Abstract
Marketing strategy is the one component of a business organization that determines its relevance and sustainability in the contemporary market. An outdated marketing strategy or a poorly informed model of doing marketing leads to the inevitable failure of a business organization. Zappos, TOMS, and Payless are shoe companies that originated in the U.S., and each one of them has positioned itself to its clients’ uniquely and differentiated its brands to establish a territory in the expansive global shoe market. Zappos is quite established in social marketing practices, specifically customer relations. However, it spends more than average revenue to finance this strategy. In contrast, Payless targets fashionable women by marketing cheap and trendy shoes. TOMS shoes, on the other hand, uses humanitarian appeal to shift the consumer focus from self to the ‘big picture,’ thereby fueling sales. In this paper, I argue that the two companies - TOMS and Payless - have little chance, if any, of long-term growth in the contemporary economic recession and inflation since they target non-affluent clients and generate little revenue, a business model that is unlikely to sustain either of the two firms in the long run. Zappos, on the contrary, has a large customer base of affluent customers and a sustainable business model, which is fundamentally the basis for my argument that it is poised for long-term growth.
Introduction
Marketing is the lifeblood of any business organization operating for profit. Marketing refers to the set of practices adopted by a firm’s management and the organization as a whole to position its brand in the consumers’ psyche, differentiate itself from similar service or product providers. It also encompassed the value propositioning practices accomplished to win the loyalty of the target market. The consumer of the product or service of a company is the target market. Organizations do their best to orient their businesses in relation to the needs and wants of their target market. They achieve this by providing unique incentives to their clients; an aspect referred to as ‘value proposition’. In fact, most organizations compete by committing to practices that cannot be adopted by other similar organizations, an aspect referred to as differentiation. Also, companies penetrate their target market by marketing their brand in a manner to win the loyalty of the client or target market, a practice which is termed as positioning.
The business of selling shoes has escalated in recent times due to the development of Information Communication Technology. Therefore, companies such as Zappos, TOMS shoes, and Payless launched themselves in online platforms to reach their target markets. These organizations either adopted a customer-focused orientation, fashion-focused orientation or production-focused orientation. They also adopted various business strategies to outdo each other in the market. The fundamental questions and the main reason for the arguments in this paper are to establish the feasibility of the business strategies with regards to long-term growth.
Zappos is an online platform that was founded by Nick Swinmurn in San Francisco. He discovered a niche in the market and decided to exploit it. As a young person, he realized he could not get the kind of shoe he desired and neither could he get information on any online platforms dealing with shoes at the time. Armed with this information, he established Zappos to cater for all the clients’ need of shoe. Therefore, those who faced the same predicament as him could get virtually any shoe on the platform. In addition to that, the company provided free shipping and delivery services to their clients, and, in some cases, hand delivery. This level of customer experience was the reason for the explosive growth of the company due to customer satisfaction.
Zappos is a customer-oriented organization that is focused on providing top-notch customer experience. Their services are popular because, in addition to the free shipping and delivery services, they also allow a free 365-day return on their products at the company’s cost. As a result, their shoes are quite expensive to procure, and most of the profits are ‘swallowed’ by their business model.
TOMS shoes, on the other hand, was founded by Blake Mycoskie in Playa Del Rey, California. Blake realized that the growing market of shoes was satisfactory except that most companies paid attention to branding efforts and expedient deliveries and completely forgot about producing good shoes. As such, he developed this online platform to provide comfortable shoes to their target market. According to their public relations plans, TOMS Shoe Company targets both men and women between the ages of 18 – 49 years of age to use their products, their primary focus is college going individuals who need to move all day in between classes and study or teach – lecturers and students alike: that they may do so in comfortable shoes.
The subject of human comfort is fused at the core of the company values so much so, that it propositioned its consumers to provide humanitarian services at company cost every time a consumer bought a shoe: they would provide a new pair to a needy child. This proposition won the hearts of their clients in addition to the fact that their shoes were comfortable, light to wear and quite affordable. In contrast, however, their shipping and return policy charge is exclusive of the product cost and varies depending on geographical distance.
Unlike the two companies, Payless Shoe Company is fashion oriented in its business model of target customer and needs analysis of their target customer. The company was founded by two cousins in Topeka, Kansas: Louis Pozez and Shaol Pozez. The company was initially founded as a retail business in the 50’s before the invention of the internet. It was intergraded into the online platform in the late 90’s. Its marketing efforts were mainly fueled by the fashion industry which showcased their products to various fashion designers, lovers and fanatics alike. Their business model demanded an orientation toward fashion unlike the two previously discussed in this paper that focused on customer relations (Zappos) and production (TOMS shoes). This company is most known for its cost structure which enables them to spend less per unit product but still deliver a stylish product that conforms to contemporary fashion. The customer is allowed the freedom to choose which product best suits their needs: self-service. In addition to this, it has managed to faithfully provide low priced fashionable shoes: to women (their target market) between ages 18 and 49 years.
Discussion
The three companies have positioned themselves to their target markets in unique ways. Toms Shoes used humanitarian ideals to create an emotional appeal to the client. This essentially shifts the focus of the client from self to charity. The client will most likely buy without much objection if the result is a needy child getting a new pair of shoe. In addition to that, their shoes value the client’s comfort. This is a very effective strategy, in addition to the shoe affordability that makes the client feel appreciated: the fundamental need for shoes is to protect the feet not to add to the clients’ frustration.
In contrast, however, Zappos adopted a system that is focused on customer relations. The organization is a social platform for shoe lovers (who are picky) to have access to virtually any shoe they prefer. The target market is the women of 18-49 years of age who subscribe to various trends of the society. Their marketing primarily relies on word of mouth as the customer socializes with sales people and later with friends and family. The company generates a lot of revenue, some of which goes into servicing free shipping and all year-long return on the unsatisfactory products. The company was recently acquired by Amazon, an international corporation: a move which elicited an outcry from Zappos customers who cited mistrust for corporate value systems.
Payless Shoe Company has operated for several decades targeting a market of women aged 18-49. The company is proficient in their cost structure mechanism that has continuously elevated the company as the go-to-place for discounted fashionable shoes. Their prime focus is on providing fashionable products to the clients at affordable rates.
Conclusion
The TOMS shoes company is successful simply because of the emotional appeal cast on their target customers: women. Its humanitarian efforts are however detrimental to business since their inexpensive products do not cater for the extra cost levied by their charity products. Given the persistent recession and accompanying inflation rates, the company might be forced to abandon its humanitarian value proposition. This will be subsequently followed by an absence of a major differentiator and consequent failure of their brand positioning in their target market.
Similarly, Payless Company is offering leather products at low prices. In addition to that, they are no doubt spending a lot of fun on their Research and Development (RnD) budget to keep up with the changing fashion trends. They invest an additional amount designing the shoes. Given the prevailing economic issues such as inflation and recession in major economies, this business has no chance of long-term growth.
Although TOMS’ concept got customers excited immediately after the brand was launched, that initial flair will eventually die down, and the firm’s customer acquisition and growth will stagnate, especially given that the firm is unlikely to stay very innovative in the long run. For Payless, it started targeting a broader audience compared to its target market at launch, a move that will see more niche brands emerge and take a share of its current market. Lastly, the Zappos shoe company is overzealous in their bid to be the leader of customer satisfaction in the business. Their free shipping and no charge policy on return product are outrageous at best given the implications this ha on revenue collected. It would fail, save for the fact that it targets affluent clients who have no trouble paying the inflated expenses as long as they continue receiving top notch services. Zappos, therefore, has a long-term future.
References
Ahsmann, A. (2011). TOMS Public Relations Plans. Santa Monica: TOMS.
Armstrong, G., & Kotler, P. (2016). Marketing: An Introduction. Pearson Education.
Forbes Magazine. (2015). #161 Payless Holdings. Retrieved June 23, 2016, from Forbes: http://www.forbes.com/companies/payless-holdings/
Michelli, J. (2011). The Zappos experience: 5 principles to inspire, engage, and wow. McGraw Hill Professional.
Payless Company. (2016). About Us: Payless ShoeSource. Retrieved June 23, 2016, from Payless: https://www.paylesscorporate.com/home/about-us/
TOMS. (2016). About TOMS. Retrieved June 23, 2016, from TOMS: http://www.toms.com/corporate-responsibility
Yohn, D. L. (2015, September 14). Retrieved June 23, 2016, from Harvard Business Review: https://hbr.org/2015/09/your-company-culture-shouldnt-just-be-greatit-should-be-distinctive
Zappos. (2016). About Zapos: Company History. Retrieved June 23, 2016, from Zappos: http://www.zappos.com/c/about-zappos
