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ECCO Case Study

ECCO shoemaking - International Business and Management course @ Bocconi University
by

Nicola Dotto

on 5 June 2014

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Transcript of ECCO Case Study

Maxime Allard, Pauline Chevalier, Nicola Dotto, Grégoire Schaetsaert, Charlotte Laterre, Lisa-Luna Letist
Agenda
ECCO’s presentation:

Characteristics
Market and products
Locations
Competitors
SWOT

Pros and cons of a
fully integrated vertical value chain

Implications
on the sales and marketing strategies

Suggestions
to increase the sales and marketing efforts

Evolution
after 2004






ECCO: 50 years of passionate shoemaking
ECCO's characteristics
Founded by Karl Toosbuy

Family owned company

Net Revenue : 3400 DKK mln ( 455€ mln)

Employees 9.657

Shoe sold: 12.04 millions
Markets and products
Shoe manufacturer extremely committed to customer comfort, design quality and innovation

Men, ladies, kids, bags & accessories

Running, outdoor, golf high quality shoes



ECCO
Fully integrated vertical value chain
Design
Development
Locations
Retail
Production
ECCO has a

fully integrated vertical value chain

What are the pros and cons of this strategy?
Control
of inventory, investment and innovation
Quick response to market
Understand
better the local customs and purchasing patterns
Take advantage of local resources and expertise
Inputs
can be improved and customized as desired
Differentiation
Control from
“cow to shoe"
High demands on quality and lead times can be satisfied
Hidden technology
knowledge
and
capabilities
+ control over raw material supply and distribution
Protection against competition & barrier to entry
Increase the
complexity
of the production process
Bureaucratic inefficiencies & complicated decision making processes
Increased
costs
of in-house production
Competitive disadvantage compared to outsourcing
Unables competition among producers and retailers
Higher costs of production
Significant
investments
in the production chain
Hard to adapt continuously to market and innovation changes
Internal phases of the entire value chain
Difficult to spread the risk that might affect raw material production or distribution channels
Global Value Chain Management
COMPOSITION OF MANAGEMENT BOARD AS OF 2004
The management Board does not contain a Chief Marketing Officer, while there is one for sales & retail, production and operations.

What are the implications of the integrated vertical value chain for the sales/marketing strategy?
Marketing
?
What do people think of ECCO?
low brand awareness
perceived quality
marketing issue
=
BRANDED MARKETERS
VS
ECCO
80% in house production
outsourcing
design and market
"cow to shoe"
policy
more
recognition
=
=
high
quality control
x2 expensive
2) Increase advertisement budget



Action Plan

No marketing focus inside the board
Old school product oriented organisation

1) Marketing team: Communication strategy
“message of unconditional quality”


Action Plan

3) Gain market insight

Update existing product portfolio

Expand and diversify


Action Plan

new products
prototypes
new technologies
fine tuning cutting edge techniques
direct injection
Competitors
Clarks
Timberland
Geox
department stores,
shops,
shop-in shops,
concessions,
multi-branded shops
Casual Lifestyle Footwear segment
Sales of €340 million in 2004
Italian design and R&D; Outsourced production (Vietnam, China...)
Casual Lifestyle Footwear segment
Sales of US$ 1.534 million in 2003
Outsourced 99% of
its production from
UK to Asia due to
increasing
manufacting costs
How can ECCO increase their sales/marketing effort?
Footwear, apparel
and accessories
Sales of US$ 1.328 million in 2003
90% of their
production located
in South America
and Asia
customer comfort
usability
Dieter Kasprzak: director of design
Sales externalizations
Market presence worldwide

Understand better local tastes

Opportunity to further expand
What's next:
Their mantra is to always aim higher, Ecco's founder said to his employees: " You must achieve in the next 10 years, what we did in the first 40".
Ongoing process of strengthening brand awareness through marketing and integration of workflow systems
Portugal

WIP
||
The firm's plan it to keep on reducing investments and maintain its growth
What's next:
Full transcript