Puma Marketing Strategy Case Study Solution
Headquartered in Herzogenaurach, Puma is the third-largest manufacturer of sportswear all over the world. Puma SE (aka Puma) is a German multinational conglomerate that designs and manufactures casual and athletic footwear. Rudolf Dassler founded the company in 1948. The earliest logo of Puma consists of a square, and a beast jumping through a D.
In 2006, the company gained the right to manufacture clothes for Italy. Puma manufacturers accessories for football and basketball players, runners, trainers, fitness freaks. It sponsored famous athletes like Eusébio, Diego Maradona, Pelé, Clyde Frazier, Johan Cruyff, Tommie Smith, Jim Hines, Martina Navratilova, Boris Becker, and many more.
It sponsors football clubs like Crystal Palace F.C, Borussia Dortmund, Newcastle United F.C, Bengaluru FC, and more. Currently, Puma has more than 9000 employees and distributes its clothes to over 120 countries, and generates a revenue of $2.5 million in a year.
- The company has high ambitions. As it accomplishes its goals, it aims even higher.
- Puma aims to establish itself as the most sustainable and demanding sportswear and lifestyle brand in the world.
- Puma spends a lump sum in sponsoring its products all across the world.
- Puma witnessed an increase in sales over the past six years.
- Puma has a proficient Research & Development team. It was the first to introduce screw shoes.
- Puma faces tough competition from Adidas and Nike.
- Puma has 7% of the share, whereas Nike has 32% and Adidas has 15%.
- Puma has disputes regarding wages among its workers that cause strikes and slowdowns production.
- Puma needs to shift its focus, and produce apparel in the lifestyle section.
- The company needs to work more on increasing its brand visibility.
- Identify and capture the potential consumer base and generate more sales.
- Change in economic conditions might affect Puma’s market share badly.
- The threat of new market entrants lies in the form of competent departmental stores overseas.
Hierarchical company structure
This sort of organization structure involves grouping the business processes and employees depending on the human resource skills, resource implementation. It supports the need for specialization among the task force and economies of scale across the company-wise scope of functional departments. Following are the groups existing in the hierarchical company structure of Puma
- CEO office
- Finance department
- Sourcing partners
- Board of supervisors
Production-based company structure
Production-based divisions involve grouping the business processes and employees based on the products served by the company. This division promotes product innovation and development. It is a generic strategy that gives the enterprise a competitive edge. It can be viewed as an intensive strategy for business growth and expansion. It implies that the corporate structure supports business processes, manufacturing, and export products in the global sports industry.
Puma’s main customer base, their target market, is mainly the females. Products are of outstanding quality, the market is customer-oriented, rather than demand-based. It produces products to meet the needs and desires, not demands.
Puma has global brand visibility, so customers seek products and/or services based on their trust in the brand. In the downtown shopping district and supermarkets, the brand has high-profit potential.
Department stores that serve premium quality products are hard to start and imitate. It’s because of the prestige of the brand.
- As per sources, 90% of products get sourced from the Asian countries as most of its manufacturing plants are located. Big Cat Ltd is the sourcing partner of Puma. It has links with over 190 suppliers across 35 countries all over the world. Procurement of raw materials gives it a competitive edge.
- The product portfolio of Puma includes watches, eyewear, footwear, apparel, and sport accessories. Presence in interrelated product segments helps Puma to increase its market share. Subsequently, it increases the number of items purchased by customers.
The main competitors of Puma are the departmental stores that offer a comprehensive range of products. It faces competition from the premium positioned first-class stores. In Australia, Puma faces competition from stores like Michael Jones and Nicholas Goodwin. Both are fashionable stores and offer similar products in a competitive range.
The market is flooded with companies manufacturing footwear and fashion products. As such, Puma concentrates on manufacturing items in Asian countries, offering viable and low-cost alternatives.
Being present in footwear, fashion wear, and sportswear, Puma has always been a source of inspiration, and motivation. It is known for risk-taking, having a brave, determined, joyful, and confident nature. It got linked with popular athletes like Usain Bolt, Tiger Woods, and others.
The footwear segment of Puma generates 45% of the sales. So it stars in the BCG Matrix. On the other hand, the apparel, and accessories are a question mark in the matrix. It is because there are lots of international and national players in the market.
Marketing Mix of M&S
Marketing Mix includes five variables that the management team has to look after and control so that it can improve the customer experience. Those variables are also known as the 4 Ps of marketing that includes Price, Product, Place, Promotion, and People.
The product portfolio of Puma includes watches, eyewear, footwear, apparel, and sport accessories. Puma makes sure that the product meets the client’s expectations and lasts for the specified period.
Puma is known for marketing premium quality goods. The company sets the product pricing accordingly. It is because the business targets the upper-middle-class people who are capable to pay for high-quality products and/or services.
Puma accessories get distributed to storefronts and the Puma retail stores found in major cities worldwide. Puma has been aggressively opening new retail stores in countries across the world.
It not only improves brand awareness but also helps to increase sales and company profits.
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