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Comment Form for Assessed Work

Section OneTo be completed by the student Pleasetick as appropriate

Name (s)………………..Zhuocheng He................................ MBA FT □ MIB □ Undergraduate □

.......................................................................................... MBA PT □ MSc □ Diploma □Certificate□

.......................................................................................... Specialization...................................................................

.......................................................................................... Intake n°..........................................................................

Student ID Number (s) ......................................................... Grenoble Main Campus □Off site (state which one) □

Subject ……..International Marketing.................................................................................... ……………………………

Assignment □Oral Presentation□Exam □

Title ….Better Understanding the Target Market and Customer: The Opportunities of Foreign Luxury Products in China.................

I hereby declare that the attached assignment is my own work and understand that if I am suspected of plagiarism or other form of cheating; my work will be referred to the Disciplinary Committee which may result in my exclusion from the program.

Signature …………..Zhuocheng He....................................... Date …..11-08-2010..........................................................

Section Two To be completed by the Professor I lecturer

Note below your comments on content, structure and presentation. Comments on specific points should be written on the assignment. Enter grade out of 20 on the bottom of this page. Please indicate whether this is a first or a second grading.

□ First grading…□ Second grading

Professor's name..............................................................

Signature.........................................................................

Date received ................................................................... Date returned to student ........................

Individual case study:

Geox

Zhuocheng He

GGSB Student--Master in International Business, Group

C

This assignment is for Mr. Coletti Michele due on 28th

January 2011 for the Managing Technology class.

The key success factors in the footwear market

1) Affordability

As the statistics published by the SATRA in 2008 (Shoe and Allied Trade Research

Association) have shown, the second the third largest footwear-consuming countries

are China and India with about 2100 and 800 million pairs respectively. And due to

the fact that both countries are developing economies, the majority of the customers

there are less willing to pay high prices for shoes than customers in the developed

markets of the west. Thus, the affordability issue is of the most importance in the

footwear market, where the companies can provide the quality products with the

most competitive prices are more likely to win the market share.

2) Proper and precise segmentation

As was written in the case, “Footwear manufacturers typically focused on either the

customer group they were targeting, such as men, women or children, or the product

type, such as casual wear, formal ear or sports shoes.” (Ali Farhoomand, 2010, 5)

Therefore, it’s essential for the companies to adopt a “riffle approach” rather than a

“shotgun approach” unless the companies are big enough to compete in all the

segments. That is to say, the companies should only focus on one or two segments

where they have the competitive advantages. For example, the Italian high-end

brand Ferragamo, which charge a premium for its products, should only compete in

the fashion formal wear at the upper side of the market, while Chinese brand Lining

should currently focus on the upper-middle part of the sports shoe segment of the

China market.

3) Good supply chain management

Due to the fierce competition in the saturated footwear market, the act of

outsourcing the manufacturing has already become a norm. However, transferring

the manufacturing in the countries with relatively cheaper labor cost also rise

additional risks for the firms, including the potential barrier to the efficient

communication and coordination between the manufacturer and the retailer and

also the quality control over the products. And also in the upstream, the efficient

cooperation with the distributor and the retailers are also a valid concern.

The competitive advantage of Geox shoes

In my understanding, the competitive advantage of Geox shoes lies in its patented

“breathability” technology. This unique feature of breathable membrane in the

shoe’s sole helped Geox to carve out a niche in the casual footwear market and

sustained its competitive advantage by the patent that prevents other competitors

from copying the design. furthermore, the proper combination of technology and

fashion, for which is famous in its country of origin, also increases the

competitiveness of Geox.

The innovation Geox introduced and the strategies they are

pursuing

According to my understanding, the innovation that Geox introduced firstly falls into

“modular innovation” , because the product uses architecture & configuration

associated with the existing system of an existing product, meaning the Geox shoes

still composes the traditional structure of ‘shoes’—membrane, sole, vamp etc.

However, it employs new components with different concepts, meaning Geox

introduced this “breathability” technology to the membrane in the shoe’s sole that

had many small channels that are too narrow to allow water to enter but wide

enough to allow water vapour to exit.

Secondly, it is a “sustaining innovation” rather than a “disruptive innovation” because

the new feature results in better performance rather than simpler and also it causes

a relatively higher price and required more complicated design.

The strategies that Geox adopts can be better described as “technology oriented”

and “niche focused”.

For “technology oriented”, it’s obvious that Geox, since inception, differentiated

itself for other shoes by introduction the new patented “breathability” technology,

which it marketed and advertized solely without even using any models or

celebrates, as a lot of other competitors do.

For “niche focused”, it has, up to now at least, largely stayed at the casual footwear

segment through a “riffle approach” as mentioned before, even though it eventually

will have to expand to other segments.

Suggestions to Geox

If I were the consultant to the CEO, I would suggests three things to sustain the

growth of the company:

First, I would suggest Mr. Polegato to diluted his current shares from 71% to close to

51%, just enough to maintain a majority shares but get extra financing from the

market to future expand the shops aggressively.

Secondly, I would suggest Geox to explicitly state to the end user that the sole with

holes are in fact “watertight”. Because being a customer myself, I don’t think they

have said it clearly to the customers and it’s just the first concern that people will

come up with when they purchase a pair of shoes like that. They can probably

achieve this goal by simply putting a sticker with illustration on the sole.

Thirdly, I would suggest Geox to enter into the sports shoe segment, first at the

running and golf shoe niches, by using the Diadora brand they acquired. To do that,

they have to restore the brand image by increasing advertisement and introducing

the “breathability” technology to the Diadora shoes.

Lessons for other companies in mature industries

Through the successful story of how Geox made it big in the saturated footwear

market in such a short time, the other industries can at least learn these following

points from the example:

1) Initially place a focus on the right niche segment

2) Invest in R&D adequately and continuously, also collaborate with big universities

3) Carefully protect the intellectual property through patents

4) Emphasis the strength and concentrate on it