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New Balance: A business analysis

Paper Type: Free Essay Subject: Marketing
Wordcount: 3376 words Published: 16th May 2017

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New Balance or New Balance Athletic Shoe, Inc. (NBAS), a company that makes shoes and foot wears based in Boston, Massachusetts. This company was founded by William J. Riley, in 1906. It began as New Balance Arch Support Company which sells arch support and other shoe accessories. In 1970s, New Balance expended its business and specialized in shoe design. New Balance has since grown larger to be one of the largest sports foot wear maker in the world. Other brand that is incorporated with New Balance includes Avaron, Dunham, PF Flyers, Brine and Warrior. To cater the demanding needs, the company has opened a few factories outside the United States, one is in England and the other is in China. This is to accommodate and cater the need from the Europeans. It still maintains five of its factories in the United States.

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Marketing Perspective

New Balance can constantly remain competitive in local and global market because they always share the knowledge between employees. New Balance set their principal guide of employees via hire a truly qualify and person with interview with several stage and keep their employees update with surroundings information and knowledge in the course of training and development to maximize their chance for success. Employees are constantly receiving training in teamwork and technical skills so they cannot be lacking of new skills.

1.1 Method of Work

Newly hired employee begin with a 22 hours classroom preparation on solidarity and continuously training on the factory floor with five or six employees per group sharing their tasks and helping each other. Training is capable to give employees latest technology, learning something new and not out of source plus brainstorm of new ideas among employees regardless of rank level higher or lower employees because mostly creative ideas for process improvement come from shop floor workers. New Balance also create a freedom of open communication between employees and company lying on trust and fair management to give their employees the best work environment experience and boost up their performance during working. These well-trained employees can manage computerised sewing tools and mechanical stitches allocating 20 works done by one person. Their employees are switching tasks every few minutes so they can be boring doing the same task for a whole day. All of them are involved with the manufacturing development helps enhanced better designs, improve quality, and innovate their processes competences. This kind of collaboration also can be useful when one of the employees sick or on leave, so the others can back up the operation cause every single employee know how to operate every machine and do others works. No breakdown or lack of employees will be face.

1.2 Advantages and Disadvantages of Going Global.

New Balance too pulverizes 30 patterns to save the time taken to produce a pair of shoes from 3 hour in China to just 24 minutes. They can make huge of profit when going global by produce the products closer to its market, like having supplier in China to sell it to the market of China. In China, cost of labour just $1.30, which is $2.70 different with Maine cost of labour. And China never out of source. They can also be more famous and well-known by every person besides they also face disadvantages of going global when they lost millions of dollars in sales without acceptable pledge to the problem and at the same time they spent millions of dollars to pay the legal fees. This happened because the supplier filled the market with unconstitutional New Balance footwear and continued to do so even after the agreement was terminated. Thousands of pirate things or copy paste items can be found in China and that’s why New Balance abridged their Asian purveyor’s number and strictly supervises their progress.

2. Strategy Formulation and Processes

There are a few of strategies to tackle customers and maintaining quality at lower cost applies by New Balance including relationship marketing that help to maintain existing customers. This method of marketing is a long period manner of marketing efforts concentrating on how to draw and possess customers through potential buyer and depends on their customer’s requirement and how New Balance fulfil their demands that are varying along with time and surroundings style. Mostly, long term customers are referred by their friends, and take a free word mouth promotion to instigate them. This technique can help New Balance get new customers and strengthen their bonds with loyal customers.

Next, is the social marketing which is an ideal approach to achieve satisfaction of customer more effectively than their competitors in the market like evaluate their own product with other company’s product without publishing the other company’s name but customer can realize the name of the company that they talk about. They did this thru advertisement strategy via media, web and else which is information can simply attain to the customer and working on target market.

The design of advertisement also takes effect on their marketing plan. The design must attract customer’s attention, lodge product in the awake or unawake mind even though the prospect just see it in flash, and astonish a positive memory of the product in the prospect’s mind. As human being, people sometimes can remember what they saw and heard so that’s why New Balance take step ahead to advertise frequently so customers can be reminded repeatedly bout the existing of the product. This liability is up to marketing manager that ensure the end product is one that demand to and go well with the customers’ desires. They also responsible for the management of the products line, ensuring that it remnants receptive to the demands of the marketplace and those superseded or bad shoes are reject.

New Balance always observe their customer’s needs and that they want something new every single day, so they continuously acclimatize with new and latest technologies and design to make sure their current and new customers not left behind with the design. To make this comes to reality, product management is involve for research, development, design and engineering to the production. Furthermore, they did research marketing starting from initial analysis which are identified and examined potential significant factors and variables then the classification of the problem recorded. After the problem known, data that sought were determined as part of research study planning.

2.1 Improving Customers’ Needs

New Balance obtained to permit conclusions and recommendations, then survey from customers been gathered and the results are interpretation lastly presentation of the result shown before management proceed to the production of new product. New Balance, as a growing and updated company, also sustain their customer with comfortable and effortless shopping with just one click through their own online store with easy payment using credit or debit card. Inside their landing page, customer can create their own custom shoes starting from plain shoes, can choose their own design, adding up with their own desire colours, their own name or words they want to put on, sizes and more with offering free shipping within selected county and country. This method can save their customer’s time, and give their customers freedom to choose, and can increase their own sales because their page can be surf globally means order can be make anywhere borderless and can give more cheaper price without paying to intermediaries plus a new and distinctive method to promote footwear. Customers have three major satisfactions before they buy the shoes; which are price, quality and design.

2.2 Quality at Low Cost

Pricing strategies is another way to tackle customers to buy their product. Certain customers want high quality product, so they do not care about the price but mostly, people are blissful if they can get high quality product with lower prices with unique design at the same time. Customers are willing to pay for what is valuable for their money. But, too cheap product can make customer think that the product has low quality even the design is quite desirability. Here, brand plays its role. With strong name of brand and well known globally, New Balance comes with affordable price with high quality products and fashionable design. Moreover, packaging of the shoes must be attractive so New Balance wisely designs their packaging creatively because sometimes people ‘judge the book by its cover’. In addition, New Balance use concept known as marketing mix that firstly New Balance apply two method, identification and exploit to recognize potential customers’ needs, desires, how they make up their minds and how they can be made conscious of the New Balance’s product then scrutiny of what thrive for their competitors by test and error using target group of customers. All of these strategies are require matching the consumer behaviour that always changing depends on the customers mood, economy, satisfaction, personal experience.

3. Manufacturing perspective

Shoes are designed for sports and other physical activities. A shoe comes in different styles and shapes because of the purpose it’s made and the material used in making the shoes. Usually, materials used are made from flexible materials and the soles are made from rubber.

There are two main materials that made up a shoe; plastics that is made from petrochemicals and rubber, a kind of sap that is extracted from certain kind of trees mainly rubber tree. Other raw materials were also used in shoe making industries such as leather. Leather is made from skins of animals mainly cow, pigs, sheeps etc. Fabrics, be it natural fibers or synthetic fibers were also used as the raw materials.

There are two main materials that made up a shoe; plastics that is made from petrochemicals and rubber, a kind of sap that is extracted from certain kind of trees mainly rubber tree. Other raw materials were also used in shoe making industries such as leather. Leather is made from skins of animals mainly cow, pigs, sheeps etc. Fabrics, be it natural fibers or synthetic fibers were also used as the raw materials.

Footware sales in the United Stated for the year of 2000 for example have risen significantly. Americans purchased 405.4 million pairs of shoes according to a studies conducted by Sporting Goods Manufacturers Associations. Shoe manufacturers such as New Balance, Nike, Converse designed and developed shoes that are not only to suit its purpose; as a covering for the foot, but also to capture the sense of style and fashion.

A shoe can be evaluated from its ‘product performance’ which is simplified as ‘3F’; fit, form and function. It is important that the person has to be satisfied with the comfort, satisfaction and safety when wearing the shoes.

Over the last few decades, technology enhancements have improved the functions of foot wares. Some shoes are made to improve the shape and appearance of the shoes rather than its functions. Designs and the developments of shoes have much changed throughout the years. New designs and developments have taken in to counts the much important aspects such as designing a shoe that will support a good posture, allows foot to move as it was designed to without constrain, biomechanics, and the materials technology.


Figure 3.1. Elements of foot ware designs Source : Ullman, 1997 The mechanical design process. McGraw Hill.

Function : shoe is a foot ware that is used to protect the human foot while doing various activities. Designs of shoes have changed throughout time and are also influenced by human culture. There are so many types’ categories of shoes available such as stiletto heels, kitten heels, lace-up shoes, high-Tops, loafers, Mary Janes, platform shoes, school shoes, work shoes and many others. Take works shoes for example; A work shoe is commonly used in industrial environments such as factories, construction sites, oil rigs and other workplace. This kind of shoes is designed to protect the wearer and can provide high traction while able to stand heavy wear.

Fit : It is important that the wearer feels comfortable, feels safe and satisfied when wearing a shoe. The way the foot rests inside the shoe is one important condition in assuring a good foot posture. With the availability of cushioning technology, it has made the wearer feels more comfortable. Cushioning technology is quite varied with manufacturers marketing air soles, pads, pods, gel or fluid soles.

Shoe manufacturing processes.

Shoe consists of sole, insole, outsole, midsole, heel, and vamp. These are the basic parts of shoes that are mainly in the market. Other parts of a shoe are lining, tongue, quarter, welt and backstay.

3.3.1 Parts of shoe:

Sole – the exterior bottom part of the shoe

Insole – interior bottom of the shoe.

Outsole – the layer of the shoe that is in contact with the ground

Midsole – layer between insole and outsole.

Heel – rear part at the bottom of the shoe.

Vamp – the upper part of the shoe

3.3.2 Shoe making process

Generally, a shoe factory has four sections or departments which in other words are also called production line. Along this production line is where the raw materials are turned into a finished product. The four departments are – Cutting department, Machining department, Making department, and the Finishing department.

Cutting department – In this department, workers make the upper part of the shoe. Usually the upper parts of the shoe are made of leather. This operation needs a highly experienced worker as the price of leather is expensive and wastage should be minimal.

Machining department – Pieces of cut shapes are sewn together here in this department to complete the upper section of the shoe. Here the complete upper sections undergo several stages of sewing processes. First, It is sewn with a flat machine. Then, is it made into shoe shape and a machine called ‘post’ is used to sew the rest of the surface. Various edge treatments are also done here, onto the leather to give an attractive look to the finished upper section.

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Making department – ‘Last’, a plastic mold shaped of a foot is used to mold the upper section. Firstly, an insole to the bottom of the last is attached temporarily. The upper section is stretched and molded over the last and attached to the insole rib. After the procedure completes, a “lasted shoe” is obtained. Now, the welt- a strip of leather or plastic- is sewn onto the shoe through the rib. The upper and all the surplus material is trimmed off the seam. The sole is then attached to the welt and both are stitched together. The heel is then attached which completes the “making” of the shoe.

Finishing department – to give the shoe an attractive finishing’s, the sole and heels are trimmed and buffed to make a smooth finishing. Here the shoes are also polished, waxed, and buffed to make it more attractive.

4. Necessity of quality planning and quality control processes

4.1 Quality Planning

Quality planning is a creation of plans for quality, reliability, operational, production and inspections. Quality planning determine customer needs, develop product in response to needs. Following are tools of quality planning: When introducing any new process, cost benefit analysis will highlight the costs associated with that and also helps to identify the savings that can be made. This will help in improved quality and less complaints and faults. Benchmarking can use previous similar projects as an indicator of potential problem areas, providing possible inspiration for improvement. Indentifying the areas in advance allows improvements to be made in advance of full production. During sample production, statistical analysis can identify areas where actual production is less than that expected from timing analysis. The causes can be many, from equipment or workspace layout issues to lazy workers. And last are the quality improvement cost, and also what are the savings involved. Apart from these four main tools there are many additional tools used for quality planning, such as brainstorming, affinity diagrams, force field analysis, nominal group techniques, matrix diagrams, flowcharts, and prioritization matrices (Frank M Gryna, et al., 2007).

4.1 Quality Control

Quality control is a process employed to ensure a certain level of quality in a product or service. It may include whatever actions a business deems necessary to provide for the control and verification of certain characteristics of a product or service. The basic goal of quality control is to ensure that the products, services, or processes provided meet specific requirements and are dependable, satisfactory, and economically sound. Quality control stress testing of products to uncover defects, and reporting to management who make the decision to allow or deny the release, whereas quality assurance attempts to improve and stabilize production, and associated processes, to avoid, or at least minimize, issues that led to the defects in the first place (Jay Heizer, et al., 2006).

Essentially, quality control involves the examination of a product, service, or process for certain minimum levels of quality. The goal of a quality control team is to identify products or services that do not meet a company’s specified standards of quality. If a problem is identified, the job of a quality control team or professional may involve stopping production temporarily. Depending on the particular service or product, as well as the type of problem identified, production or implementation may not cease entirely. Quality control can cover not just products, services, and processes, but also people. Employees are an important part of any company. If a company has employees that don’t have adequate skills or training, have trouble understanding directions, or are misinformed, quality may be severely diminished. When quality control is considered in terms of human beings, it concerns correctable issues. However, it should not be confused with human resource issues. Even with such a clear-cut difference defined, identifying the differences between the two can be hard. Basically, quality control involves evaluating a product, activity, process, or service. By contrast, quality assurance is designed to make sure processes are sufficient to meet objectives. Simply put, quality assurance ensures a product or service is manufactured, implemented, created, or produced in the right way; while quality control evaluates whether or not the end result is satisfactory. By using Sig sigma process a company can reach total quality control (Dale H.Besterfield, 2008).

Ishikawa diagrams also called as fishbone diagrams, cause-and-effect diagrams or Fishikawa are diagrams that show the causes of a certain event . It is a team brainstorming tool used to identify potential root causes to problems. Because of its function it may be referred to as a cause-and-effect diagram. In a typical Fishbone diagram, the effect is usually a problem needs to be resolved, and is placed at the “fish head”. The causes of the effect are then laid out along the “bones”, and classified into different types along the branches. Further causes can be laid out alongside further side branches. The main objectives of this tool are: Determining the root causes of a problem, focusing on a specific issue without resorting to complaints and irrelevant discussion, Identifying areas where there is a lack of data (Johannes ledolter et al, 1998).


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