Executive Summary:
CCM Hockey is a traditional and authentic company that offers long-lasting and reliable hockey equipment. The success of the new line of skates’ launch is paramount to the company. With the launch of new line, the company must re-establish the faith of the customers in the CCM products and gain its position in the market, position that was lost due to past quality issues. CCM Hockey strongly believes that they should target customers in the retail channels, and are focused on selecting a proper positioning/targeting strategiesa proper positioning/targeting strategy, when they launch the new line of skates. Due to implementation of social media campaign, management must re-assess the budget.
Our group analysis illustrates that CCM Hockey chances for a successful launch have a strong foundation. The new product has a perfect combination of using new technology in creating high quality product that will ensure the success of re-launching the U+Pro Skate.
The future of CCM depends on a marketing strategy for a successful re-launch of the U+ Pro skate to regain creditability as a high performance skate company. And CCM is contemplating how to re-build the brand equity to reposition this product.
The future of CMM depends greatly on the success of the re-launch. CMM is faced with the challenge of gain confidence of the initial customers, explaining the improvement done in the new U+ Pro skate and improving their communication programs. The success of the re-launch greatly depends on their communication and the level of confidence that customers have on them
Situational analysis
Objectives:
-Successfully re-launch of the U+ Pro skate
-Increase market share and regain the leading position in the market
-Re-establish creditability as a high performance skate among elite players
-Restore CCM brand as a leading hockey skate
-Reach target gross margin and sales profit from the U+ Pro Reloaded product line
Background:
Canada Cycle and Motor Company Limited (CCM) was formed in 1899, in Weston, Ontario to combat the American market for bicycles. The market for bicycles begun to declined due to market saturation and seasonality. The sport of hockey was growing and CCM entered the market and within 30 years, they had 90 per cent of all players wearing CCM skates. The company introduced a number of technological features into the world of hockey (ex. Tackaberry boot). The image developed by CCM during their history is a classic, traditional and authentic company making long lasting reliable equipment. CCM is well known for their skates and acquired other hockey equipment manufacturers (ex. Koho and Jofa). CCM changed their name to The Hockey Company and in April 2004 Reebok International acquired the company. Since 2007, the company is called Reebok-CCM Hockey Inc. and its headquarter are located in Montreal, Canada.
CCM’s marketing strategy was product driven and used media, social networks, retail and professional players. It also had campaign themes and partnerships with major hockey leagues. The media strategy was traditional print in hockey publications and TV, online social media, advertising and partnered with hockey schools. The company used commission based sales agents to sell products to different channels. Also, they had salaries paid to in-house to Key Account managers and had a sales force that served all team businesses.
The global hockey equipment market was very competitive. In the market share for skates, CCM is ranked third behind Bauer and Reebok and had fallen out of the consideration set of elite players.
SWOT Analysis:
Market Analysis:
According to the case study the hockey equipment industry is in the mature stage of development. The companies sell equipment in two major categories: head-to-toe and goalie. Skates and sticks are the key business segments. Canada, the USA and Europe are the key markets and annual sales that equal to approximately $615 million are distributed in equal parts among them.
Small equipment manufacturers find it very difficult to compete against the large companies including CCM and therefore are often sold to the solvent companies. At the moment there are several key competitors: Reebok-CCM Hockey, Bauer, Easton and Graf.
Hockey has lost some of its popularity recently, because it is more expensive than the other kinds of sport, in particular soccer. Those people who play hockey usually purchase durable and branded equipment through various distribution channels. The hockey equipment manufacturers especially compete for the customers in the 12-18 age groups. And there were three consumer segments in the hockey equipment market worldwide. The first, the Personal Expression and Performance group, comprised 49 percent of consumers. The second segment consisted of Smart performers (45 per cent). The third segment was the Price Conscious Consumers (6 per cent) for whom price was paramount (Ross, 2011, p4).
In terms of the CCM, this company is one of the strongest manufacturers in the industry. However their market share has not been growing. Bauer and Reebok were able to become the market leaders in recent years. CCM failed to compete in the high end skate segment and had to focus on the entry-level products. Now the company is trying to restore their position as a leading hockey equipment manufacturer and the innovative technologies together with the endorsements and active promotion should help to do that.
Segmentation analysis:
The CCM had to reevaluate themselves and come up with new strategies to ensure the success of re-launch. The company’s personnel are to look at the past failure of the companies launch of the U+ Skate pro. They are to take note on the reasons that could have led to the launch not being a success and come up with possible solution. The study should be designed to inquire if;
Increased marketing of the product would lead to the success of the re-launch of the product
There is need to explain the improvement done on the old product to come up with the new product
Marketing themes and product features that could be used to differentiate it in different market segments
The potential profitability of different segments.
CCM should focus on the three segments of customers that are the most easy to identify. Their most loyal customers, the new marketing strategies should target them and explain to them the improvement and benefits of the U+ Skate pro. Their most loyal customers are not so hard to convince but commitment should still be put in place while dealing with them. They should also focus on the undecided customers; these are customers who buy they hockey product from any company. They marketing strategy and communication should be aimed at convincing them that they have the best. The third segment of customers to focus on is those who are loyal to other specific competing companies. They should aim at convincing them to try their new product and that they will not be dissappointed
CompetitorsCompetitor’s analysis:
There are several large companies that compete with each other in the hockey equipment industry. Bauer is the strongest company with 39% of the global market. Reebok is in the second place with 20% of the market. There are also smaller competitors such as Eaton and Graf. Brief description of the competitors is provided in the table.
Financial analysis:
- The recession of the 2008 has impacted the CCM hockey performance deeply.
Reebok International has been confronted by a gradual decline of their net sales from €2,473M to €2,148M. However, in 2008 the operating profits had a deep decline of 106.42% for Reebok International. (Refer to Appendix A for more information).
Operating expenses need to be decreased and Reebok International needs to perform a detailed analysis of their operating expenses. In just two years, the operating expenses have increased from 31.5% over of the net sales in 2006, to 37.34% over the net sales in 2008. (Refer to Appendix B for more information). Combined with the decrease of the sales, it leads us to think that the increase is a clear indication that the fixed operating cost represent a big portion of the operating expenses and Reebok International along with CCM hockey need to come up with solution to reduce the avoidable fixed cost.
- The gross margin of Reebok International has stayed stable at about 36%.
Annual net sales also decreased from 2007 to 2009. If CCM keeps the same market share at 15%, the projected gross sales in 2009 would be US$92.25M. Unless, CCM Hockey will eliminate a portion of the fixed cost, it means that the operating loss will increase more in 2009. (Refer to Appendix C for more information)
The market share of the CCM Hockey increased only 1% in 2008. In comparison to the competition this is increase was not satisfactory as the main competitor of the CCM Hockey, Bauer continued to increase their hold in the market by an impressive increase of 9% in 2008, when the entire industry sales had a decline of 3.4%.
In 2009, the industry sales are expected to have a deeper decline of 8% versus 2008. However the launch of the new skates, might give the CCM hockey an opportunity to increase their grasp on the market.
How CCM adopt the market strategy to rebuild the brand equity and brand personality?
If CCM market tests effectively reflect the commercialization of this new U+ Pro skate?
How to increase the client’s royalty to wait for the re-launch of this product till Fall of 2011?
Key success factors:
- Client enthusiastic on the new feature of U+ Pro skates
- Time factor is neglected completely by clients
- Media and advertising affect the consumer Media and
Key uncertainties:
- Client already bought the skates before the launching of the new product
- Family income decrease due to depressed economy
- Warm weather in the coming winter
Alternative analysis:
Alternative 1:
Increase the presence of the CCM Hockey skates amongst Hockey players worldwide, making CCM Hockey their brand of choice.
Pros:
• It increases the brand popularity and creates the brand personality
• It increases the brand reputation and confidence in the brand
• It has the potential to increase the sales of the product to the fan base of the hockey player
• It will decrease the scepticism of the quality of the products
• It will increase the sales and market share
Cons
• It might be expensive
• It does not attack all the segments of the market, making the repositioning diffi cult
Alternative 2:
Showcase the product by organizing a free event/tournament, where some of most talented hockey players of peewee group are invited to play using the CCM Hockey products in conjunction of inviting some of the most famous player to attend
Pros
• Gain the lifetime loyalty of “the Boss”
• Gain the loyalty of “the Boss” parents
• It speaks to both “smart performers” and “personal expression and performance” group, as it enhances the qualities of the offered products
• New technologies, that provide extreme speed and increase the performance can be introduce and tested in these events
•
Cons
• It might be expensive
• It does not attack all the segments of the market
Alternative 3:
Invest in new skate technologies that improve speed acceleration, durability, decreases skate weight, create better contact with the foot, while staying true to hockey culture.
Pros
• It will eliminate the stagnation on the products, by offering new revolutionary products
• It will increase the need to have the new skate due to revolutionary technology
Expand the new market and rebuild the reputation of elite player
Cons
• New products might be expensive due to extensive research
• Not all market segments can afford the product
The product might have a high risk, as it might not trigger the consumer’trigger th
Alternative 4:
Increase partnerships with various hockey organization like Canadian Hockey League, American Hockey league and etc. as well as individual who have the influence to help the performance of the products and gain exclusive rights worldwide to supply the team uniforms.
Pros
• It will increase the deliverance of the products to the most avid fans of various teams
• It will increase the market share
Cons
• It can be expensive
• It does not consider the Price Conscious Consumer
Recommendation:
Short term: Alternative 1+2. It will successfully launch the product and restore the faith of the consumer (in alignment with the objectives)
Long Term: Alternative 3+4 It will increase the market share and set CCM hockey as a leader of the industry (in alignment with the objectives)
Action Plan:
Phase 1 – Launch a campaign to promote the product
Steps:
1 sLaunch a new branding campaign for its CCM line of hockey skates by using slogans like “Learn skating before walking” or “Score!” and etc. and support the campaign with TV and print ed ads, web and radio advertising.
2 Emphasize the best qualities of the product to gain the attention of the consumers.
3 Pique the interest of Boss by developing a series of advertisements that target the group.
4 4 4 Organize activities where the Boss is invited to attend.
Phase 2 – Launch the product
Steps:
1 sUse the hockey legend/ famous players to advertise and promote the product.
2 sOrganize information session to increase the knowledge of the retails sales force on the product, in all retail stores.
3 Get maximum feedback on these sessions.
4 Emphasize the qualities of the product.
Phase 3 - Persist in expanding the market
Steps:
1 Create memorabilia items like small edition of the product to maintain a constant interest on it.
2 Create new model of the product, model that emphasize various qualities of the skates.
Contingency:
In case the recommendations fail, CCM hockey has two options:
Return to the roots, where they provide the same old products, making sure that they are aware of the stagnation / saturation of the market and limit advertising.
Expand the business in different direction, providing products in the sport industry. However, the focus should be in soccer (European football). Soccer seems to have replaced a part of the hockey business and has potential to increase further in North America.
