Industry Analysis of New Balance

This article provides an industry analysis of New Balance, covering topics such as competition analysis, dominant economic features, external environmental analysis, and key success factors. The aim is to provide insights for a potential marketing plan. The article discusses the company's competitors, its positioning strategies, and the dominant economic features of the athletic footwear market. It also analyzes the external environment using the Five Forces Porter's model and PESTEL analysis.

System04099
[COMPANY NAME] [Company address]
NEW BALANCE

Contents
Executive summary...............................................................................................................................3
Introduction...........................................................................................................................................3
Competition analysis.............................................................................................................................4
Dominant economic Features................................................................................................................5
External environmental analysis............................................................................................................6
Five forces Porter`s model.....................................................................................................................7
Key success factors................................................................................................................................8
References...........................................................................................................................................11

Executive summary
Certain critical elements of industry analysis macro environmental analysis that is used to
understand several external factors of organisation that uses analytical techniques. Moreover,
certain stakeholders that help in the operations of business and their affect is considered in
Five forces Porter`s model. The aim of this discussion to consider all the factors such as
economies of scale affecting the distribution, advertising, and production concerns,
competitors, certain economic domain features and key success factors that can help to make
a successful and potential marketing plan.
Introduction
Industry analysis is a method that gives and facilitates the company to build its understanding
regarding how New Balance perform when as compared to other similar products or among
the whole industry. It is important to allow the business owners to estimate that how much
profit the business can generate. The below discussion commences from competitive analysis
of New Balance, dominant economic features, external environment analysis, and figuring
out the Key success factors (Paperap, 2018). As for industry and situational analysis where
environmental analysis plays an important role in identifying the external and internal
elements that affect the organisation`s performance. Here, two model are discussed named as
PESTLE analysis and five Porter’s forces model. Moreover, the analysis continues in such a
way that no factor should be left behind while preparing the marketing plan. The first
assessment comprises of in-depth analysis of what competitive advantage it enjoys, what
positioning each renowned shoe company have received. To make a marketing plan,
organisation has to consider its competitors and what competitive advantage they enjoy
(Marketingweek, 2015).

Competition analysis
With the increasing globalisation especially in business concerns, many business-
manufacturing firms produces footwear and shoes apparels. Nevertheless, popular shoes
brands always stand in competition to outdo one another with modern and advanced shoe-
making technology in order to provide the customers the shoes that can fulfil the
requirements. Famous competitors such as Nike (a Oregon-based company), Adidas, Jordan,
Testoni (designed as formal shoes popular among opulent business class), Converse
(remained and dominated highly competitive US shoes market), Berluti, Reebok, Johnston &
Murphy (best known for sourcing, marketing, distribution and designing), Puma, and
Bostonian. The above 10 are popular shoes companies in the world (Sousa et al., 2014). The
products are differentiated on the basis of what particular attribute does the company offer.
For example- Nike is biggest sports equipment producer and is famous for designing, global
marketing, and manufacturing. Testoni`s designs are famous for formal occasions. Converse
generally indulge in manufacturing which is famous among Teenagers and youth
(BusinessWire, 2016).
As far as positioning strategies of New Balance is concerned, it has adopted many marketing
strategies to get brand awareness in the market. The company has undertaken marketing
campaigns through television, social media platforms, and sports magazines. Moreover, it has
its own website, page on Facebook, YouTube, and twitter in order to handle advertising
activities (Fresh Britain, 2018). The company has competitive advantage among other shoe
manufacturer. This brand provides affordable product both in terms of price inspired and in
terms of well-taken care of employees that drives performance. The company engages good
marketing techniques and focus on strategies that has contributed to handle competition.
People wear sneakers for fashion and leisure purposes and New Balance targets the market
but as a recommendation, company has to look for more market share by indulging the

operations through advancement in technology (Fresh Britain, 2018). The company has the
opportunities to update the products and come up with advancement and innovations to
penetrate the target market. Majority of crowd is tended from younger generation and there is
a huge population on which New Balance is not able to cover or focus on. Moreover, new
Balance generates its brand recognition from Baseball, rugby, and soccer players but people
who are generally influenced by these players who adore these players. Not everyone is
interested in players, so it is better to undertake this through a celebrity endorsement
especially during sponsorships and endorsements for sporting activities. The sportswear
industry is growing and becoming more competitive with the passage of time (Molnár, and
Lengyel, 2015).
Dominant economic Features
Globally, the market size of athletic footwear is valued at USD 64.30 billion during 2017. It
is expected that it shall increase in the coming years from around 5 percent from 2018 to
2025. Growing awareness and enthusiasm in regard to health benefits of fitness and sport
activities so that it can flourish the commercial retail e-commerce sector worldwide and
rising levels of personal disposable income of customers. The Growth rate is reasonable
because people are realising that importance of each type of shoes and activities related to it
such as to prevent muscle injuries, knee pain, back pain, hip pain, and leg injuries (Caravaggi
et al., 2015). Other prominent players such as Nike, adidas, and Skechers USA focused on
developing innovative technologies in order to increase the stability of sports shoes and
provide them a comfortable zone. The segment of running shoe has dominated the market in
2017 and it contributes to daily usage.
Although, it is important to consider economies of scale when a firm is entering into the
market. In order to have a edge over the industry leaders. Companies is able to compete at all
the levels such as reasonable prices, efficient production, and good product quality. Key

barrier to entry is adopting of traditional distribution channels. It is quite evident that
combining the shelves at stores such as sports authority and Footlocker. Nike and Adidas
dominate the shelves of retail stores. Lesser-known brands becomes risky as adidas and Nike
replaces the new entrants. Production facilities is very close to raw material and other cheap
labour sources. The facilities are located for most customers that result in high distribution
cost. The cost saving strategies is due to the placement of production facilities that allow
cheap production of products but on the other side, there is high cost of transporting products.
It has efficient economies of scale especially in production that is they continue to focus
improvement in production process by incurring low cost with high or increased level of
revenue (Yang, 2015). The cost of incurring distribution procedures such as New Balance
shoes have less retail stores so it incurred high transportation and distribution cost.
Nevertheless, independent distributors and subsidies sell New Balance products. New
Balance plans to open more stores and give franchises to reach the target market. The
competition is cutthroat but competitive advantage can win to achieve a bold image in the
market. Marketing plan has to consider competition in the industry (Paperap, 2018).
External environmental analysis
In this assessment, we consider two environmental situations named as Five forces Porter`s
model and PESTEL analysis-
Political factors- Government influences the economy of the country. A strong example of
this can be imposition of corporation tax. Being such a big company, it has to pay a good sum
or large proportion as it is recognised among the high bracket of tax (Bhutto et al., 2016).
Economic factors- for New Balance, if country suffers from recession and earning less as a
whole, it affects the business decision and its operations. This would lead to cutting down of

jobs and kicking people out of organisation for no reason. In opposition to this, economic
growth in the country to expand more that can lead to more sales (Welty, 2013).
Social factors- Social factors are linked to customer’s preferences, demographic aspects and
changing demand of customers. For example- Aaron Ramsey wear the latest New Balance
Boots in new era. This promotes the product and induce the customers to purchase the
product. New Balance have set high standards and looked to create partnership between
manufacturers (Mora, and Merino, 2014).
Technological factors- Technology act as a barrier to entry in international market. New
Balance can expand the website and online marketing to emphasize and stress technology in
modern business world or it can lead to losing of track designs and quality standards
(Marketingweek, 2015).
Legal factors- This affects the company`s operations. While exchanging goods from different
countries, it has to consider custom duty, import, and export taxes. Before exporting,
company have to get a licence, as there always remain legal requirements in country you are
selling to. Export contract made clear what the responsibilities for the delivery are.
Environmental factors- New Balance take vital steps to execute and improve environmental
welfare. It should include providing education on environmental factors for product design
and manufacturing workforce (Welty, 2013).
Five forces Porter`s model
Bargaining power of customers- This force according to different segmentation such as new
Balance has separated its target market quietly because of running enthusiasts and fashion
and trend conscious customers.

Bargaining power of Suppliers- As company buy in huge bulks from US, china, Canada,
Turkey, UK, Thailand, Vietnam, Philippines, Pakistan, Mexico, Netherlands, Jordan,
Malaysia, Israel and Cambodia. The product type has been varied in different countries such
as it buys apparels mainly from Cambodia and china and these countries already employ
labour at low wages because of high availability of labour (Grand view Research, 2018).
Competitive rivalry-Although, New Balance is America`s multinational company based in
Boston but competition always lie especially from European companies that troubles US
because the value of their currency is less. More competitors such as Nike, Puma and Adidas.
Therefore, the company strived to make its shoes more popular by showing and placing them
in popular movies such as Gone Girl, with Ben Affleck, and with Mark Wahlberg (Grand
view Research, 2018).
Threat of substitution- Threat of buying other renowned brand always exists. Due to
economies of scale and high purchasing power of customers, New Balance`s well established
competitors had become a threat due to shared target market. The company does not have
established brand name as other companies such as Nike, Adidas, and Reebok and it suffers
from losing of market share (Mora, and Merino, 2014).
Threat of new entry- This factor can influence the amount of sales but New Balance products
are highly differentiated. Moreover, New Balance already has strong association with the top
and leading sportsman. This also includes most of famous baseball athletes who promotes
and represents the product of New Balance such as Tampa Bay Rays (3rd baseman), Detroit
tigers (1st baseman), and other more sportspersons. Therefore, a person a need huge sum of
investment and highly differentiated product with superior quality to encourage and induce
people to buy.

Key success factors
Some factors are common when shoe industry is suffering. These are some identified key
success factors for New Balance-
Some KSFs do not remain same at all market segments such as New balance has its stake in
manufacturing stylish and designer sneakers for teenagers and youth. In such a competitive
industry, it is important to develop and keep a USP (unique selling proposition) while
innovating and maintaining the market share. While predicting the fashion trend, company
understand the categories of segmentation. The potential market for New Balance products
has grabbed the youth population. The company has also adopted ethical way of performing
business and created a very positive brand image that gives a viable marketing campaign,
which leads to increase in the market share of the company (Schlesinger, 2015).
While many well-known sneaker manufacturers such as Nike and Adidas that operate its
business overseas. Whereas, athletic brand named New Balance continued to make sneakers
in US. One key aim to competing success factor is something that offers customisation,
which cannot be done as quickly at global level. Another key success factor can be customer
can move online and order its pair of customised shoes that are delivered on next day. It has
also added new sneaker styles in the customised program (Schlesinger, 2015). The programs
allow the customers and shoppers to design the colour schemes. Customers can also message
personally to buy embroidered shoes. Quality is another success factor that associated and
make sure that pair of shoes is carefully inspected before it is packed. Moreover, it provides
high quality product especially in terms of craftsmanship. Expanding the new market is
important for New Balance, especially when considering the pace of globalisation. The
company have to adapt to the changing and competitive international movements in the
emerging market such as BRIC countries will have to stay competitive. New Balance is 3rd in
sales of US and globe’s sixth sport`s brand. It has copied the same business success in Japan.

The acquisition and integration among the different sports brands and readjusted the
marketing strategy to achieve the appropriate results. The analysis focused on domestic
market in current years. Packaging enables to re-position the brand with successful industry
experiences. The brand store in South Africa has a sporting culture that New balance can grab
market share through advancement in innovation and technology. The company had also
headed in online retailing sector. Growing level of health in public and people are leading
active lifestyle and this add more sales of running gear (Salerno et al., 2015).

References
Bhutto, A, Brohi, H., Prithiani, J., Khubchandani, R., and Kumar, S. (2016) strategic
marketing plan of Nike. Reserch Gate: Technical Report, 36(J), pp. 14-15
BusinessWire, (2016) Top 3 Trends Impacting the Athletic Footwear Market in the US
Through 2020: Technavio. Available on:
https://www.businesswire.com/news/home/20160823005099/en/Top-3-Trends-Impacting-
Athletic-Footwear-Market [Accessed on: 02/12/18]
Caravaggi, P., Giangrande, A., Berti, L., Lullini, G. and Leardini, A., (2015) Pedobarographic
and kinematic analysis in the functional evaluation of two post-operative forefoot offloading
shoes. Journal of foot and ankle research, 8(1), p.59.
Fresh Britain, (2018) Brand Communication & Strategy for New Balance. Available on:
https://freshbritain.com/press/brand-communication-strategy-for-new-balance/ [Accessed on:
02/12/18]
Grand view Research, (2018) Athletic Footwear Market Size, Share, & Trends Analysis
Report By Category (Running Shoes, Sports Shoes, Aerobic Shoes, Walking Shoes, Trekking
Shoes), By Gender, By Retail Channel, And Segment Forecasts, 2018 – 2025. Available on:
https://www.grandviewresearch.com/industry-analysis/athletic-footwear-market [Accessed
on 02/12/18]
Marketingweek, (2015) How New Balance is reinvigorating its brand to move away from its
lifestyle image. Available on: https://www.marketingweek.com/2015/10/13/how-new-
balance-is-reinvigorating-its-brand-to-move-away-from-its-lifestyle-image/ [Accessed on
02/12/18]

Mora, M. C. and Merino, F., (2014) Offshoring in the Spanish footwear industry: A return
journey?. Journal of Purchasing and Supply Management, 20(4), pp.225-237.
Molnár, E. and Lengyel, I.M., (2015) Understanding the changing geography of labour-
intensive industries from a GPN perspective: case study of the Hungarian leather and
footwear sector. Regional Statistics (5), 2, pp.144-160.
Paperap, (2018) New Balance: Competitive Advantages in the Sneaker Industry Paper.
Available on: https://paperap.com/paper-on-new-balance-competitive-advantages-sneaker-
industry/ [Accessed on 02/12/18]
Salerno, M.S., de Vasconcelos Gomes, L.A., da Silva, D.O., Bagno, R.B. and Freitas,
S.L.T.U., (2015) Innovation processes: Which process for which project?. Technovation, 35,
pp.59-70.
Schlesinger, J. (2015) New Balance: The US Company shaking up the sneakernomics:
Efficiency and customization keep these sneakers “Made in the USA”. Available on:
https://www.cnbc.com/2015/06/09/new-balance-the-us-company-shaking-up-the-
sneakernomics.html [Accessed on: 02/12/18]
Sousa, A.S., Silva, A., Macedo, R., Santos, R. and Tavares, J.M.R., (2014) Influence of long-
term wearing of unstable shoes on compensatory control of posture: An electromyography-
based analysis. Gait & posture, 39(1), pp.98-104.
Welty, M. (2013) 50 Things You Didn't Know About New Balance. Available on:
https://www.complex.com/sneakers/2013/06/50-things-you-didnt-know-about-new-balance/
[Accessed on 02/12/18]
Yang, T. (2015) LOCALIZATION OF NEW BALANCE BRAND MARKETING STRATEGY
FOR CHINESE MARKETS. Available on:

https://www.theseus.fi/bitstream/handle/10024/97708/Yang_Ting.pdf [Accessed on
02/12/18]