NewShoes Introduction to Marketing Simulation
Newshoes is a marketing simulation which offers you the chance to manage a brand of athletic shoe, and to experience the exhilaration of competition in the marketplace. Consider the simulation an opportunity to apply the marketing concepts you have studied or will study this term. Thoughtful decisions will go far toward achieving success in NewShoes. As is true in the real business world, luck can also play a role in business success. But as is also true in the real business world, relying solely on luck and not sound business decisions, is a high-risk strategy.
You and your team are responsible for deciding which markets to compete in, as well as pricing and promotion decisions for each market. You will also need to decide how much to develop your product in order to remain competitive in the marketplace. As you manage the marketing for your brand of shoe you will gain a practical understanding of business strategy and how various factors interact and affect one another in a marketing organization. By analyzing information, making decisions, and observing the results, you will experience first-hand the challenges and rewards of strategic marketing.
Unlike the real market in athletic shoes, every NewShoes company starts from the same position, so there is no competitive advantage for any team at the beginning of the simulation. Your goal is to increase sales and profits for your company. By making better decisions than your competitors, you will increase your company’s share of sales in the market and be more profitable. Key factors in making good decisions are: understanding your situation, evaluating all your options, and assessing the results of your choices. By working together with your team in each of these areas, you will learn much about managing a brand in the marketplace.
To get the most out of the NewShoes experience, we recommend the approach outlined on the following page.
NewShoes is a competitive simulation covering basic concepts in marketing.
You will learn about developing a product, while pricing and promoting it in different markets.
You will compete against your peers in a NewShoes industry. All competitors start in the same position.
By researching the markets, making good marketing decisions, and analyzing the results, you will gain experience with marketing management.
NewShoes Quick Start Guide
PERIOD DECISIONS • Corporate decisions • Marketing (input for EACH region) • Market research
SIM ADVANCES • Check Schedule for times • Complete Decisions BEFORE Deadline
SIMULATION ENDS • Evaluate team performance • Review what you have learned
STARTUP DECISION • Access simulation from course website • Input a company name
READ THE CASE • Industry background • Company starting situation
Your instructor may require additional assignments during the simulation. Check the schedule and messages on your course website for details.
DECISION ANALYSIS • Cost of Goods • Break-even • Contract Bid
EVALUATE RESULTS • Company reports • Market research
The remainder of this manual is divided into the sections described below. Understanding and success in NewShoes will be greatly enhanced by reading this manual before you begin the simulation. The sections listed below will answer most of the questions students typically have during the simulation experience, and reading them have the added benefit of improving your competitiveness. Finally, the operations guide and NewShoes case are also available on-line in the simulation software. Section 1: NewShoes Case contains a brief history of the athletic shoe industry and background on the current situation of your firm. It also provides details of the decision variables that you will set over the course of the experience. A summary table of all the decisions you will face in NewShoes is also included.
Section 2: Marketing Concepts presents a general discussion of the marketing function, the 4Ps, the strategic planning process, how to make decisions, and an introduction on how to analyze the effectiveness of your decisions. Appendix: This section provides a description of the regional markets’ customer groups in the NewShoes environment.
This section details customer expectations by region and can help guide you in marketing approaches to advertising, sales promotion, price, etc. The decisions and research request form will be useful for recording and analyzing your company’s decisions. The glossary contains marketing terms that are used in the simulation. An index concludes the appendix.
The Athletic Shoe Industry The Athletic Shoe Industry is a dynamic and exciting industry with sales of over $70 billion worldwide. In recent history, increases in product demand were fueled by health and physical fitness trends, but the advent of athletic shoes goes back to the 1800s. Now athletic shoes are common and designed to meet many different consumer needs.
When the jogging and fitness craze began in the mid-1970s, athletic shoe manufacturers were dubbed “Adidas and the Seven Dwarfs” because of the success of West Germany’s Adidas company. But the early dominance of Adidas was no guarantee of future success. In the mid-1970s, Adidas not only underestimated the amount of growth that was about to occur in the athletic shoe market but also the aggressiveness of other manufacturers, such as Nike in the United States.
The rise of Nike in the athletic shoe industry is a Cinderella story. A university runner (Phil Knight) and his former coach (Bill Bowerman of the University of Oregon) went into business distributing Japan’s Tiger running shoes in the United States. In 1971, they developed their own shoe and named it Nike. Fiddling with a waffle iron and some urethane rubber led Bowerman to develop the “Waffle” sole. This product improvement gave Nike its initial impetus. On the marketing side, the now famous “swoosh” trademark on the shoes was developed by an art student at a cost to the company of a mere $35!
Nike experienced phenomenal sales growth from $14 million in 1976 to $920 million in 1984. Although Adidas remained “number one” outside the United States, fast-rising Nike dominated the domestic market by the early 1980s. In the mid-1980s, Nike had several problems to contend with, including a peak in demand in the athletic shoe industry, quality control difficulties, and a loose and paternalistic management style that appeared inadequate for a billion-dollar firm. As Nike faltered, a new player, Reebok, surged.
Beginning its life in the United States as a subsidiary of a British firm, Reebok became a publicly held firm that went on to own its former parent. Reebok’s revenues zoomed from $4 million in 1982 to $900 million in 1986. Although Nike lost its position as number one in market share to Reebok in 1986, it regained it through astute changes in its management style, improved marketing strategies, and product development. During the 90s, Adidas dropped to fifth place in
As can be seen in this brief history of the athletic shoe industry, it is a competitive market with changing market trends and fads that result in a dynamic business environment. The NewShoes simulation will allow you to experience this same competition