Lady Foot Locker

1. Lady Foot Locker Presentation by:Julie Perkins & Jody Vail March 21, 2006

2. Situational Analysis • Founded in 1982 • More than 600 stores nationwide • Athletic footwear industry offers a wide array of product segmentation • LFL specializes in athletic footwear, apparel, and accessories • There are very few retail chains that specialize in athletic footwear for women exclusively • Competition consists of department stores, and apparel specialty shops

3. Situational Analysis • Strong relationships with key suppliers is essential: • Current products on shelves • Special make-up products • Highly competitive markets • Advertising & in-store marketing • Negotiate for: • pricing • product exclusivity • shoe design • colors • material • matching apparel

4. Situational Analysis • Technological advances: • Aided in developing further differentiation in the industry • Increases consumer demand and competition • Shortened product life cycle • Promotional activity consists of: • Health magazine “Race for Women” • Sponsored events such as fitness classes, and spa treatments w/ well known instructors • Receive market funds from vendors for advertising, in store displays, and sales associate education for products • Athletic event sponsorships

5. Situational Analysis • Trends within industry: • Prior to LFL, women were purchasing Keds & Canvas shoes • It is now possible to find a sneaker for every activity or sport and even casual wear • The athletic footwear market has declined over the past couple years

6. Situational Analysis • Objectives & Constraints: • Staying current with new and updated products • Working to secure product exclusivity (very hard due to other competitors within the industry) • Financial Condition: • Strong financial position • Pricing strategy allows them to reduce inventory quickly and still maintain profits • LFL is currently #3 in the top ten retailers for total pairs sold • History of Problems: • Suffered one huge product launch failure (Swoopes II) • Initially product only sold 3%-4% per week and was forced to markdown after only 10 weeks • Issue at Hand: • Whether or not to launch a new product (Rebecca Lobo Reebok sneaker) • Product exclusivity • When to start advertising and launch product

7. Marketing Strategy • Target Market: • 18 – 37 year old active females • Likely to be active in sports, fitness, and family life • 12 – 17 year olds represented an important secondary market • Sales however occurred across a broad age segment, the LFL customer was considered to be somewhat ageless market Total U.S. Athletic Footwear Market (% of total pairs sold by consumer segment)

8. Market AnalysisU.S. Athletic Footwear Market (% of total pairs sold by footwear category)

9. Marketing Mix Variables • Product: • Due to growing consumer demand, consumer segmentation, and increased competition, manufacturers frequently introduce new products which shortens product life cycles • Pricing: • Based on 30% – 55% supplier gross margins on wholesale selling price and 45% retailer markups on the retail selling price • Typically offered at full suggested retail price for 1st two weeks • Shoes were not marked down until they fell below a 10% weekly push • Retail Channels: • Competition was based upon several factors: 1) target consumer segment, 2) price, 3) merchandise assortment, 4) store reputation, 5) store location, 6) advertising, and 7) customer service • Promotion: • Celebrity endorsements • National brand and image campaigns

10. Marketing ExpendituresTotal Advertising Expenditures for the Top 10 Athletic Footwear Brands

11. Lobo Launch or No Lobo Launch? • Facts surrounding the decision: • The Lobo shoe would incorporate Reebok’s Hexalite technology • Lobo’s contract with Reebok enabled them to involve her in product endorsements and ads, store appearances, and speaking engagements • 12-17 year olds would be critical to reach due to their buying power, in the past this segment bought shoes based on fashion, styling, and brand appeal rather than performance • When to launch the product: • June at the start of the inaugural WNBA season or October when school basketball season begins? • Retail Exclusivity: • LFL desired exclusivity to help differentiate • Marketing Support: • Reebok would provide the launch plans and marketing funds (television, print, and in-store merchandise displays) • Can a female athlete drive product sales or at least create demand?

12. SWOT Analysis • Strengths: • 3rd highest % of total pairs sold within a given year • Great reputation for supply of women’s athletic shoes • Few other chains specialize in women’s footwear • Largest portion of sales during back to school season • Prides itself on service • 600+ store chains strengthens relationship with vendors • Power to solely own the Rebecca Lobo launch • Weaknesses: • Sales below that of Footlocker and Kids Foot Locker • Swoopes II launch failure • 12 – 17 year olds do not purchase shoes for performance • Web page is not kept up to date • Lack of creative advertising

13. SWOT Analysis • Opportunities: • More product segmentation • Technologies designed to enhance performance • Increase in women’s sports participation • Lobo contract enabled product endorsements, ads, store appearances, and speaking engagements • 12 – 17 year olds critical is proceeding with Lobo launch also offer athletic wear and accessories to match • Threats: • More product segmentation • Sales within industry starting to fall • Increasing demand for men’s and children’s shoes • Discount stores

14. The Decision • Launch Lobo shoe with Reebok • Take minimum amount of pairs for exclusivity (15,000) • Price product at $80.00 • Advertising and promotional support to commence in June • October delivery date for purchase • Rebecca Lobo is well known among teens and with solid marketing efforts the market can be reached effectively • The Hexalite technology can be marketed as an attractive lightweight active wear shoe providing a great deal of comfort • First 5,000 pairs sold will receive one of the following • free tickets to a Lobo game • photograph with Rebecca Lobo • autographed accessories or apparel • team shirt