Puma’s Ag Case

Table of contents

Adalbert and Rudolf Dassler founded puma in 1924 in Germany. The company was called Gebruder Dassler OHG, and was internationally well known. However, the two brothers separated creating Adidas and Puma, respectively. Puma had sponsored some of the worlds most famous soccer players, positioning itself as one of the most important company in soccer shoes and accessories. In spite of that, the son of the founder, Armin Dassler, take Puma to a point where all product were sold “dirt-cheap”, ruining the brand image. The high society was not willing to wear the brand.

In 1993, Jochen Zeitz, became the CEO of the company, and together with Martin Gaensler, the supply chain management chief, applied 3 significant phases into the Comeback of Puma:

  • Aimed at making Puma profitable in order to build a strong financial foundation.
  • Restructuring the whole company
  • Focusing in core competencies: marketing, brand management, and product management.

Transform Puma into an attractive sports brand. (High- value brand in sport and lifestyle sales categories). Sponsoring and advertisement.

Puma’s major competitors.

Adidas

Salomon AG Headquarters in Bavaria, Germany. Production was in every continent, except in Australia, with administration, design, and marketing in Germany and France. Production outsourced in Asia.  Only supplier covered all sports. * Main strength soccer line, sky and tennis market. Known as a brand for the family, satisfying customer’s needs. Sponsoring activities on huge sports events, famous teams, and athletes like FIFA World Cup and UEFA Champions League.

Nike

American company founded by Bill Bowerman and Phil Knight in 1964. Outsourced part of the production to China and concentrated its skills on product design, marketing, and distribution. Located in Oregon. Administrative activities concentrated in United States. Europe, Africa, and Asia worked only in sales strategies. * Target group young people with the slogan “Just do it” Marketing strategy: sponsoring events, popular teams, and athletes. * Introduction to specialized brands Web-based Nike ID (customizing Nike products)

Reebok

Founded in 1895 in USA by Joseph William. Key market: footwear industry (aerobics industry, women’s sportswear, and design street & casual footwear). Located in 140 countries. R & D in China, Korea, and Taiwan. Distribution finished goods via traditional retailers. Sales in Gym club trainers. Reebok female sports shoes were the most famous. 1992, change of strategy to American football, basketball, and soccer. Sponsoring sport events and popular athletes. Nevertheless, Reebok was often regarded as a fitness and exercise equipment manufacturer.

Fila

1911, Italy. Distribution in 50 countries. Portfolio of sportswear and athletic footwear. Focus on running, basketball, and fitness.

Prada

Italian brand focused on luxury leather goods. Founded by Mario Prada. 2003 Sportive line called Prada Sport.

Diesel

1970. Casualwear or sportswear company that became a luxury brand.

PUMA’s Value Chain

R&D: sourcing, production, and logistics  80% of all production move to Asia due to raw materials and MOD. Manufactured in Turkey and Mexico. It reduces its working capital and inventory to 21% * The raw material sourcing allowing shortening the production and enabling full quality control of input factors. (Inditex’s Zara strategy). Production partners according to quality, price, and environmental/social factors. Logistics was not a core competence.

Brand management – Turnaround new positioning of the brand itself. 1980’s unpopular image due to heavy price decline. Jochen Zeitz (CEO), repositioned the brand. Making PUMA desirable again. 2003, the brand was already positioned and well-known and considered as a luxury. Ensuring success, PUMA hired charismatic personalities who could represent and understand the desired brand perception, recognition, and awareness even further.  Sponsoring several teams such as the Jamaican running team, Cameroon soccer team, and Italian national soccer team. Sponsoring Formula One, entering by the official supply of sportswear for the FIA World Rally Championship, the Ford Rally division, and freestyle motocross champion Travis Pastrana. Quality over quantity and rely on innovation.  Following upcoming trends quickly and creating trends. The Puma classic King was reintroduced creating a new market segment of lifestyle sportswear, having in consequence to it a significant competitive advantage over competitors from the fashion industry. CEO understood the fashion as “the new combination of elements of the past”. Right time for launching a new product line. Puma entered in the cricket market in Australia and Africa. Advertising in MTV and in Hollywood movies. Puma was perceived as rebellious and stylish. Distribution Outsourcing 70% in distribution logistics. Building up a system to develop its own network in Europe.  Retail activities Selected partners according to the corporate message of Puma. Sport retailer did not operated globally; only foot Locker and Intersport, Decathlon, and JJB Sports. * There was no price discrimination due to low transportation costs in Europe. * Collaboration with strategic partners and allies Acquired the Swedish company Tretorn (manufacturer of tennis balls), because of the sophisticated and broad distribution system in the Scandinavian market and a very skilled management team. Corporative Strategy: R&D and design (functionality and stylish appearance products). Launching the New Collection: sport, lifestyle, and fashion. * Trying to be innovative in every part of the process . Marketing strategy Innovation. Modernizing latest collections and re-launch them Bibliography. Kaufmann, Lutz. “Puma AG”. The WHU Otto Beisheim Graduate School of Management.

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