Speedo Marketing Plan
Speedo: Marketing Plan
Name:
Professor:
Speedo International Limited:
Production firms deal with the production of goods and services, a process that occurs in different sectors like manufacturing sectors. Developing a perfect production line in any manufacturing firm entails the decision making process which ensures good and services creating takes place according to the planned activities. In production, resources like labor and material inputs assist in production through use of transformation and conversion processes. Resources, such as labor and materials inputs, aid in service and goods creation through the use of transformation or conversion processes to aid in value addition. As such, operations management process starts at high-level business strategies and plans, over both short and long run. Product and service demand dictates the strategies and plans adopted. After the production process gives the output of goods, the distribution of the goods occurs geographically in line with the business market (Daft, & Marcic, 2008). A swimsuit manufacturer, Speedo started its operations from Bondi Beach near Sydney, Australia. Speedo is the World’s leading swimwear brand. The company manufactures and sells products for recreational swimming as a part of its fashion swimwear products as well as it leads the competitive swimwear market. Speedo is famous for its hi-tech innovative designs as it believes in “take technology and make it available in the forms of swimwear clothing”. Speedo International Limited is a subsidiary of the Pentland Group plc; a U.K based privately held company. It is a global brand management company CITATION The111 l 1033 (The Pentland Group, 2011).
History of the brand Speedo:
Speedo was founded in 1914 by Alexander MacRae, a Scot who had migrated to Australia. Originally it was underwear manufacture business, known as MacRae Hosiery manufacturers. The name ‘Speedo’ was born from a slogan “Speed on in your Speedos” in 1928 CITATION Qum11 l 1033 (Qumer & Purkayastha, 2011). With the growth and development of swimwear market in 1920s, MacRae introduced “Racerback”, a swimming costume. It was very supportive and allowed free movement of the body. First swimsuit by Speedo was launched in 1929. The brand established itself well in the market, Swedish swimmer Arne Borg was the first brand ambassador who set the world record in Speedo swimwear. Speedo became a famous brand and the company introduced innovative products during 1930s, these products focused on style and performance. Speedo sponsored swimmers won gold medal in the Los Angeles Olympic Games in 1932 and the company sponsored Australian team in Berlin Games of 1936.
Speedo initiated its exports to USA in 1959 and thus an international division was born to look after sales in Japan, New Zealand and South Africa. The company moved to U.K. in 1959 by acquiring a 30% stake of Nottingham based Robert Shaw and Company Ltd. Speedo sponsored athletes won 27 out of 29 medals in the Mexico Olympics of 1968. Also the Speedo swimmers set 22 world records; Speedo was rising on the horizon of swimwear market. The company took part in Montreal Olympics in 1976 as an official licensee, 52 out of 54 countries were wearing Speedo swimsuits. During 1980s, countries like, the Netherlands, Iceland, Italy, Spain, Sweden and Switzerland had official agreements with Speedo and now the company had established its presence n 112 countries around the Globe.
Speedo started investing in technical research and in1996; it launched AQUABLADE, a swimsuit that lowered the surface resistance by 8%, in the same year Speedo sponsored teams won 77% of all 77% of all swimming medals in the Atlanta Olympics. Speedo launched its revolutionary FASTSKIN in the start of this century; the swimwear was endorsed by world famous swimmers like Grant Hackett, Michael Klim, Inge de Bruijn, and Lenny Krayzelburg. Its swimmers won 13 out of 15 gold medals in The 2000 Sydney Olympics. Speedo launched the evolution of this product in 2004 which reduced the drag by 4% and also the company joined hands with the Brazilian swimmer Amir Slama to promote its fashion swimwear Rosa Cha. In 2008, Speedo launched LZR Racer which is considered as the most advanced swimsuit in terms of technology. The swimwear proved its worth in The Beijing Olympics and 92% of all medals were won by the swimmers wearing LZR Racer. Star of the games Michael Phelps who won 8 gold medals and set a new world record.
Global Market and Speedo Products:
Speedo is a famous swimwear brand and it leads competitive swimwear market. Till early 1990s, global swimwear market had been largely dominated by Speedo products but the competition intensified in mid 1990s when sportswear giants such as Nike and Adidas entered the market. Demand for swimwear developed from seasonal to round the year and it is fundamentally influenced by presence of beaches and popularity of water sports in the countries.
Speedo competes with TYR and Arena in performance swimwear but Speedo dominates the market due to its hi-tech swimwear which enhances performance of bodysuits. Innovation has been a major component in the Speedo’s products. The company invested heavily in technical betterment its performance suits and its innovative suits such as FASTSKIN and LZR Racer have proved to be breakthroughs in swimwear markets. FASTSKIN series of suits by Speedo in 2000s earned the company a reputation of first class performance swimwear manufacturer. The LZR Racer proved to be a big hit and boosted sales of Speedo to many folds. About 108 world records were broken by the athletes wearing the LZR Racer suits. Speedo was the first swimwear manufacturer which introduced recyclable swimsuits. Speedo also established itself as a fashion brand and introduced a range of leisurewear in the start of this century. The company has done heavy advertising in 2000s including Sydney Olympics and in 2003 Speedo’s retro-style logo was a part of popularizing strategy of its brand.
U.K. Market: Size and Structure
Although interest in recreational sports activities have increased over the years, global economic downturn had an adverse effect on every industry including swimwear industry and it is expected that global swimwear growth will be lower between 2008 to 2014, from 5.3% to 1.7% CITATION Jus09 l 1033 (Just-Style.com, 2009). In the past decade local U.K. swimwear market has been adversely affected by price inflation due to high fuel and transport cost, volatile exchange rates and strong competition offered by low-cost economies of India and china CITATION Rus00 l 1033 (Rushall, 2000).
London Olympics 2012, the upcoming most important event for swimwear, has created hype in the swimwear industry and all the major players Nike, Speedo, Arena, TYR and Adidas are competing in a highly competitive market. Private-label retailers such as Marks & Spencer in U.K., also play an important role in sales of swimwear clothes. Speedo is the market leader in U.K. and the market is fragmented. Although Nike is currently leads the UK market with an 18% share of the very competitive £4.3 billion sportswear market, it has decided to exit elite swimwear market CITATION The122 l 1033 (The Telegraph, 2011). It has been estimated that swimwear and sportswear market will constitute about US$ 7 billion till upcoming Olympics. With Nike out of the market, Speedo has every opportunity to earn extra from the Olympic Games 2012, as Nike allowed its sponsored swimmers including Cullen Jones, Jason Lezak, Aaron Piersol and Brendan Hansen to opt for the Speedo swimwear CITATION ert08 l 1033 (Rovell, 2008). TYR has the second largest market share in U.K. after Speedo, and it has quiet a financial muscle to compete with Speedo. The brand is much popular in U.K. because Speedo is synonymous with any kind of swimwear. Although competitive swimwear market constitutes only a portion of the overall swimwear market, it is the main focus of Speedo’s marketing and promotion strategy in U.K.
Target Market:
Speedo has its target market in U.K. that includes swimmers, coaches and swimming enthusiasts. The brand name of Speedo is so attached with the Olympics that Speedo 2012 Olympic Graphics at Olympic Trial Event attracted nearly 200,000 audiences CITATION Spe12 l 1033 (Pure Blue Swimming, 2012). Speed’s main focus has been on the competitive swimwear market.
Customer Analysis:
In the swimwear industry, customer is interested in the “swimwear fit”. It is considered the most critical factor and the ‘fit’ is dependent on the fabric; this has driven the swimwear manufacturers to search for the best fabric. Manufacturers are interested in the material other than nylon/spandex or polyester/spandex blends. This increases costs and economic downturn have affected sales of swimwear too.
Junior customers such as teenager professionals and swimming enthusiasts are buying less as compared to previous years. It is also reported that an average customer buys a new swimwear suit after three years CITATION Fas10 l 1033 (Fashion and Fit in Swimwear, 2010). It proves that consumer is price sensitive and high prices adversely affect the sales.
Product distribution for Speedo Swimwear
Development of a correct distribution strategy is essential for every business. Distribution strategy helps businesses to concentrate and utilize the available resources and opportunities to realize profits and become competitive in the market (Armstrong and Kotler, 2008). In speedo, the management have developed a perfect supply chain distribution strategy aimed at ensuring people all over the world have access to their products. According to Porter, competitive advantage comes in two different ways, low cost and differentiation. Combining these two types with the goals that an organization aims to pursue generates three strategies for a successful business. These are; cost effective leadership, different approach methods, and focus on business returns. When it comes to cost, every organization aims at creating more goods at the lowest cost possible in order to gain more returns from sales (1987). In developing appropriate distribution strategies, proper assessment of the internal and external environments of the business is essential. The internal environment includes type and nature of product, marketing mix and the distribution constraints. On the other hand, the external environment may include the nature, type and distribution of customers and competition in the market. Other external environmental factors could include technology, cultural, politics, legal and the economic environment. Assessment of the environmental factors helps in the development of appropriate strategic distribution plans. A proper distribution strategy is required to execute the distribution plans to realize the marketing objectives. Different products require different distribution strategies due to their own nature and the nature of the market.
According to (Simchi, Kaminsky and Levi, 2003), different products require different distribution strategies due to their own nature and the nature of the market. This is because the different products have different properties and their markets do not exhibit similar characteristics. Speedo Swim wear marketing is diverse in the world. Moreover, the rapidly changing technology and increasing competition require every business to outline a proper distribution strategy to enable the realization of the business objectives. According to Linton and Donnely (2009), analysis of the market coverage is very crucial especially for the swimming garments industry. Therefore, a distribution strategy that ensures effective delivery of products to the end user is important since it ensures that the products are available to customers at all times. A good strategy for use is the intensive marketing and distribution strategy. In this strategy, products distribution occurs over a wide region where the market covers. To facilitate extensive marketing, use of intermediaries is important. These include agents and dealers that are all over the globe. Deployment of various dealers all over the world ensures that the products are available to customers all over the world at every time. This has the effect of placing the business at better competitive grounds in comparison to other businesses (Muller, 2011).
Competitor analysis:
Many brands and companies have competed with Speedo in the past, both in sportswear and swimwear market. TYR Sport Inc, Michael Kors , Andrew Christian, Gottex, Catalina, Seafolly, Michael Kors, Jantzen, and O‘Neill are among those. Speedo remained leader in competition and fashion swimwear that also includes leisure swimwear suits too CITATION Hen12 l 1033 (Henson, 2012). Nike, Arena International (Arena), TYR, Reebok International Limited, Mizuno, and Adidas are the major competitors of Speedo in competitive swimwear market. Major competitors of Speedo are listed below.
Major Competitors:
Nike
Adidas
TYR Sports Inc
Arena
Nature of Competition:
Products by Nike and Adidas are considered a direct competitors of Speedo’s products because these two offering multiple products in both categories of fashion as well as sports swimwear. Though Speedo has remained market leader in overall swimwear market, its competitors have expanded their product lines and currently offer tough competition in various markets. As of 2008, Speedo had 60% market share of competitive swimwear products; TYR and Nike had 20% and 13% respectively CITATION Nik08 l 1033 (India Times, 2008). Capitalizing on technological advances, Speedo launched its LZR Racer® and it proved to be a cash cow for the company. Due to this technically advanced swim suit, Speedo remained dominant in the performance swimwear market and Speedo gained momentum which will be much helpful in future growth strategy. This competition is for a market which is expected to grow up to US$17 billion till 2015 CITATION Glo10 l 1033 (Global Swimwear Market , 2010). Speedo has been successful in forcing its competitors to acknowledge its supremacy in technically advance swimwear of all types.
Nike
Nike, Inc. is a world famous supplier of sportswear and the related equipment. The company has its headquarters in Washington County, Oregon United States. The company earned US$2,133 million in 2011 and turnover was US$ 20,862 million CITATION Yah12 l 1033 (Yahoo Finance, 2012). The company also owns and operates several sportswear retail stores and maintains its presence in more than 180 countries of the world. The company is a world famous sponsor of many high profile athletes. It also sponsored many famous teams. Its tagline “Just Do It” is well known in the world of sports. The company decided to quit elite swimwear products though it will not quit swimwear retail market. Some analysts consider it a defeat of Nike at hands of Speedo but company’s top management considers it a part of Nike’s long-term growth strategy. It is said because Nike acknowledged Speedo’s supremacy in swimming competitions by releasing its sponsored players from its contractual obligations as well allowing them to wear Speedo’s products in these competitions CITATION Pre09 l 1033 (Press Release: LZR Racer Aquabeat, 2009).
Nike’s marketing strategy is based on the sponsorship agreements with athletes, professional teams and athletic teams of different colleges and universities. Company’s promotional strategy is a mix of advertising (especially in 1980s and 2000s) and sponsorships around the world.
Adidas:
Adidas is another world recognized brand name, the company was founded in 1924. Adidas AG is sportswear, equipmentand footwear manufacturer and its headquarters are situated in Herzogenaurach, Germany. The company earned US$ 671 million in 2011 and turnover was US$ 13,344 million CITATION Adi11 l 1033 (Adidas Ggroup Consolidated Income Statement(IFRS), 2011). Adidas’s JetConcept swimsuit gained worldwide recognition due to its grooves which were much like those of an airliner. This swimsuit helped to reduce friction drag. During 1990s, the company divided its brand into three major groups for the sake f a focus separately on each brand. These include Adidas Performance, Adidas originals and Style Essentials (Y-3 is subgroup in this group). “Impossible is Nothing” is the mainstream tagline of Adidas CITATION New11 l 1033 (News: Mark Wolfe Contemporary Art, 2011). Adidas power soccer Commodore 64, ZX spectrum, Amstrad CPC: Adidas Championship Football are notable games that feature Adidas and it is also involved in the sponsorship of domestic as well as international sports events around the world. the company has focused on its promotional activities and there was increase in its marketing budget every next year, in past few years and company expects to earn up to 47% margins in coming years CITATION Adi12 l 1033 (Adidas Group 2012 Outlook, 2012).
TYR:
Famous for its swimwear and goggles, TYR Sport, Inc. is a comparatively young players in the swimwear market, as the company was founded in the year 1985 in USA. The company is famous for the manufactures and designing of swimwear and related equipments for professional players of athletics. The company has joined hands with Swimwear Anywhere for the production of hi-technology swimwear products such as Aqua Shift, Aquapel, and Fusion 2. These products were endorsed by world famous athletes and winners of swimming competitions around the world. Hi-tech fabric suits are company’s main products in the Olympic games of past three years. The completed started research in 1999 and hoped to produce swimwear that will reduce the drag friction by 6%, and the company was able to explain components of drag force offered by the racing suits. Also it was successful in reducing pressure drag by 18% and wave drag by 13%, reducing the overall drag by 10% in 2004 CITATION Hoo12 l 1033 (Hoovers, 2012). The company has sponsored athletes like Josh Schneider, Amanda Weir, and Allison Brennan in international games. Speedo was sued by TYR in US for conspiring with the US Swimming Federation on charges of tempting their athletes but the accusations did not stop Speedo from investing in hi-tech swimwear and gaining a competitive advantage.
Arena:
Originally a part of Adidas Group, the company was founded in 1973 and has its headquarters in Tolentino, Italy. Currently it has established its presence in 103 countries; it has two major business units, Arena in Europe and Arena by Descente in Japan that is famous for its sporting apparel CITATION Are12 l 1033 (Arena: History , 2012). These two are totally separate divisions and share no technology or designs. Southeastern unit developed a hi-tech swim suit using Powerskin fabric. This fabric absorbs less moisture and thus helps to reduce the drag. Arena is reportedly the first company to focus on textile and fluid dynamics research in order to develop the fastest, lightest and smoothest swimwear. According to company’s website “Arena has equipped the world’s leading swimmers and lovers of water sports with racing, training, and leisure swimwear and accessories built on a foundation of in-depth research, technical know-how, and an unyielding commitment to quality” CITATION Are121 l 1033 (Arena: Company Profile, 2012).
Competitive Advantage:
Speedo invested heavily in latest technology that helped to manufacture and design its hi-tech products while its competitors mainly focused on expanding their latest merchandises. So the company gained a competitive advantage over its competitors and became a dominant player in the global swimwear including fashionable leisure swimwear.
Competitors’ Weakness:
Nike, Adidas and TYR acknowledged the technical supremacy of Speedo’s products as Nike and Arena released their sponsored athletes from their contractual obligation and allowed them to wear Speedo suits so that they would not be at a disadvantage in the pool. The success of the Speedo-sponsored athletes forced athletes sponsored by other brands to curb their deals. Some swimmers defied their sponsorship deals and opted for Speedo suits. Speedo‘s competitors lost market share as many athletes and teams switched to Speedo Swimwear. Some of them even exited from the competition and accused Speedo of monopolizing the game and for using technology that broke competitive rules.
Current Market Strategy:
Sponsorships: Speedo sponsors many national swimming teams which include teams of Australia, Brazil, Finland, Hong Kong, Japan, Mexico, Romania, United States, United Kingdom and Canada. It also maintains its reputation by sponsoring world-class swimming athletes around the world.
Advertisements: Speedo has traditionally focused on people over product and credibility over advertising, analysts said. Sponsorship was the key forSpeedo to reach the top position in the competitive swimwear market. For Speedo, advertisingwas done in a way by training and sponsoring elite swimmers as the company involves swimmers in its product development process. To boost its fashion brands it invested in advertisements in 2000s.
Product positioning: Speedo brand positioning should be carefully done so as to attract as many customers as possible. Speedo swimming products come in a variety of brands and different customers have their own tastes and preferences. A key method of minimizing ideas generated about a new product by a company is having a market research conducted. In this, the consumer preferences for the product, the price of related products, the brand name of related products and the target market information is gathered. The information is then analyzed and presented to the company. The ideas generated by the company about the new product are then sorted out in line with the results of the research. The ideas found to fully meet the desires of the target market are then adopted by the company and used for the product development (Khanna, Palepu, and Sinha, 2005).
SWOT matrix: This is an analysis model used for analyzing the competitive nature of a company through assessing both internal and external aspects of carrying out a business. In the SWOT matrix, Strengths and Weaknesses are the internal factors while Opportunities and threats are the external factors. Table 3 below represents a SWOT matrix framework for Speedo Swimwear Manufactures (Maxi-Pedia, 2011).
Strengths Weaknesses
Speedo is a well known brand and an established company in the United Kingdom.
Swimwear industry is not saturated and it is in growth stage
Potential market is large enough to earn profits
Speedo has experience with providing hi-tech and innovative swimsuits
Already a market leader in the competitive swimwear market and the fact is acknowledged by its competitors such as Nike and TYR
Speedo sponsors many national teams around the world and have their support.
Threats
Political and legal environment of the country may change, as it has happened in Australia when early bikinis were banned.
Almost all the hi-tech suits of Speedo have created controversy as it happened that Clare Dennis was going to be disqualified from her record-breaking event because her Speedo swimsuit saw suspected CITATION Ras11 l 1033 (Raszeja, 2011).
Competitors may join hand in order to compete with Speedo.
Operation costs such as raw material and utilities may increase drastically due to economic pressures; it will be very difficult for the business to offer inexpensive swimwear to the commons.
In 2009, FINA introduced new rules and placed restrictions on thickness of suits etc, this may cause problems for Speedo. Speedo is the subsidiary of a brand management company which may sell it any time and it can lose the financial muscle
Speedo may face problems in the United Kingdom due to its Australian roots and foreign identity.
Opportunities
With the competition intensifying in the competitive swimwear industry, the company can focus more on the fashion wear and broaden its scope.
Swimwear industry is in growth phase and the concept of beachwear as fashion is becoming popular day by day.
As the competition is increasing, Speedo has an open window for the use of technology in swimsuits. So it can capitalize on its experience.
After the success of the business in hi-tech swimwear, it may explore the similar opportunities in other fields such as related accessories such as Speedo Digital music player in the pool and movie camera.
The business may choose to use technology in a more efficient way in order to attract more customers and popularize its new brands. Internet can provide unlimited access to many online social networks.
Table 1: SWOT analysis for Speedo
U.K. Market: PESTLE Analysis
Political U.K is “the mother democracy” with its own constitution, parliament and government.
U.K enjoys political stability since very long.
This stability has encouraged a lot of foreign direct investment into the country.
Privatization of public services has led to a decrease in regulation through political measures.
Economical U.K’s economy is one of the Europe’s strongest economies and it has successfully recovered from the economic downturn of 2009.
Tourism is one of the most important industries and government has taken many steps to encourage this industry.
U.K has beautiful beaches and they are source of tourist interests as well as attraction points for swimming enthusiasts.
Social Literacy rate is high.
Higher standard of living and high life expectancy
Speedos are not encouraged as normal clothing in the country
Technological U.K. has a well-developed infrastructure
It is considered one of Europe’s technologically most advanced countries.
Technology has affected the competitive swimwear industry in many ways, such as Speedo has achieved market leadership due to its hi-tech suits
Legal Law enforcing system is divided at 3 levels ; federal, state & local
More Powers at state level, whereas federal government mostly controls, foreign affairs, economy and defense
Environmental/Ethical Due to its geographical situation in the centre of Europe, its high population density and high level of industrialization, U.K continues to call for special efforts in the field of environment protection.
Due to the construction of 8,000 biological sewage treatment plants in the municipal sector, U.K has reduced pollutants into its waters CITATION Ger03 l 1033 (U.K: Country Profile, 2003).
Table 2: PESTLE analysis for Speedo
TOWS MATRIX Strengths
1. Speedo is well known and established band
2. Industry is not saturated
3. large potential market
4. Experience in hi-tech swimsuit manufacturing Weaknesses
1. Foreign Identity
2. Subsidiary of a brand management country which may sell it any time.
Opportunities
1. Swimwear Industry in growth phase
2. Focus on fashion wear
3. Possible market expansion
4. Better use of technology, internet etc
SO Strategies:
Invest in Fashion wear market (S2, S2, O1, O2)
Use technical knowhow for development (O1, S3,S4)
Invest in the development of internet channels to reach wide range of target customers. (O4, S3) WO Strategies:
Learn about the English culture and traditions more and more from possible available online resources (W1, O4)
Joint Ventures with the local firms (S3, W2)
Threats
1. Change in political and legal environment
2. FINA 2009 new rules
3. Controversial technology of swimsuits
4. Increase in operational costs
ST Strategies:
Keep in touch with the FINA management and use international contacts to company’s benefit (S4, T2)
WT Strategies:
1. Develop an insight into the legal and political environment of the country and try to forecast 5 years major political and legal changes (W1, T1)
Table 3: SWOT Matrix
Target Markets:
Planning also entails knowledge of customer’s lifestyle for the target market. Lifestyle is important when designing the type of products to sell to consumers in different regions. To address such issue of lifestyle, the company could open a website whereby customers post their suggestions and give their likes for the products offered. In addition, communication is very important when planning new marketing strategies. Most people are technologically advanced and would love to purchase swimming costumes products online and get home delivery. Improving the Company’s website would be most appropriate. Responding to customer issues and queries go along the way in achieving customer satisfaction; thus, in attracting and retaining of customers. It is easier to satisfy and delight customers when their true and perceived needs are known than when they are unknown.
Business organizations always perform an analysis that aids in market entry strategies formulation. The market, cost, competitive advantage and government forms the globalization drivers that the country analysis basis the focus. This depicts weaknesses and strengths for a business to participate actively in the international market. Multinational business analysis like Speedo Swimwear Manufacturers, on the other hand, outlines the potentiality of the business to gain from the market participation. The analysis incorporates strategic levers such as marketing, location and product, and organization analysis such as culture, people, management and structure. The target market for Speedo consisted of the following groups.
Teenagers who swim regularly
Swimming enthusiasts who visit beaches in their leisure time
These are profitable potential market segments Speedo’s target market. Company’s performance swimsuits and gadgets like aquabeatetc can help teenage swimmers to perform better in swimming pools or during competitions at school and college level. Speedo’s unique fashion swimwear and gadgets like digital camera and music players can be favorite choice of swimming enthusiasts who visit beaches and do the swimming in their leisure time.
These two are distinct and unique segments of the target market. Investing more in the products for this target market can be a source of high profits for the company.
Segment Need/Benefits Activities Interests Opinions Demographics
Teenagers To take part in school and college studenets swimming compititons swimming Games such 12-19 years old
school and college Swimming lovers in their surroundings as Olympics etc Esteemed
and local swimming Visit swimming pools Sports Sports Events Both Genedrs
competitions regularly Urban Dwelling
Beach Visiting To enjoy Swimming lovers Fashionwear Entertinment All Ages
Swimming and spend some Often Visit Beaches in Prefer branded items Fashion Have leisure time
Enthusiasts quality time on U.K. over generic it
