Hunter Boots WellingtonCase study report

The original Hunter Wellington Boot - Dark Olive Green

„They are everywhere. From the farmyard to the High Street. From Royal Ascot to the Isle of Wight. The humble welly is now„

/Thomas Quinn, Jul 10, 2012 – The Big Issue/

Author: Attila Németh

15.05.2013.

Index

Introduction …………………………………………………………………………………………………………………………………… 1.Methodology …………………………………………………………………………………………………………………………………. 1.

SWOT………………………………………………………………………………………………………………………………… 1.Global footware market outlook ……………………………………………………………………………………………………. 3.The competitive advantages for Hunter Boots when going international ………………………………………… 4.The screening criteria for Hunter's selection of the new markets in Asia ………………………………………… 5.The entry mode Hunter would use in the new Asian markets …………………………………………………………. 6.Two most important “Ps” from the marketing mix for Hunter Boots ………………………………………………. 7.Conclusion ……………………………………………………………………………………………………………………………………… 8.Bibliography …………………………………………………………………………………………………………………………………… 9.

Introduction

Hunter Boot Ltd. is a rubber boot and footwear manufacturer and designer. The company has 3 offices in Edinburgh, London, and New York. The North British Rubber Company - established by Mr Henry Lee Norris in1856 - was the predecessor of Hunter Boot Ltd., the company basically manufactured vulcanised rubber products in Scotland for over 150 years but Hunter Boot Ltd. outsourced its manufacturing base from Edinburgh exclusively to China and significantly reducing the costs of the products in September 2008.

Historically the North British Rubber Company has been involved in the manufacture of tyres, conveyor belts, combs, golf balls, hot water bottles and rubber flooring too. In this Chinese plant the enterprise produces mainly rubber boots, and also produces other products e.g. bags, socks, other related accessories.

Hunter Boot Buffer Hunter rubber care kit

The Hunter Boot company (previously North Brittish Rubber Company) is the oldest manufacturer of rubber boots in the UK. Hunter Boot Limited was registered on 17 Jul 2007. It was founded by Mr Robert Priestley Shepherd, Lord Jonathan Peter Marland of Odstock, Mr Malcolm Stewart Graham Cannon, Mr Anthony De Keyser, Mr Peter Joseph Mullen. The company proved to be not just waterproof but recession-proof posting a 41% increase in turnover to £25.7million and a 16% increase in profit before tax to £4.1million in 2009. Currently The Hunter Boot Ltd. employs 50-99 people, and has no subsidiaries. The latest Annual Accounts submitted to Companies House for the year up to 31/12/2011 reported 'cash at bank' of £19,113,000, 'liabilities' worth £12,484,000, 'net worth' of £34,838,000 and 'assets' worth £47,115,000. Registered trade marks of Hunter Boot Ltd.: Hunter, Royal Hunter, Balmoral, Huntress, Stablemate, Streamfisher, Coarsefisher, Argyll, Wellyboot, Bullseye.

Methodology

In this part of the case study report, I’ll define which theories would be used to get a whole picture about the company, in which I can impact the answers of the assignment.. For analyzing the company's internal and external situation I’ll use SWOT as a business strategy tool that helps in analyzing Hunter, when the company wants to penetrade to the Asian market. It gives a comprehensive view of the company strengths, weaknesses, opportunities and threats in context of Asian market. This model also helps to collect the information and answer the questions.

SWOT

Strengths

The company’s knowledge of comfort, quality, heritage and multifuntional use together are the main advantage of Hunters can be a steps ahead of the competitors. Hunter collaborated with British (Chinese) designer Jimmy Choo to create a range of fashionable and practical boots to the markets, and it seems the brand continues this way to strengthen their position as the luxury Hunter boots. This makes sure they stay up to date and the competitive advantage to be occured in this aspect too. The design and use of the most suitable materials probably this is the reason what makes the brand most wanted in the future too. Hunter managed to avoid the influence of the recession and improves the company financial position, despite being regarded more times as a luxury item trading enterprise, and the selling have been growing rapidly.

1.

Weaknesses

Asian people who have to deal with the issue of suffering from relatively low-income. Overall, there are not many mid- or high-class people in Asia. This will decrease the potential amount of costumers for Hunter desiger and expensive product. Hunter will have to deal with a wide range of competitors, becouse the most of the footware companies established plants in Asia, and they are in the market with their products.

But the main weakness about their price range is that there exist a lot of substitute cheaper products. Thousand of footware brands are already active in Asia, and they also produce products of good quality, but with an easier model. This will make the consumers maybe lean more to the alternatives.May be they should consider investing in whether they can lower their prices or simplify their design.

Opportunities

Hunter boots come in a diverse range of styles and functionalities (from the original hunter boot to a more casual clog design) Hunter are also looking to expand their range to cater for all outdoor, country activities, this will mean creating Umbrellas, coats, all labelled with the Hunter brand. Hunter is hoping this brand diversification will make increasing of sales. Hunter wellies normally retail at £65. However, demand for the boots prompted the company to launch limited-edition boots with fashion designer Jimmy Choo currently selling around £300. So the company aimed different customers with different, stronger purchasing power, and wider their potential needs of the products. The global footwear market is experiencing a stable growth rate due to changing fashion trends. This market has exhibited sustainable development owing to driving factors such as rising demand for innovative designs, growing awareness about healthy and active lifestyle, rising population and disposable income levels, and rise in retail culture.

Threats

The recession damaged several leading organisations balance sheets with several companies even facing bankruptcy. In fact, between June and August 2010 it was reported that the economic downturn had caused 4000 organisations to enter liquidation processes (Daily Telegraph, 2010)However, Hunter itself has done a lot to protect the company's performance, and the Members of the board of Directors took £200,000 pay cuts to ensure the companies financial position, and the production of the boot has also moved to China, to help reduce production costs, but there is a threat, that the quality oft he product would be weakens.

The success of this brand is due to its popularity with celebrities. Several, A-List celebrities have been spotted wearing hunter boots this season including a few golfers wives at the Ryder Cup. Brand ambassador, Alex James has gone a long way to promoting the boots, the Blur bassist was spotted wearing the iconic boots at several major festivals.The argue is that, the company how can transplant this strategy to a significantly different socio-cultural market.

Key players on the global footwear market: Bata, Deckers, Brown Shoes, Wolverine, Weyco, ECCO, Kenneth Cole, Nine West, Timberland, Puma, Gucci, Lacrosse, Vans, San Paulo & Alpargatas, R.G. Barry, Nike and Adidas. If they seriously deside to manufacture and sell rubber boot, it is a threat for Hunter. There are not only large companies operating in Asian footwear market, but also smaller independent brands, which are often acquired by large and mid-size companies like Hunter.

2.

Global footwear market outlook

The global footwear market is segmented into Men, Women and Kids footwear. Men's footwear market is a leading segment with 52% market share of the overall footwear market. Kids footwear market is expected to grow at a CAGR of 3.7% due to the high demand of comfortable and designer footwear for kids.Based on type of distribution, footwear retailing is sub-divided into store-based and non-store retailing. Store-based footwear retailing accounted for most of the footwear market revenue and is valued at USD 173.6 billion in 2011. Non-store footwear retailing is expected to gain pace in future and is expected to grow at a CAGR of 6.9% from 2011 to 2018 to reach USD 18,588 million by 2018.

The Asia Pacific region holds the largest share at 42% of the overall footwear market and is expected to grow at a CAGR of 2.1% from 2011 to 2018 followed by Europe with 21% of market share. The Asia Pacific region remains the point of focus for footwear manufacturers due to the cheaper cost of manufacturing and faster growth in population and disposable income of consumer groups.

Nike is the world leader in athletic and non-athletic footwear segment and comprehensively leads the overall global footwear market. The footwear market is largely consolidated with top five players including Nike, Adidas, Reebok, Puma and New Balance holding around 70% market share. Other major players in the footwear market are Asics, Converse, Sketchers and K-Swiss. The popularity of local manufacturers and growing piracy in developing countries remains the major challenge for global footwear manufacturers.

According to a new market report published by Transparency Market Research "Footwear Market - Global Industry Size, Market Share, Trends, Analysis, and Forecast, 2012 - 2018 ," the global footwear market was worth USD 185.2 billion in 2011 and is expected to reach USD 211.5 billion in 2018, growing at a CAGR of 1.9% from 2011 to 2018. In the overall global market, Asia Pacific is expected to maintain its lead position in terms of revenue till 2018. Asia Pacific is expected to enjoy 30.1% of the global footwear market revenue share in 2018 followed by Europe.

Non-athletic footwear is the largest market segment and is expected to grow at a faster CAGR as compared to the athletic footwear segment. Various fashion trends in the market such as demand for innovative designs and styles, and celebrity endorsement is driving the non-athletic footwear market.

China exports more shoes than any other country, producing almost 13 billion pairs, or 63% of overall production, in 2010, according to RNCOS. Domestic sales have been driven by online shopping and rising demand for specific brands. China has been faced with domestic currency appreciation, along with rising raw materials and production costs. Branded shoes are strong sellers in China, with companies popularizing their shoes with promotional practices. China’s footwear market has recorded strong growth in consumption and exports, which is likely to continue at an annual volume growth rate of 7% for the few years to come. Exports are strong because on the domestic market, Chinese people consume less than 2.5 pairs of shoes each year, whereas the Western average is far higher.

India’s footwear market is expected to record strong growth in the years to come, reports RNCOS. The market, which has been impacted by an increasing presence of international companies, is predicted to record close to 10% annual growth from 2011 to 2014. The market is fuelled by advantageous factors such as a skilled workforce combined with low labor costs. In production terms, India is second only to China.

(ALBANY, New York, September 18, 2012 /PRNewswire/Published Reports by Transparency Market Research)

3.

The competitive advantages for Hunter Boots when going international

“We couldn’t have asked for better publicity.”As Claire Saunders, Hunter’s marketing director, told the Financial Times in 2010

The Hunter boots have multi functional use. Lot of types of Hunter wellies exist, so everyone can find the best boot for what reason anyone wishes to wear them.

Hunter wellies are perfect choice for heavy use or in challenging conditions for man, woman, or kids. For street wear, Hunter wellies are perfectly serviceable boots that will last years as long. Advantage of the new Chinese-made wellies is the huge range of different kinds of boots available, in all sorts of colours , like original neon collection, and more and more countries, stores can sell Hunter boots all over the world.

Huge value of tradition

Hunter Wellies have built a reputation for making excellent quality boots that last a lifetime, over 150 years ago. Wellington used by rich or ordinary people, farmers, fishers and celebrities over years. Wellies were appeared in wars, on street, on cutwalks and in the countryside too.

Hunter is fashionable and exclusive

The company alliences with famous designer, actors, modells to promote Hunter brand, and give exclusivity for certain types (e.g. black Wellington by Jimmy Choo). With this method, the company can generate awareness easier since nowadays it became more important for people to follow and in this way, to wear those clothes, shoes, accesories what their icons have.

4.

The screening criteria for Hunter's selection of the new markets in Asia

The global footwear industry has been witnessing a decline. Moving forward, companies operating in developed markets such as the US will continue outsourcing production to cheaper countries like Indonesia, China and Vietnam. With consumers looking for bargains due to the economic recession, the shift toward cheap imports will continue, accounting for the majority of domestic demand. The industry will see revenue continue to decline, and pricing pressures will make the market environment increasingly competitive.

Hollensen- Global Marketing 5th edition: The international market segmentation/screening process: an example of the proactive and systematic approach

I would suggest to screen the competition as the main criteria if Hunter would like to select a new market in Asia. Asia is the world's fastest growing economic region, with more than 4 billion people. The effective demand of rubber boots is limited, but the magnitude of the population is indicate a great amount of sales (high market potential). The wealth within this region is varied, so the demand and the ability to pay is divided. The pricing pressures will make the market environment increasingly competitive in Asia. I would need to bring to light who is the key players of the target market, and what the position of the market, and what are the market shares among key players. There are more than 60 manufacturers operates of rubber and plastics footwear market in Asia. Asian and Middle Eastern manufacturers are responsible for about 70 percent of worldwide production of these products. The major manufacturing countries are China, India, Indonesia are taking advantage of lower labor and material costs. In these countries the regulations contain worldwide labor standards, including minimum wage and safety provisions. Need to define the advantages of Hunter and positioning this boots to the competitors and find out which substitute products exists in the new market, and how the company could captivate customers (marketing plan). I assume Hunter would make excellent marketing activities in Asian targeted market, because a couple of thread ties to this market (e.g. the plat of Hunter and the employees in China, Jimmy Choo is half Malaysian half Chinese by birth).

3.

5.

The entry mode Hunter would use in the new Asian markets

„Hunter Boots represent an excellent addition to any product line, whether it's for the outdoor or fashion outlet. However, we are very careful as to whom we choose to represent the Hunter brand and associated products.“ (Reseller Opportunities from Hunter website)

Hollensen- Global Marketing 5th edition: Examples of the different market entry modes in the consumer market

The company has to face up with lots of occurring questions for example which are the company's goals, the size of the organisation, the available resources, the production process in the foreign market, the expectable profit, the foreign problems and risks etc. According to these problems, the company can choose which entry mode is the most suitable and profitable, the less risky.

„Every year we are contacted with requests from prospective retailers who wish to stock Hunter products for resale. If you would like to be contacted with regard to becoming a Hunter stockist, please send your business contact details to Hunter and a member of our sales team will be in contact with you shortly.“ (Hunter official website)

In 2006, the company was put into administration and in September 2008, the production of Hunter boots was moved from Scotland to China. The reasons cited for this move was the expensive rent of the factory in UK and also that the more than 95 years old factory was old and inefficient. By moving their production to the East, they can reach appropriate sells since the company doesn't have to spend that much money to the traveling costs or distribution as they should have from the East to the West countries in Europe or in the USA.

Hunter boots could make a competitive advantage in the Asian market with their factories, because Asians are more likely to stay loyal and be struggled for one brand which is from their own country.

In conclusion, they should contract with prospective wholesalers, or retailers and use export mode first with a strict control. If “their” (where can buy Hunter) stores in a bigger number and also build their marketing plan around this topic e.g. that Hunter boots are made in China, and they provide quality to every buyer should invest for own shops, or showrooms (with joint ventures) in big cities, and later build a store chain (establish subsidiary in Asia) for Hunter product.

6.

Two most important “Ps” from the marketing mix for Hunter Boots

Price:

Hunter have its own prices in the different markets but in the Asian market they should find a price which is affordable for most of the people who want to wear in their everyday lives, but the company should also use the model and method of the differentiated products since there are boots which wear the names of famous designers and they were made with higher quality for wealthier people. In this way, Hunter boots give a different kind of experience to those people who can afford luxury and for those who wear it in order to be protected from the rain but also to be fashionable.

Product:

The product is given, BOOTS, but Hunter boots are fashionable and practical at the same time and with this they have a competitive advantage. The more and more types of colours, lenghts, shapes and styles also make the product unique and gives a feeling to the customers that they wear something comfortable and safety from rain or even snow but at the same time they stayed high fashioned and they became a part of a special community. Hunter boots are good quality and long lasting products, and has the heritage to. So if the company makes the positioning of the product could use these objectives.

7.

Conclusion

Hunter Boot Ltd. is a traditional, small rubber company manufacturing, and selling boots with an outstanding brand name, and marketing strategy in a growing global footwear, and fashion wear market . If they can continue their strategy, and wants to brake into new markets has to use the advantages of the brand name and the quality of the product against the competitors. I assume that Hunter does not like to invest too much, and take risk when they enter Asian market, so if they use local retailers, and spread their products step by step, would the most safe strategy. I think the price issue and the quality issue are the two most important, when the company creates the marketing plan for the Asian market.

"Our strategy when entering markets is typically to work in partnership, where we will take an investment that we can seek to grow over time, working closely with the local people leading the business," (Hunter Boots owner Lord Marland)

8.

Bibliography

The Big Issue -Thomas Quinn, Jul 10, 2012

DAILY TELEGRAPH, 2010 -Impact of the Global Financial Crisis

TRANSPARENCY MARKET RESEARCH - Footwear Market - Global Industry Size, Market Share, Trends, Analysis,

and Forecast, 2012 – 2018

RNCOS INDUSTRY RESEARCH SOLUTIONS - China Footwear Market Analysis

RNCOS INDUSTRY RESEARCH SOLUTIONS - Indian Footwear Industry Analysis

PRNewswire -ALBANY, New York, September 18, 2012 Published Reports by Transparency Market Research

FINANCIAL TIMES, 2010 - Claire Saunders, Hunter’s marketing director

SVEND HOLLENSEN - Global Marketing 5th edition

www.hunter-boot.com HUNTER OFFICIAL WEBSITE - Reseller Opportunities

Hunter Boots owner Lord Marland looks for new prey- Lord Marland – written by Jonathan Sibun -Feb 2009

9.