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Individual Case 7: ASICS Chasing a 2020 vision; November 13, 2019 Joshua Mills

-Introduction/Background ASICS is a sportwear company that has roots back to 1949 in Kobe, Japan where it started as the brand “Onitsuka Tiger” offering basketball and marathon shoes to the Japanese Market. In the 1964 Tokyo Olympics, 47 athletes won medals while wearing the Tiger shoes resulting in the brand becoming well known outside of Japan and so they began to target the U.S. market switching from the tiger to a 4-stripe design. Due to sensing a lack of diverse apparel to offer its customers, in 1977 Onitsuka merged with two sportswear companies and change the company name to ASICS (Anima Sana in Corpore Sano; meaning “A Sound Mind is a Sound Body”). In 1986, ASICS released their first GEL-technology jogging shoe which protected athletes’ feet through shock absorption. Due to a burst in economic growth within Japan during the 1980’s ASICS quickly expanded into shoe offerings for many diverse sports as well as clothing and other sporting goods. ASICS continued to improve their technology and sponsored marathons leading to them becoming successful generating both sales and brand awareness within the market and continued growth. In 2002 they relaunched Onitsuka Tiger as a European lifestyle brand with high-end fashionable designs and thin soles. In 2010 set a five-year growth plan to reach 400 billion yen with 10% of operating income by concentrating on only running, athletics, and lifestyle strengthening the company as a “True Sports Performance” brand. In 2015 ASICS relaunched the Tiger brand with causal thick soled styled after U.S. streetwear. February 2016, Oyama (the president and CEO of ASICS) announced a new five year strategic plan with the goal of increasing annual sales to 750 billion yen with an operating income of at least 10% of sales, the plan consisted of six core strategies: 1) shift to a direct to consumer mindset; 2) expand the consumer base; 3) communicate a consistent brand; 4) create differentiated innovation; 5) pursue operational excellence; 6) develop people and the team. (pg. 1-5) -Statement of the Problem 1. Will refocusing on a direct to consumer mindset, expanding the consumer base, and communicating a consistent brand help ASICS reach there 220 goal of reaching 750 billion yen with an operating income of at least 10%. 2. How can ASICS best use the Runkeeper fitness tracking app to help expand their customer base and improve their digital presence? -Analysis ASICS has differentiated itself from their competitors up to 2016 by positioning its brand as a “True Sport” and “Performance” brand as opposed to “Lifestyle” and “Fun” brand with a focus on running and athletics. (pg. 18; Exhibit 3). The core customer base is composed of performance running shoes which accounts for over 50% of their sales, they have sponsored numerous marathons to help grow this customer base. (pg. 6) In order to be more direct to consumer ASICS plans to focus selling direct to consumers by opening over 60 stores globally each year for next five years but is unsure of where they will be located. Currently ASICS has most it’s stores in Asia (617), followed by EMEA (82), and the Americas (75). ASICS has been contemplating entering the “Fun Run” segment as they feel that functional improvements would be more highly sought by this group versus performance improvements, in product development ASICS

Individual Case 7: ASICS Chasing a 2020 vision; November 13, 2019 Joshua Mills

focuses on cushioning, stability, breathability, durability, fit, weight, flexibility, and grip but with so many advances that have been made my ASICS over the years it may be harder for consumers to notice advancements and superiority to previous models. ASICS is considering streamlining the high-end functions to cost cut to create cheaper shoes to attract fun runners noting that they value foot protection over performance enhancements. This mid-tier market will result in a shoe that has lower margins but is more affordable to the part time “fun runner”. In 2015 there were 16 times more (16,500) 5K race events held than marathons (1,100) and almost 4 times more 10K’s (4,200) (pg. 14, Exhibit 1) In February 2016, the company launched a campaign “Want it More” tagline which was seen as a “tough-fitness” marketing approach yet it was intended to instill the view that “if you want to get better, whoever you are, then ASICS will help you get there” but it hard to tell whether the tagline was able to reach audiences other than those seeking performance (pg. 8). ASICS digital presence is lagging with only 1 million of their 70 million pairs of shoes being sold directly from ASICS e-commerce. With the advent of wearables and smartphones the idea of merging fitness with technology has been growing, Nike and Adidas had their own Apps and and ASICS had an ASICS app that was tailored to marathoners but since its launch in 2012 in only 3 years of the 1 million users only 500,000 were active users, it was tailored to marathoners performance improvements and training in preparation for a race and not towards the causal runner. To potentially gain a larger customer base ASICS recently acquired the company that markets the Runkeeper app which was a GPS enabled app, the customer base of this app was individuals that ran on average 2.5 miles per run and over 50% took over 10 min to run a mile. There was talk that having two apps may be confusing and redundant. -Recommendation ASICS should focus on direct to consumer mindset to help reach there 2020 goal doing this will further develop the market awareness help strengthen the brand equity for consumers. ASICS needs to develop strong relationships with distributors of their products in order to create better placement within the stores to increase visibility and increase promotional discounts to help make ASICS more competitive with competing brands (Nike, Adidas, etc.) to help promote ASICS more competitively leading to further substitutions. ASICS should open its retail stores in locations in large metropolitan with high populations with a focus on the Americas and European areas as these have the smallest footprint of ASICS stores as well as in areas where more marathon finishers have worn ASICS such as Paris, Tokyo, Rome, and NYC. Having store locations in busy areas will allow the brand to have higher visibility to a larger base of consumers and will maximize sales due to more foot traffic and in turn brand awareness. ASICS should also risk venturing into the athletic leisure market due to it being lucrative market. They should keep their core positioning as a true sport performance but also focus on the positioning of “Fun Run” Segment focusing on a second positioning of “Fun” and “Lifestyle” which will allow them to focus on comfort innovations style which may not shave seconds off your time but will make you feel like your running on the cloud and gain more enjoyment for the occasional fun runner (such as increase comfort at the expense of added weight or elastic laces that also had comfort and ease of use and are more sleek looking than tied laces) This will help target the lower distance

Individual Case 7: ASICS Chasing a 2020 vision; November 13, 2019 Joshua Mills

runners such as 5k runners which has the highest number of total finishers due to having more overall held events. (pg. 14 exhibit 1) ASICS should make sure that the fun run mid-tier shoe has a visible branding that sets it apart from their high-performance footwear to ensure differentiation and minimize cannibalization as the avid marathoners would clearly know the difference. ASICS should have “ASICS Performance” be the performance brand, Onitsuka be a “Luxury” brand, and the “ASICS Tiger” should be the fun run mid-tier brand focusing on comfort and affordable price. ASICS should also discontinue their “Want it More” campaign as it did not push their intended message. ASICS must focus on increasing their weak digital footprint to increase online sales through better online advertising focusing on social media (Facebook, blogs, YouTube) and high usage smartphone App Ads such as Angry birds, words with friends, etc. To further expand its digital presence, ASICS should merge their ASICS app and the RunKeeper app into a consolidated app that has a subscription service for those preparing for a race and want customized improvements as well and a basic version for those that are in the “Fun Run” segment as this is the segment that Runkeeper already targets, to further expand customers ASICS could also partner with a wearables company as this is a growing consumer market that could be incorporated into its consolidated app system.

References Ofeck, Elie and Akiko Kanno 2018. ASICS: Chasing a 2020 Vision. Harvard Business School. Exhibit 1 ASICS SWOT analysis Strengths -

Continuous technical innovations and technologies Worldwide established brand Well known for their performance running shoes

Opportunities -

Strengthen e-commerce sales Increase online presence for advertising (social media/smartphones) Offer promotions like competitors (discounts) Increase apparel sales through better placement

Weaknesses -

Dilution of brand from being too diversified Lagged in online sales and social networks usage Apparel sales low

Threats -

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Competitors such as Nike, Adidas, Puma, Under Armor, New Balance etc, that offer discounted products, Competitors having better placement of products Competitors having better apparel sales Online...