactured the "Trackster," the world's first running shoe made with a ripple sole. It was also the first running shoe to come in varying widths (Cardona 2005, p. 38). Since then they have focused on performance and lifestyle shoes. The previous years New Balance has established their presence on the Danish lifestyle shoe market, this they have done with great success and they are now competing with the very established brands Nike and Adidas. New Balance is not nearly as widely used and approved of as Nike and Adidas are in Denmark, but it is continuously growing and moving a bit closer to its competitors. In Denmark New Balance is being traded by Active Sportswear Int. a/s, which is a company specialized in selling sportswear. Active sportswear has hired Lob agency, a Danish fashion agency, to be in charge of branding and distribution of New Balance’s lifestyle shoes.

3.2 BRAND PLATFORM The brand platform summits the most essential brand facts, personality and values of New Balance. The core essence of New Balance is “Technical shoes. Proudly produced. For everyday use.” This refers to Product-focused UK & US production facilities the design and the technical FACTS Understated New England roots features of the shoes that PERSONALITY enable you to wear the shoes Innovative Technical at all occasions. “Proudly VALUES produced” refers to New Technical shoes Proudly produced Balance’s rich shoe heritage For everyday use and their knowledge within this area. Comfortable Variety The core essence works as Urban Experienced guidance for future marketing activities. Local customization Global

 

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3.3 MARKETING MIX IN DENMARK The marketing mix shows how New Balance currently is represented on the Danish market. It is divided into product, price, promotion and place. All of the parts work together and affect each other. A change in one of the parts will affect a change in one or more of the others. If the product is changed it will affect the price, the way of promoting and distributing. I am going to use the marketing mix analysis to examine how New Balance differentiates from their closest competitors. PRODUCTS New Balance manufactures a wide range of lifestyle shoes for both men and women. They produce new shoe models as well as reproduce older models. The new models have more technical features compared to the older models that are more casual. The older models are the ones that have sold the biggest amounts. New Balance adapt locally, in Denmark a small range of the shoes has been carefully selected to fit the Danish consumers taste and preferences. Furthermore they do collections with external designers in limited editions. In Denmark New Balance has made a shoe in collaboration with the Danish company Norse Projects, who is known for their many co-works with high profiled companies and artists. Unlike the trend in the shoe industry where most companies outsource their production to Asia, New Balance has manufacturing presence in the United States and in the United Kingdom. 30% of the New Balance shoes sold in the European market are manufactured at the New Balance facility in Flimby, England. PRICE The wide range of products and the differences in technical level makes the price range wide. The less technical older models cost around 700 D.Kr. The newer models with higher technical feature and shoes only produced in limited amounts are premium priced. The result of manufacturing in UK and United states is that New Balance shoes tend to be more expensive than those of many other manufacturers, but their pricing is very similar to their closest competitors; Nike and Adidas. PROMOTION Globally New Balance has chosen not to do a lot of marketing activities, they are very product-focused and believe that the shoe speaks for itself. John Donovan (New Balance’s director of advertising) have stated that “…customers aren't well-served by the expensive but widespread practice of paying professional athletes to endorse products.” (Los Angeles Times, January 29, 1998). This statement concerns the athletic shoes, but also covers how they handle marketing activities for the athletic apparel shoes. They want to be viewed as a trustworthy company and therefore do not want to pay people to recommend their product. In Denmark New Balance make use of product placement in TV and magazines and has a few sponsorships of celebrities – but none of them are being paid to wear the products. New Balance also has showrooms in Copenhagen and Aarhus, and is present at the two yearly fashion fairs in Copenhagen. PLACE In Denmark all shoes are sold through retailers. They make use of differentiated distribution, where shoes and retailers are segmented and paired. New Balance’s way of distributing their shoes is based on the trickle down effect mentioned in the trend theory

 

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section. They start by feeding the top of the triangle, which means the trendsetters. The different shoe models move through the trend triangle, they start being available at stores targeting trendsetters and early adopters and when these segments are saturated, the shoe “trickles down” to stores targeting the mass market. The older shoe models are sold through mainstream shoe- and clothing retailers, of which most of them are targeting young female consumers.

PR EM M

AR

M

S  

AS

IU

M

Dr.  Adams

Storm

Wood  Wood Støy-­Munkholm Norse  Projects

T

KE

Troelstrup

EXPENSIVE

3.4 STORE SEGMENTATION The store segmentation map (see below) contains the most well known stores offering menswear and shoes. The stores are placed according to price and innovation level. The stores highlighted with green already sell New Balance athletic apparel shoes. The map shows that New Balance has done a great job getting their shoes distributed through the most innovative stores that are targeting trendsetters and early adopters. Furthermore they have accessed a share of the retailers targeting the early majority of the mass market.

Kaufmann Pede  &  Stoffer Le  Fix 8UEDQ2XW¿WWHUV Street  Machine

Wagner Bertoni Tøjeksperten MAINSTREAM

Mr Din  Tøjmand Dressmann Marcus

Flavour Loftet !Solid Drop  Dead Quint Carlings Deres Invasion

HIGH  INNOVATION

Westhouse EC Y

M

O

N O

Zara H&M

Bilka

 

CHEAP

Føtex

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3.5 CUSTOMERS: VALS-MODEL x ADOPTION/INNOVATION CURVE VALS ("Values, Attitudes and Lifestyles") The model is used for psychographic segmentation. The main dimensions of the VALS framework are: primary motivation shown on the horizontal dimension, and level of resources and innovation shown on the vertical dimension (Shaw 2009, p. 66). The Adoption/Innovation Curve is a sociological model developed by Everett M. Rogers (Stern 2006, p. 220). It describes the adoption of a new product. I chose to apply the Adoption/innovation curve to VALS to give a clearer picture of approximately how big the segments are. EXPERIENCERS A small but important segment is the Experiencers which consist of both men and women. The Experiencers can also be called trendsetters. New Balance has succeeded in gaining their attention by offering them the limited edition shoes through curated stores. The curated stores already have a strong brand value among the trendsetters, which New Balance benefits from by being present in the stores. The trendsetter segment is difficult to please; they always want new and outstanding products. It is a young segment with a high disposable income, they are not rich, but they are willing to and love to spend money on the newest products, and in this way express themselves.

FULFILLED High-­resource  group.  Well  in-­ formed.  Mature,  responsible,   well-­educated  professionals.   Open  to  new  ideas.  Practical   and  rational  decision  makers. IDEALS   BELIEVERS Modest  income.  Conservative   and  predictable  consumers   who  favor  established  brands.

 

LEVEL  OF  INNOVATION      AND    RESOURCES

MAKERS The biggest consumer group New Balance have is the makers. The Makers is a mainstream segment that consists of young consumers of whom most of them are women. They value practical and functional products, are motivated by self-expression, but they are not willing to spend as much on lifestyle products as the trendsetters. The segment buys the less expensive old-school models through mainstream clothing and shoe retailers. Even though it is a mainstream segment they are placed as early majority on the adoption curve. This is based on the general use of New Balance in Denmark. INNOVATORS Succesful  individuals.   Wealthy.  Individualistic  and   creative.Leading  edge  of   change. ACHIEVERS High-­resource  group.  Career   RULHQWDWHG6HOIFRQ¿GHQW Seeking  new  and  different   things.  Favor  products  that   show  off  their  success  to  their   peers.

EXPERIENCERS High-­resource  group   motivated  by  self-­ex-­ pression.  Youngest  of  all   the  segments.  Impulsive   and  social.  Avid  con-­ sumers  of  new  products.

ACHIEVEMENT

SELF-­EXPRESSION

ESTEEM  SEEKERS Modest  income.  Purchase   symbols  of  success.  Image   and  status  important  as  a   means  of  enabling  accept-­ ance  by  their  social  circel.

MAKERS Modest  income.  Moti-­ vated  by  self-­expression.   9DOXHVHOIVXI¿FLHQF\ Appreciate  practical  and   functional  products.

STRUGGLERS Lowest  income.  Oldest  of  all   the  segments.  Within  their   limited  means,  they  tend  to   be  brand  loyal  consumers.

INNOVATORS  2,5  %

EARLY  ADOPTERS   13,5  %

EARLY  MAJORITY   34  %

LATE  MAJORITY   34  %

LAGGARDS  16  %

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4.0 EXTERNAL ANALYSIS

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4.1 COMPETITORS: POSITIONING MAP New Balance’s closest competitors are first of all found by field research in stores where New Balance is present and furthermore by reading Danish blogs and magazines to get an expanded view on which brands are the most popular within sporty lifestyle shoes. The map visualizes how the brands in the Danish shoes market are placed. The brands are placed in the perceptual map based on the parameters; price and market share (see map below). Many of the brands work within a wide price range; therefore I have chosen to place them according to their most expensive shoe models (not with counting limited collections). There are no statistics covering the market shares within sporty lifestyle shoes in Denmark, thus I have placed them by best effort based on what I have spotted on street level and information I collected in my interview with Frederik Leonharder (New Balance brand manager in Denmark). In previous years New Balance has established their presence on the Danish market, this have been done with great success and they are now competing with the very established brands Nike and Adidas. New Balance is not nearly as popular and widely used as Nike and Adidas are in Denmark, but is continuously growing and moving a bit closer to these two competitors.

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4.2 MICRO-ENVIRONENT: PORTER’S 5 FORCES ANALYSIS Porter’s 5 forces analysis (Industry competitors, Potential entrants, Substitute products, Powers of suppliers, Power of buyers) is a great tool to analyze the competitive environment. Porter referred to these forces as the microenvironment. The 5 forces continually impact the shoe industry New Balance competes in and determine how the competitive intensity in the shoe market is (Shaw 2009, p. 303-5). INDUSTRY COMPETITORS The competition in the sporty life style shoe marked is very intensive. Many companies want to benefit from the current sporty-cool trend. The companies competing are both actual sportswear manufactures but also high street chains, as Bestseller, which produces what the consumers demand. Sporty lifestyle shoes are being produced within a wide range of price and function. New innovative initiatives are arising all the time. New materials and designs are made in collaboration with external partners that have a different skill set. Strategic partnerships are very present in the industry. New Balances biggest competitors Nike and Adidas are the most prominent players in Denmark within the sporty lifestyle shoe market. Both Adidas and Nike do many marketing activities to continuously reinforce their brand value. POTENTIAL ENTRANTS As mentioned there are already a lot of companies competing in the industry. It is a profitable market that is very attractive to new competitors. Thus I believe that many more companies want to, and are going to, benefit from the current sporty-cool trend. The barriers of entry are not high. For many trend following consumers it is all about the right visual look and to a lesser extend the functional features. This kind of competitors is only to a little degree going to pose a threat to New Balance. A bigger threat is the high-class fashion companies who implement the trend in their collections. Even though their prices are higher they are a threat because they also target the not brand loyal trendsetters. An example of this is Givenchy. In their latest collection they have sneakers that are also being sold through Storm in Copenhagen. POWER OF BUYERS Due to there not being a brand switching cost, the buyers of sporty lifestyle shoes are generally not very brand loyal. The availability of substitute products makes the consumers price sensitive. This can go both ways depending on the segment, the product can be too expensive but also too cheap. The availability of sporty lifestyle shoes also pressures the companies to broaden their presence. It needs to be convenient for the consumer. Unless it is a truly unique brand with differentiated benefits offered, the shoes need to be available exactly where the desired segment shops. POWER OF SUPPLIERS The suppliers are indispensable and therefor very powerful. It is important to maintain a good relationship. It concerns suppliers of raw materials, components, labor and services. Substitute suppliers are to be found. Anyhow, this is not a desirable solution neither for New Balance nor the supplier due to the switching costs. A long-term partner is always preferable.

 

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SUBSTITUTE PRODUCTS Trends are not as limited as in the past, where you decided on e.g. being a Hip Hopper or Rocker and followed the rules of the “tribes”. Now there are overlaps or “trickle across” between lots of styles and cultures, which make substitute products a bigger threat than earlier. The supply of low price lifestyle products makes the buy-and-throw-away culture economically possible. Due to small time right collections instead of the classical division in S/S and A/W trends are shifting much faster than earlier; what is popular today is not necessarily popular tomorrow. 4.3 MACRO-ENVIRONMENT: PEST-ANALYSIS PEST (Political, Economic, Social, Technological). Using this tool I get an insight in New Balance’s external macro environment. None of the factors are possible to affect, but if necessary adjustments in marketing mix can prepare the company to the challenges. It is important to have all the factors in mind when creating a marketing mix. Economical factors can affect pricing strategy, social trends can affect how to produce, which branding message to choose and who to target. Especially the technological factors in the global shoe market are important to know, to be able to compete. POLITICAL Political decisions of regulating the State education grants or other forms of assistance can affect the disposable income and willingness to spend in certain segments. Regulations in the legal amount students are allowed to earn alongside their studies and factors such as political regulation in maternity leave, labor law and taxation can also affect the future of the industry. ECONOMIC Factors such as interest rates, exchange rates and the inflation rate affects how businesses operate and make decisions. Especially a high interest rate can affect the extent to which a business grows and expands. If the rate is very high, downsizing of employments can be necessary and this will affect the general unemployment and thus affect the demand of lifestyle products. SOCIAL TRENDS Trends in social factors affect the demand for a company's products and how that company operates. Companies may change various management strategies to adapt to these social trends. I have chosen to divide social trends into two subareas; Demographics and Ethics. DEMOGRAPHICS During the previous 15 years the birthrate in Denmark has been declining. This means that the number of young consumers continuously declines during the next 15 years (see appendix no. 01: Birthrate in Denmark 1998-2012). ETHICS There is a growing consciousness concerning CSR (Corporate Social Responsibility). Not only do consumers want to know the specific functional benefits of the products, they also want to know about the core brand and associated company values. This implies among other human rights, social conditions, working conditions and environmental concerns. TECHNOLOGICAL A lot is going on in the lifestyle shoe market, where lots of companies are competing. Because of the big competitiveness the companies really need to reinforce

 

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themselves all the time to gain the consumers attention. Many new initiatives are being made and many of them by engaging in strategic partnerships. A new trend is also arising in the shoe market; offering the customers ability to customize their own shoes. New production optimization and the Internet makes it possible for costumers to customize their own shoes and have them shipped within a few days. Nike, Adidas and New Balance have all expanded their activities by adding custom-made shoe program, allowing consumers to design their own shoes online. This program is not available in Denmark – yet.

 

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5.0 PARTIAL CONCLUSION In the SWOT-analysis (Strengths, Weaknesses, Opportunities, Threats) below, all the findings from the internal and external analysis are summarized. The outcome of the internal analysis displays that New Balance is a brand with a lot of potential. The strong background of the company and their way of manufacturing is where they especially differ from their competitors. The external analysis shows many opportunities in order to reinforce the brand, and it seems necessary to exploit many of them due to all the threats, especially the threat of substitute brands and products.

INTERNAL      Product-­focused      Trustworthy      Well-­established  company      Innovative  by  history      Wide  range  of  shoes  and  prices      Adapt  locally      Co-­works      Differentiated  distribution      Manufacturing  prensence  in  UK  &  US

     Few  marketing  activities      Store  segmentation  map:  gap  in  male  mass              market      Few  male  distribution  channels      Lack  of  branding          No  clear  differentiated   EHQH¿WV

S W O T

     Men:        Current  segments  not  brand  loyal      Greater  interest  in  fashion,  not  price  sensitive.            Very  established  competitors      like  to  spend.  loyal  customers.  Prefers  branded            Many  competing  in  the  shoe  market      products.        Substitue  products      -­  Other  kinds  of  shoes      Branding:      -­  Cheaper,  same  visual  look  but  lack  of              Trickle-­down:  Expand  celebrity  sponsorships          technical  features      Bubble-­up:  Trendsetter  sponsorships      -­  High  class  companies  producing            Trickle  across:  Current  sporty  cool  trend          sporty  life  style  shoes      CSR-­related:  production,  working  conditions      Gender  based  branding:  sports  celebrities      Other  companies  customization  programs      Expand  local  co-­works      Strategic  partnerships      Polical  and  economic  factors  can  affect  the        disposable  income          decline  in     ,QIRUPDWLRQ¿UVWKDQGZULWWHQPDWHULDOV      demand  for  lifestyle  products.      instructional  videos,  web  platform.      Expand  distribution  channels      Customization  program EXTERNAL

 

 

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6.0 PROPOSED SOLUTION 6.1 OBJECTIVES The objective of this assignment is to gain more male consumers. Create a customized marketing strategy in order to increase the brand awareness among the male audience. On the basis of the results of Analysis part 1 I suggest the following adaptations. DISTRIBUTION o Make New Balance shoes geographically more available. o Gain mass market male consumers BRANDING o Differentiate New Balance from their competitors o Gain a masculine perception of the brand MARKETING o Give the consumers information firsthand o Visual merchandise to gain awareness of the brand o Sales promotion activities to create brand culture 6.2 STRATEGIES The chosen strategies give an overall picture of how the proposed future activities will operate and what changes this will contain.

Product

Present

New

Market Market  

6.2.1 ANSOFF’S GROWTH MATRIX penetration Present Ansoff’s matrix clarifies the options available Market   for growing sales (Shaw 2009, p. 313). The development New goal of this assignment is to grow sales in a present market by offering a present product - which is market penetration. The focus will be on expanding marketing activities in order to gain more male customers.

Product   development

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6.2.2 PULL vs. PUSH STRATEGY In a marketing pull-strategy the consumers request the product and "pulls" it through the distribution channel. The product is only available in a limited amount of stores and a very modest amount of marketing activities is carried out. This is only possible if a product offers differentiated benefits or is highly attractive in any other ways. A pure pull-strategy is demand-driven and therefore risky. If the consumers does not get reminded why they need the product, perhaps they forget it and the demand declines.

 

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In contrast to Pull-strategy there is Push-strategy. According to this strategy information and products are “pushed” toward the consumers. This can be done by being widely available by distributing through a wide range of stores and doing a lot of marketing activities. A pure push-strategy is risky because it can saturate the market very quickly. Another risk is that the product gets too available and therefore less interesting. New Balance’s future activities in order to penetrate the market should be based on a combination of pull and push. First of all push-activities as expanding marketing doings targeted a male audience will help evoke a product demand within this audience. Expanding male mass-market distribution channels is another push-activity, but it should only be done to a certain extend to avoid loosing current distributors by making it too available. This way a pull-demand will still be present. 6.3 ADAPTED MARKETING MIX The adjustments are made from the findings summarized in the SWOT-analysis, mainly the ones found under opportunities. They will be clarified by dividing them into place, product and promotion. I have chosen to exclude the price-parameter, since the Consumer Behavior theory section showed that men are not very price sensitive. As an extension to the 3 P’s, I am also going to include psychographic segmentation of the customers based on the VALS model. DISTRIBUTION The store segmentation map in the internal analysis made it clear that there is a big distribution gap in the male mass market. This gap and segment will be the focus area in my solution on gaining more male customers.

Storm Wood  Wood TRENDSETTERS Dr.  Adams Norse  Projects Støy-­Munkholm Pede  &  Stoffer EARLY  ADOPTERS Street  Machine 8UEDQ2XW¿WWHUV Loftet Drop  Dead Flavour

Quint !Solid

EARLY  MAJORITY

Carlings Invasion

Deres The store segmentation triangle MASS  MARKET is the exact same as showed Troelstrup Wagner Kaufmann earlier in the marketing mix, I Tøjeksperten Bertoni have chosen this time to build it Mr Din  Tøjmand LATE  MAJORITY Dressmann as a trend triangle in order to Marcus Westhouse show how present New Balance should be on each level. Føtex Bilka LAGGARDS As the store segmentation triangle shows I have, to begin with, chosen only one of the stores in the mass-market gap. As mentioned in the strategy section above the shoes should not be too available in the mainstream chains in order to keep New Balance’s current selected distributers interest. The chosen store, Tøjeksperten, is a menswear chain that combined has 100 stores spread all over Denmark (see Appendix no. 02: Tøjeksperten stores in Denmark).

 

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The vast majority is placed in provincial towns, where the range of shops is very limited. Currently New Balance is mainly available in bigger cities because of the stores they have chosen to distribute through. In provincial cities the same segmentation of stores is not possible because of the limited store range. Since men are very convenient and sees shopping as problem solving instead of a social activity, as found in the Consumer Behavior theory section, it is important to have the shoes available where they go shopping. As men are very convenient they will most likely shop locally, unlike women that makes it a social activity to go shop in bigger cities. This is why it is important to be present in provincial towns. By expanding the distribution channels into also concerning Tøjeksperten as well, the New Balance shoes will be geographically easier accessible and reach the men where they are. PSYCHOGRAPHIC SEGMENTATION Based on VALS psychographic segmentation model Tøjeksperten’s customers fit a mix of the Fulfilled and Believers. Because of their varying income they fit both segments. It is an older segment than New Balance’s current Experiencers and Makers. Their motivation is ideals; they are very rational and practical decision makers. They are very brand loyal mainly because they see shopping as a problem-solving activity. Still they are open to new ideas as long as they are convinced that the solution has the benefits that they seek. PRODUCT New Balance already adapts their products locally. Furthermore they make strategic partnerships with external designers. This carefully selected range of shoes should be expanded to also concern more functional shoes that suit the practical and rational men. New Balance already made collaboration with Project Norse, which suits the trendsetters and early adaptors very well. This way of working with the market is also possible to adapt to the mass-market. To support the goal of gaining the mass-market men a co-work with a sports celebrity would be very suitable. The selected designer should match the New Balance brand. This means; be trustworthy, cool and down to earth. A person that matches these Tøjeksperten criteria is Danish Brian Holm, former racing cyclist, who is known for his masculine gender based values as endurance but also great taste in apparel. A co-work with Brian Holm would create a buzz around New Balance and raise EXPERT  CO-­WORK awareness brand awareness in massmarket male segment. All three partners in the project; Tøjeksperten, New Balance and Brian Brian  Holm New  Balance Holm are experts in each of their own areas, but their common denominator is fashion. Tøjeksperten is, as the name says in Danish, apparel experts. New Balance is a shoe expert and Brian Holm a bicycling expert. They all mutually benefit from the partnership. Brian Holm gets the opportunity to design

 

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his own shoe with a global brand and a share of the profit. Tøjeksperten gets renewal by adding a new and refreshing brand that suits their fashion profile and furthermore a shoe exclusively designed for their chain, which also gives good PR. New Balance gets the opportunity to gain male customers within the mass-market who are very brand-loyal. PROMOTION As mentioned in the internal analysis New Balance has an “Endorsed by noone”-policy. A co-work with Brian Holm as external designer puts a face on the brand without directly breaking this policy. EVENT The shoe made in co-work with Brian Holm will work as great PR for New Balance and a supporting factor for the opening sale which should be formed as an event. The event should take place in Tøjeksperten stores right after the usual closing time so most citizens will be able to join. Instead of making it a shopping activity it should primarily be a quitting time event where you can come have a free beer with your co-workers and friends and secondary while you are there, you might as well also have a look at the shoes. IN-STORE MERCHANDISE As found in the Consumer Behavior based on sex role, men are reluctant to ask for help, advice or any other information. Instore info tables about the shoes can solve this problem. A new trend within retail is that it should be edutainment, a mix of educating the customer and entertaining them at the same time. The in-store merchandise shall show the steps that go into making the shoes, and use visuals, like cross-sections and exploded views, to prove that in addition to looking good, the pieces are well made. An in-expensive way to present these graphic illustrations is as posters, stands or a mix of these. As an extension to this an actual shoe with crosssection will work as a great tool to make the customers interact with the shoes. Emphasizing construction would do a lot to toward convincing the rational male consumers. As an even further extension QR-codes placed on the price tags that you scan it with your telephone and be led to the same graphic illustrations will make it possible to learn about the shoes at home also. WEB PLATFORM Currently New Balance have a Danish website that enables people to download the catalogues with New Balances selected range of shoes available in Denmark. Active Sportswear runs the site. There are links leading to Active Sportswear’s website, New Balances Danish Facebook page and New Balances global .com website. Lob Agency also present New Balance at their website, where they have text about New Balance’s history and movies from the UK factory showing how the shoes are produced. This information should also be present at New Balance’s official Danish website. Furthermore it is predicted that companies in the future will expand from multichannel to hyperchannel retail activities (see Appendix no. 03: Retail prediction: From multichannel to hyperchannel). This concerns both offline

 

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retailers but to a greater extend multiple online retail channels in the future. One of the channels is selling through your own website. Currently this is not possible at New Balance’s site, but it should be in the nearest future. This enables New Balance to be unlimited geographically available in Denmark. Furthermore the site shall provide product information in order for the male consumer to get the information firsthand. It should also contain a complete retailer list in order to make it as easy psychically available for the convenient male consumers as possible. PRODUCT PLACEMENT & SPONSORSHIPS To further reinforce the brand within the new segment new sponsorships and product placements should be established. They should sponsor celebrities and in this way get the shoes placed in TV and magazines. The celebrities should be masculine men who are experts within an area. These could be actors, tv-hosts, and athletes. Examples of Danish men that suit this profile are the actors Mads Mikkelsen and Nikolaj Lie Kaas, the tv-hosts Mikkel Beha Erichsen and Adam Price, the athletes Michael Laudrup and Mikkel Kessler. By sponsoring these celebrities a trickle down trend process can occur and affect the mass-market men. 6.4 IMPLEMENTATION PLAN The implementation plan consists of an action wheel and a Gantt chart. 6.4.1 THE ACTION WHEEL shows in which order the activities should be arranged, which are directly linked to what and how all components influence and help each other in order to reach the objective of gaining more mass-market male consumers. 6.4.2 GANTT CHART breaks the components into smaller pieces and show exactly when the adjustments should take place, in which order, which ones that take place at the same time and how some phases that leads to the next.

 

Distribution  via   Tøjeksperten

PR  &  W.O.M

Co-­work  with  Brian   Holm

Website   optimization: Where,  what,  how. Online  retail

Expand   product  range

ACTION  WHEEL  

In-­store   merchandise: Information   ¿UVWKDQG

Opening  sale  event Product   Placement: People,  magazines   &  TV

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The Gantt chart visualizes that the very first steps towards the expert co-work is the design process done in collaboration between New Balance and Brian Holm. At the same time Lob Agency, who selects the available shoe range in Denmark, shall find new shoe models suitable for the rational mass-market men. Both should be conducted within the first 3 months. When these phases are done the shoe can be set into production, the shoe designs can be viewed to potential celebrities to sponsor, the co-work can be presented for the press and in-store merchandise can be designed and produced. These phases should be conducted within 6 months. The last step is starting to distribute via Tøjeksperten. The introduction is going to be celebrated with an event in each of the stores. The event is going to take place the very first day the products are available in the stores. From this day the sponsorships start. Simultaneously active sportswear should begin optimizing New Balance’s Danish website. First of all with all the “basics” such as the history of New Balance, a news section, shoe range, graphics and movies showing how the shoes are produced and a full retailer list. At the same time as this is being Conducted by New Balance worked out a webshop for the site should be developed. When Conducted by Active Sportswear these are established a continuous maintenance and updating Conducted by Lob Agency of the website including the webshop should take place. My suggestion is that the processes should start November Conducted by Brian Holm 2013, this means that the shoe will be available in the Conducted by Tøjeksperten Tøjeksperten stores from September 2014. Month

1

2

3

4

5

6

7

8

9

10

11

12

component Co-work: Design process Co-work: Production Select expanded product range Present co-work officially: PR & Word of mouth Distribution via Tøjeksperten Design and produce In-store graphics View visuals of products to potential celebrities to sponsor Start sponsorships & product placement Opening sale event Website optimization: information and graphics Online webshop Maintenance and updating of website

 

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7.0 DISCUSSION Based on my analysis I have come up with a proposed solution as to how New Balance can reach more male consumers. In this section I will consider some of the downfalls this solution might be seen to have. It might be objected that New Balance currently has a stable and even successful position within the Danish market. They have gained a high brand value and awareness within the Trendsetter segment. A possible threat of entering mass-market male stores is that New Balance’s brand value within the Trendsetter segment declines. If the brand becomes too mainstream at a lower level of the trend triangle, a risk is that the trendsetters abandon the brand and starts searching for other brands (as explained in the trend theory). Why risk this position? This is why differentiated distribution is crucial for the expansion of activities. The stores targeting the Trendsetter segment still need to have some products exclusively sold through their stores. The threat of becoming too mainstream was also taken into consideration when creating the new marketing mix. Thus I only chose Tøjeksperten, which mainly has stores placed in provincial towns and thus wont be competing with current distributors. As mentioned earlier, in the segmentation of New Balance’s current target groups, the trendsetters are a tough segment to serve. Their purchases are driven by self-expression thus they always want new and outstanding products. Even if targeting is done properly it is not a segment to rely on because of their lack of brand loyalty. Therefore it is important to expand and establish presence at more levels of the trend triangle. It might also be objected that New Balance’s performance shoes might loose some of their reliability within the mass-market male segment, with the continued profiling of their lifestyle shoes. On the other hand the more technical performance shoes are already fairly well established within the male consumer segment, so there might then be a positive synergy between the shoe lines, meaning that once the performance shoes have proven their reliability this will effect the general brand value across all shoe lines.

 

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8.0 CONCLUSION o In shopping situations men act fast and go straight for their “prey”. They do not like asking the sales staff for help, instead they prefer to get their information firsthand, Women strengthen their social relations through shopping; men’s primary wish is to solve a problem. Men like to have their purchases done quickly, this is accomplished by visiting the same stores from time to time, and purchase branded product. This makes them loyal customers. o Earlier on trends were situated in a societal model, with more rigid and wealth based divisions than is the case in most modern western societies today. Today the trend process has changed, now a trend can occur at other levels of the society. The contemporary trend process has gone from solely concerning the “trickle down” effect to also concern “Bubbling up” and “Trickle across” effects. It is common for companies to use the trickle down process in branding by using the trendsetters in advertising or sponsor them. o Gender is a norm that society sets. This norm changes over time. In Denmark men and women continuously move closer in terms of gender roles, but there are still certain areas of interests and expertise that we associate with a particular gender. Especially sports such as cycling races have a masculine aura due to the base of body endurance. These theories can strategically be implemented in a company’s marketing activities such as branding. Celebrity endorsements or sponsorships of trendsetters within the segment can give a strategic advantage.   The rivalry in the lifestyle industry is very intense, a lot of companies want to benefit from the current trickle across sporty-cool trend thus it is important for these companies to continuously reinforce their brand. New Balance has succeeded in positioning the brand and is now competing with the biggest brands in Denmark; Adidas and Nike. This has been done through a marketing strategy that has included a very limited number of activities. But even so New Balance has succeeded in this by adapting locally, made coworks and used differentiated distribution. Especially the trendsetters and mass-market women have applied New Balance’s shoes to their wardrobes. But they are still not reaching the men of the mass-market. A way to penetrate this segment is by expanding current distribution channels. By distributing through the menswear chain Tøjeksperten’s stores New Balance’s shoes will be geographically more accessible for the convenient men. The mass-market male segment differs from New Balance’s current segments. Their motivation for buying is based on practical and rational decisions. Thus an adapted marketing mix will be beneficial. The changes in the marketing mix should fit the men’s buying behavior. This means firsthand information shall be present in-store and as well as

 

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on New Balance’s website. This should be done to prove to the rational men that in addition to looking good, the shoes are well made. To create a masculine aura surrounding the brand, sponsorships should be established with trendsetters within the segment. In this case the trendsetters are mostly celebrities. By sponsoring these celebrities a trickle down trend process can occur and affect the mass-market men. I suggest New Balance make use of a fairly manly celebrity to enhance their position within the male consumers. A shoe could be made in collaboration with Brian Holm to support this process by putting a face on the brand without breaking New Balance’s “endorsed by no-one” policy. Furthermore it will create a PR-buzz around the brand and gain brand awareness within the mass-market men. By implementing these consumer behavior theories and trend theories New Balance will gain an advantageous edge.

 

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9.0 CONTEXTUALIZATION MEN'S INCREASING STRATEGIC IMPORTANCE The theories introduced and actively used in this assignment can also be applied to other products, companies and retailers. The reason why men are increasingly important to target is simply that fact that a growing number of men do shopping on their own. Many are developing a greater interest in fashion and some are “forced” to have it. There are many reasons for this. One reason is that men and women continuously move closer in terms of sex and gender roles. “One consequence of the continual evolution of men’s sex roles is that men are concerned as never before about their appearance.” (Rabolt 2009, p. 174) Men have a growing consciousness about their appearance. For many this now starts at an early age and continues throughout their life. This is due to the general expansion in range of apparel. Another reason is that they stay single for a longer time- and many become single again due to divorces. From being men who had their wives shopping their apparel, they all of a sudden become “forced” to consider the many options. On the basis of this study it will be able to continue to explore other gender-based purchasing behavior, such as to what extend the sexes affect each other's purchasing actions, to what extend man are affected by sensory branding and how to organize the stores in a strategically wise way. As mentioned earlier it is predicted that retailers will development from being multichannel to hyperchannel. This means that the competition is going to be even more intense in the future. This might make gender based marketing activities crucial. The companies that explore and exploit these differences are the ones that are going to win. John Wanamaker (US department store merchant) is among other things known for having stated that "Half the money I spend on advertising is wasted; the trouble is I don't know which half." Even though many measuring tools have been developed since, such as fMRI brain scanning, I believe that there is still a lot of truth in what he states. There are still a lot of uncertainties about exactly how and to which extend the activities actually affect the consumers. The statement is supported by Martin Lindstrom, who describes it as a coincidence when current marketing activities actually work. He explains the activities as marketers throwing spaghetti at the wall and hoping that it will stick (Lindstrom 2008, p. 175). I believe that research in consumer behavior based on gender will make it possible to develop a more qualified guess on what works and which approaches to include.

 

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10.0 ORAL EXAM At the oral exam I will present a brand building strategy plan for how New Balance will be able to continue reinforcing the brand within the new mass-market male segment in the future.

11.0 BIBLIOGRAPHY Bakewell, C. & Mitchell, V.-W. (2004) Int. Rev. of Retail, Distribution and Consumer Research, Vol. 14 (2), Routledge. Cardona, Melissa (2005) The sneaker book: 50 years of sport shoe design, Schiffer Publishing Ltd. Johnson, Greg (1998) New Balance Puts Foot Down on Endorsements, Los Angeles Times, 29.01-1998. Lindstrom, Martin (2008) Buy.ology – Sandheder og løgne om hvorfor vi køber, L & R Business. Rabolt, Michael R. Solomon & Nancy J. (2009) Consumer behavior in fashion, Pearson Education. Shaw, Tim Jackson & David (2009) Mastering fashion marketing, Palgrave Macmillan. Simmel, Georg (1904) “Fashion”, International Quarterly, October, p. 130-155. Stern, Peter Doyle & Philip (2006) Marketing Management and Strategy, Prentice Hall. Underhill, Paco (2009) Why we buy - The science of shopping, Simon & Schuster Paperbacks. van Hauen, Emilia (2013) “Køn er også en kvalifikation”, Børsen, 08.03-2013, p. 4. Vejlgaard, Henrik (2008) På sporet af en trend, McGraw-Hill Companies.

12. APPENDICES Appendix no. 01: Birthrate in Denmark 1998-2012 http://www.statistikbanken.dk/02 (Accessible: 12.05-13)

 

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Appendix no. 02: Tøjeksperten stores in Denmark http://www.toejeksperten.dk/find-butik (Accessible: 12.05-13)

               

 

Appendix no. 03: Retail prediction: From multichannel to hyperchannel http://www.morm.se/fileadmin/mediabank/www.abmorm.se/res/images/10.pdf (Accessible: 12.05-13)

 

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The first shoe was designed with three support points to provide greater balance and comfort. It is believed that the founder Philip Riley came up with the name "New Balance" by observing chickens in his yard and demonstrated the way his shoes worked by keeping a chicken foot on his office desk. He explained to customers that the chicken's three-clawed foot resulted in perfect balance.


Design Technologist: Final exam