Athletic Footwear Distribution Channels
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Questions and Answers

What is the primary distribution channel traditionally used by athletic footwear manufacturers?

  • Private-label sales to specialty boutiques
  • Wholesale sales to independent footwear retailers (correct)
  • Online sales through social media
  • Direct sales to consumers at trade shows

    • What is a common retail markup over wholesale prices for athletic footwear at premium retailers?

  • 20%
  • 60%
  • 40%
  • 100% (correct)

    • Which of the following regions has the least number of retail outlets for athletic footwear?

  • Asia-Pacific
  • North America
  • Latin America (correct)
  • Europe-Africa

    • What role do sales representatives play in the distribution strategy of athletic footwear manufacturers?

    <p>Convincing retailers to carry the company's brand</p> Signup and view all the answers

    Why do athletic footwear manufacturers operate their own websites?

    <p>To provide access to consumers far from retailers</p> Signup and view all the answers

    How many retail outlets for athletic footwear are estimated to be in Europe-Africa?

    <p>20,000</p> Signup and view all the answers

    Which distribution model allows manufacturers to sell their products directly to large retailers?

    <p>Private-label sales</p> Signup and view all the answers

    What is a characteristic of retailers that carry athletic footwear brands?

    <p>They usually have a limited selection of brands.</p> Signup and view all the answers

    What factor primarily influences overall production costs at footwear manufacturing facilities?

    <p>A combination of wages, fringe benefits, and training expenses</p> Signup and view all the answers

    What is the cost to ship pairs from a production facility to a distribution center in the same region?

    <p>$1 per pair</p> Signup and view all the answers

    Why might production not be concentrated in regions with lower wages?

    <p>Increased shipping and tariff costs associated with exporting</p> Signup and view all the answers

    What is the tariff cost for footwear exported from Asia-Pacific facilities to North America?

    <p>$4 per pair</p> Signup and view all the answers

    What is one strategy companies might use to avoid import tariffs?

    <p>Maintain a production base in each geographic region</p> Signup and view all the answers

    What impact do exchange rate fluctuations have on footwear companies?

    <p>They influence costs at two different points in the business.</p> Signup and view all the answers

    What complicates the decision-making process regarding production facilities in different regions?

    <p>Year-to-year fluctuations in tariff rates and currency values</p> Signup and view all the answers

    What is the cost incurred when footwear is exported from Latin America to Asia-Pacific?

    <p>$8 per pair</p> Signup and view all the answers

    What percentage of total branded sales are online sales expected to reach by Year 20?

    <p>25%</p> Signup and view all the answers

    What is the projected annual growth rate of the private-label segment during Years 11-15?

    <p>12%</p> Signup and view all the answers

    Why is the private-label segment attractive to manufacturers?

    <p>It helps manufacturers to utilize unused production capability efficiently.</p> Signup and view all the answers

    Which statement about consumer demand in the athletic footwear market is correct?

    <p>There are diverse consumer preferences based on price and purpose.</p> Signup and view all the answers

    What is a major driver of growth in private-label sales?

    <p>Multi-outlet chains attracting price-conscious consumers.</p> Signup and view all the answers

    What is the expected growth rate for private-label sales during Years 16-20?

    <p>10%</p> Signup and view all the answers

    How can manufacturers improve overall financial performance when producing private-label pairs?

    <p>By ensuring that the price received exceeds direct costs per pair.</p> Signup and view all the answers

    What can happen if a company emphasizes online sales below the industry average?

    <p>They risk falling short of expected growth in online sales.</p> Signup and view all the answers

    What does the competitiveness of a company's strategy depend on?

    <p>The actions and decisions of rival companies</p> Signup and view all the answers

    Why should participants be cautious about following advice from former players of the game?

    <p>They may not have played in a similar industry</p> Signup and view all the answers

    What is the probability that past competitive efforts match current game conditions?

    <p>Under 5%</p> Signup and view all the answers

    What must happen before calculating each company’s competitiveness?

    <p>Each company must save its final decisions</p> Signup and view all the answers

    What could lead to flawed thinking in business strategy planning?

    <p>Assuming fixed competitive advantages</p> Signup and view all the answers

    What type of information should participants view with skepticism?

    <p>Tips from prior participants in different industries</p> Signup and view all the answers

    How does the timing of decisions affect game outcomes?

    <p>Final decisions must be saved before evaluations can happen</p> Signup and view all the answers

    Which aspect is NOT a factor in determining overall performance in the game?

    <p>Prior competitors' pricing strategies</p> Signup and view all the answers

    What is the criterion for judging a company's brand advertising expenditures in a given region?

    <p>Expenditures must exceed the regional average for all companies.</p> Signup and view all the answers

    How does celebrity endorsement affect consumer purchases of footwear?

    <p>It enhances brand image and positively influences consumer purchases.</p> Signup and view all the answers

    Which factors contribute to the image rating of a footwear company?

    <p>Global S/Q rating, market share, and social responsibility actions.</p> Signup and view all the answers

    What impact do companies with above-average current-year brand advertising expenditures have on their sales?

    <p>They outsell companies with below-average advertising expenditures when other factors are equal.</p> Signup and view all the answers

    What is the main reason for companies to invest in celebrity endorsements?

    <p>To gain an advantage over competitors and attract buyers.</p> Signup and view all the answers

    How often are image ratings for footwear companies updated?

    <p>Annually, considering S/Q ratings, market share, and social responsibility.</p> Signup and view all the answers

    What happens to image ratings during the annual updates?

    <p>Newly-released ratings are published and accessible to buyers.</p> Signup and view all the answers

    What is a potential drawback of hiring celebrity endorsers without adequate advertising?

    <p>It can dilute the effectiveness of the endorsements.</p> Signup and view all the answers

    Study Notes

    Athletic Footwear Distribution Channels

    • Independent Retailers: The primary distribution channel for athletic footwear manufacturers.
      • Approximately 60,000 retail outlets globally, with North America and Europe-Africa each having 20,000 and Latin America and the Asia-Pacific each having 10,000.
      • Retailers typically carry 2-4 brands of athletic footwear, stocking only a limited selection of models and styles.
      • Markups range from 40% at discount chains to 100% at premium retailers.
    • Online Sales: A growing channel for manufacturers, accounting for 15% of total branded sales, expected to reach 25% by Year 20.
    • Private-Label Sales: Attractive due to projected growth of 12% annually during Years 11-15 and 10% during Years 16-20.
      • Driven by multi-outlet chains using lower-priced private labels to attract price-conscious customers.
      • Manufacturers supply private-label pairs to retailers on a competitive-bid basis.

    Manufacturing Location & Costs

    • Production Costs: Influenced by base wages, overtime pay scales, fringe benefits, training, equipment, and production improvement options.
    • Regional Production Costs: Significant variations in production costs across different geographic regions.
      • Latin American and Asia-Pacific regions may have lower base wages & overtime costs, but other factors (e.g., fringe benefits, training, equipment, etc.) can offset this advantage.
    • Export Costs: Influenced by tariffs, fluctuating exchange rates, and shipping costs.
      • Shipping costs are higher for pairs exported to other regions compared to the region of production.
    • Tariffs: Apply to footwear exported to different regions.
      • Asia-Pacific to Latin America: $10 per pair.
      • Asia-Pacific to Europe-Africa: $6 per pair.
      • Asia-Pacific to North America: $4 per pair.
      • Latin America to North America: $4 per pair.
      • Latin America to Europe-Africa: $6 per pair.
      • Latin America to Asia-Pacific: $8 per pair.

    Exchange Rate Impacts

    • Footwear companies are subject to exchange rate adjustments at two points:
      • When buying raw materials (e.g., leather, rubber, fabrics, etc.).
      • When selling footwear in foreign currencies, particularly for exports.

    Factors Influencing Competitive Advantage

    • Brand Advertising Expenditures: Companies spending above the regional average for brand advertising are judged competitively stronger.
    • Celebrity Endorsements: Boost brand image, but require significant investment in advertising to maximize their influence.
    • Image and Brand Reputation: Based on global average S/Q rating, global average market share, and social responsibility efforts.

    Best Practices for The Business Strategy Game

    • Avoid Predetermined Strategies: The success of any strategy relies on the specific decisions and actions of rivals.
    • Be Skeptical of Outside Advice: Past experiences in other industries or from previous game participants may not be relevant due to changing competitive dynamics.

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    Description

    Explore the various distribution channels for athletic footwear, including independent retailers, online sales, and private-label options. Understand the significance of different sales strategies and their impact on manufacturer growth and retail pricing. This quiz delves into global retail dynamics and emerging trends in the athletic footwear market.

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