Vans, Inc.: A Company Analysis - Essay Example

?Vans, Inc A Company Analysis Question Paul Van Doren, pioneer of Vans, Inc., started manufacturing shoes on the East Coast in the early 1960s. While other companies rely heavily on retailers to distribute the goods, Doren focused on direct selling (Encyclopedia.com, 2002), and marketed the brand personally to the public. Vans, Inc. gained momentum in the 1970s when skateboarding took off as a recognizable sport in California (Spencer, 1999). Others took advantage of the opportunity to sell boards and equipment, only to go bust when the fad died, which according to an ESPN history of the sport, was triggered by safety warnings to stop patronage of boards and accessories. Apparently, the customer traits at the time are not so different from those of today—customers are driven by the band wagon, and their demand for a product plummets as the craze expires. Vans associated closely to the sport, customized shoes according to customer preferences and recommendations by professional skateboarders. The company was hailed the “skateboard shoe of choice”, and remained profitable despite the competition and all efforts of the authorities to prohibit the sport (Encyclopedia.com, 2002). Vans customers were offered flexibility, affordability, and durability; these value propositions also served as the company’s competitive advantage. It added more styles, colors, and designs that satisfied more customers in the year that followed. The slip-on “was introduced in 1979, and it became the rage of southern California” (Encycopedia.com, 2002) Unfortunately, on account of related accidents, the sport was viewed as illegal, and further anti-skateboarding regulations were put into effect that somehow may have affected the sales. Question 2 Trends surface and die out at a fast pace. When companies are inflexible to changes, their downfall is imminent. Vans, Inc. survived the blows, and over time has developed strategies to cater to the changing needs of its customers. In 1981, an employee with connections to Hollywood suggested Sean Penn should wear the “black and white checked Vans slip-ons” in the movie Fast Times at Ridgemont High (Encyclopedia.com, 2002). In result, Vans converted from being a skater shoe to the must-have shoe for the dudes. However, the leverage did not last long when competitors offering low-priced imitations began to invade the market and compelled Vans to cut prices below manufacturing costs (Encyclopedia, 2002). Vans, Inc. added apparel and accessories to its product lines, yet kept the company perspective of comfort, durability, and style. In 1991, Vans restored the “dress-your-own kicks operation” that enabled customers to design their own shoes, and choose from a heap of fabrics and canvas colors (Crane, 1995, p. 37). “Customers does not want to have shoes that everyone else can buy”, according to Sari Ratsula, vice president of design and product development (as cited from Crane, 1995, p. 37). Vans, Inc. joined forces with Pacific Sunwear in 1997 to dominate the industry of young men’s skateboarding apparel in the United States (Encyclopedia.com, 2002). Meanwhile, a fourth quarter performance report in 2001 showed a 20 percent increase in Vans sales and profits, as a result of product innovation, expanded retail presence, enhanced management and liquidity (Crane, 1995). Question 3 Vans, Inc. has increased the number of sports it is affiliated with. From merely skateboarding, it became closely associated to core sports such as snowboarding, surfing, and wakeboarding. Vans also initiated sponsorship of events and venues such as the VANS Triple Crown Series, VANS Warped Tour, VANS World Amateur Skateboarding Championships, and VANS High Cascade Snowboard Camp located on Mount Hood in northern Oregon” (VANS, 2011). This act of the company is in line with niche marketing, and seeks to appeal to young men of different inclinations. A limited area of concentration—consumers 10 to 24 years old, enabled Vans, Inc. to guarantee salability of new products, heighten impact of promotional strategies, and revamp opportunities for exposure. Vans products are currently distributed locally in the United States through wholesale accounts and retail stores, internationally to about 50 countries, and on the internet. Different sports require different shoe styles. Vans, Inc. added to its product portfolio, snowboard boots that restored its position in the youth sportswear industry. Sales showed a momentous leap from 6000 in 1995 to more than 100,000 in the year that followed, and doubled between 1997 and 2001, from $46.4 million to $98.2 million (Encyclopedia.com, 2002). Vans, Inc. later accommodated female consumers and launched a complete line of women outdoor shoes in 2002. At the time, globalization is swiftly taking place, and developing countries as well have followed the current. Vans, Inc. seems to have manipulated the occasion, outsourced manufacturing to plants in China and Korea, and at the same time expanded consumer base through integration in the global market. Question 4 For many years, Vans, Inc. continued as the leader in outdoor shoe collections, and streamlined its products when participation of women in sports took the next level. However, competition with brands like Nike, Reebok, and Adidas along with major issues brought about by trade liberalization seems to make marketability less easy for Vans. To earn a stable ground, the company is in the process of promoting other lines that include music, film, video games, and iPad applications. Vans, Inc. admitted that it lacks expertise in the aforementioned categories; but although it has substantial experience in shoe-manufacturing, it did not do well in women’s collection. Diversification into unrelated product areas, according to author Paul Beamish (2001) is “part of the search process, and the firm cannot learn about its capabilities in a new product-market until it actually enters that market” (p. 64). This, he added, should involve retention of successful new businesses and divestment of unproductive lines. Among the advantages of diversified product line is economies of scope, that is a drop in the production cost as a result of increasing number of different merchandise produced. A trial and error venture can be risky, and Vans, Inc. may not recover if it falls from its present status. The company can perform extensive research and development to steer women’s collection into the right track, and back up other product lines with superior promotional strategies. Other companies, Toshiba and Bosch for example, have demonstrated the competitive advantages of product diversification; and Vans will not realize how far it can go if it ceases from trying. References Beamish, P. (2001). “Japanese subsidiaries in the new global economy”. Massachusetts: Edward Elgar Publishing, Inc. Business Wire (2002). “Vans, Inc. reports record fourth quarter and fiscal year sales and earnings”. AllBusiness.com [online]. Available at [Accessed 23 October 2011]. Crane, L. (1995). “Voting with your feet”. Vibe: Lifestyles of the rich and shameless, August. Vibe Media Group. Encyclopedia.com (2002). "Vans, Inc." International Directory of Company Histories. High Beam Research Inc. [online]. Available at [Accessed 23 October 2011]. Spencer, M. (1999). “Getting thrashed 120”. Orange Coast, November. California: Orange Coast Kommunications, Inc. VANS (2011). “Company Overview”. Vans Official Website [online]. Available at [Accessed 23 October 2011]. Read More