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Case Rollerblade

Case Rollerblade

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The case on ROllerblade
The case on ROllerblade

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Published by: Mahmudul Hasan Rabby on Jun 17, 2013
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CASE: ROLLERBLADE, INC.

DOING BUSINESS IN A MATURE MARKET
For Rollerblade, Inc. to remain the market leader in the competitive in-line skating industry, the company must continually innovate its product offerings in response to changing consumer desires. In an industry trying to rebound from an enduring maturation phase, Rollerblade continues to lead in-line skating into the next millennium. Over the last 20 years Rollerblade has made technical, aesthetic, and practical improvements in its products as well as introducing extensive new product lines that have developed into dependable moneymakers. In attempting to maintain consumer interest in an industry which is experiencing declining sales, Rollerblade looks to expand the scope of in-line skating by creating new ways and reasons to skate. As the company looks ahead and considers the long-range in-line skating market conditions, it faces a challenging question: In what directions should Rollerblade go, and what strategies should it pursue to maintain its market share and revitalize its growth? The Company As a 19-year-old goaltender for a minor league hockey team, Scott Olson divined a simple idea that soon led him to multimillionaire status. The simple idea was ice skates that could work without ice. In 1979 Olson came across a pair of roller skates in which the wheels were arranged in a single row rather than two by two. This "in-line" skate originated in the Netherlands in the 1700s and was said to be the first roller skate.' Although slow and clumsy, the skate provided the feel of skating on ice. As a hockey player, Olson knew the outstanding potential of a skate targeted toward hockey players that could simulate the feel of ice skating but allow a hockey player to perform off the ice and during the off-season. After locating the manufacturer of the in-line skate and buying up back stock (the manufacturer had quit making the skate by then), Olson proceeded to refine the skates (through good skate boots and better wheels for a faster, smoother tide) and began building them in his basement. In 1983 Olson's company, Rollerblade, Inc., based in Minnesota, became the only manufacturer of in-line skates. Olson soon sold most of his holdings in Rollerblade, Inc., to Robert O. Naegele, Jr., and in 1985 Olson left Rollerblade after a business dispute. The success of the company continued through the late 1980s and into the 1990s, with Rollerblade, Inc., maintaining its number one position in a growing market experiencing increased competitive activity. In 1991 Rollerblade, Inc., embarked on a partnership with Nordica Sportsystem (Italy). Nordica, a division of Edizione Holding (controlled by the Benetton family) and the world's number one ski boot maker, purchased 50 percent of Rollerblade, Inc., for an undisclosed sum.3 Edizione Holding's product lines, under the Benetton Sport system umbrella, also included Prince tennis rackets, Asolo mountain boots, and Kastle Skates. In November 1997 Rollerblade, Inc.'s, Minnesota headquarters closed, and the company was relocated to Bordentown, New Jersey. There all facets of the manufacturing, sales, marketing, and distribution of Benetton's Sports brands were consolidated in one place.

In-Line Skating
In the 1990s in-line skating permeated the recreation, fitness, and athletics industry at a startling pace. According to the Sporting Goods Manufacturers Association (SGMA), U.S. in-line participation had grown 858 percent in the last 10 years. An estimated 32 million Americans were in-line skaters, a striking contrast to the reported 3.6 million participants in 1994. At 22 percent, up 7 percent from 1995, household penetration of in-line skating was on the rise. A recent SGMA study noted in-line skating as the fastestgrowing sport of 1999. While the number of new participants continued to increase and the sport maintained its evolution, the industry faces a decline in sales resulting from the onset of maturation. The in-line craze of the early 1990s led to the presence of almost 30 manufacturers in the industry by 1995. Large sporting goods companies entered the market. Nike and Fila capitalized on their footwear popularity and entered the market in 1996. Ski boot manufacturers Rossignol, Salomon, and K2 joined as

Maturation for in-line skating began as it approached its 20-year presence in the sporting goods industry. vice president of sales and marketing. since the origin of the sport. numerous companies entered the market. 5 off-road. all-terrain skate and introduced Blade Cross at the 1998 Summer X Games. while 1997 posted $374 million and 1996 reported $418 million in sales. Salomon. and with fewer major players in the market. With the launch of Rollerblade's Coyote skate in 1998. By listening to the consumers and devoting itself to extensive research and development. brought skating to an entirely new level with grass skating. presenting consumers with new and innovative products. had served the desired function but lacked any distinct . which in turn generated new product lines for the company. The abundance of product offered to customers by these competitors as well as numerous other independent manufacturers contributed to the industry's continuous sales decline in the late 1990s. Fila. Product Line Over the years. The continual lowering of skate prices. and playing hockey."4 New products and skating opportunities were being developed. resulting from competitive pricing and the presence of so many skate manufacturers in the market. industry leaders were better able to maintain and grow their market share. The slow and steady recovery of the in-line skating market began in the new millennium as "inventory pipe-lines are finally getting cleared out and the closeouts haunting the business begin to subside. 5. down 35 percent from the previous year. The entrance and exit of manufacturers in the industry had created an excess inventory problem. This "problem" evolved into inventory pileups. product dumping.8 percent. changing consumer patterns and industry trends led to a redefinition of the original market segments. Inc. overstored tanking across the industry. Its original transportation skate. In 1998 the in-line industry had plateaued. Since the industry slowdown in the mid-1990s. recognized their efforts as unprofitable and decided to end distribution of their respective skate products. After soaring sales and consistent years of double-digit growth rates. Rollerblade. 34 percent. 36 percent. In 1998. The four major players in the industry (Rollerblade. Rollerblade capitalized on this monotony by creating a new category of skating. resulted in a steady decline in dollar sales in the late 1990s. With the consumer's hunt for the cheapest pair of skates and the absence of upgrade purchases. Rollerblade sustained market dominance by developing skates that addressed buyers' needs and desires.6 percent) continued to lead the market in the year 2000. apprehensive about consumer response. continued to innovate its products to satisfy consumer needs in the late 1990s. building their in-line businesses on their quality ski equipment images. Inc. nothing "new" was introduced to motivate or excite the market. lured by the exciting terrain made accessible by product attributes. Future sales performance was expected to follow this trend. The introduction of all-terrain skating resulted in the evolution of new sports in the industry. off-road skating was born. to dominate the aggressive market. been the lifeblood of in-line. strong brands looking to capitalize on their brand equity and the in-line craze. waited until aggressive skating became main stream before manufacturing off-road skates. In 1999 Nike. downhill slalom. According to Rollerblade.4 million. Rollerblade marketed the Coyote as a downhill-specific.. Rollerblade had worked hard to create new markets. bump competition. Inc. aggressive skaters. the development of the Coyote was essential because aggressive skating was the direction in which inline skating was headed in the future. 2. recreation.well.'s. and Blade runner. Major competitor brands exited the in-line market in the second half of the decade. and Rossignol. Innovation had. Concept and design innovation stimulated media hype and consumer attention. and inventory rollovers. transport. and rough-terrain racing. The competitive saturation produced inevitable over inventoried. While in-line skating remained popular. This trepidation allowed Rollerblade. the Metroblade. While in-line users continued to skate. hoping to take advantage of the popularity of in-line skating. Both their presence and their absence were felt by other manufacturers and retailers. sales were $322. Mike Klein. preseason orders project sales in 2000 to continue to decrease 15 to 25 percent. Sales in 1999 were $305 million. Skates were used for fitness. The company had introduced new products in those segments based on customer usage. Competitors. K2. the industry faced a discouraging decline. all-terrain.

in-line hockey. capitalized on the company's brand equity to introduce a new product line and skating concept to the consumer market.beneficial feature. The stylish new line featured a variety of softboot skates with advances in braking. In late 1998 Rollerblade introduced a specialty transport skate. approximately 57 percent. Joining the product launches of 1998 was Rollerblade. professional and highly educated Aggressive/specialty: 18. To grow in the new millennium. Therefore. introduced to the consumer market simultaneously with the Coyote and the Nature skate. featuring Rollerblade's patented Twin Bar Roller System.'s. As Rollerblade must continue to present the market with new and innovative products. Rollerblade must focus on developing a marketing strategy that will drive future sales in a stagnant market. considering marketing strategies. causing Rollerblade to acknowledge that market as an important growth segment and regard it as a legitimate investment. created with the student and local commuter in mind. As aggressive market sales slow. comfort. Rollerblade's marketing efforts were not based on gender segmentation due to the presence of an almost equal male-female inline representation (male. The Grind shoe.to 24-year-olds . Another segment in which Rollerblade hoped to generate sales was high-performance fitness. the 2000 skate line aimed not only to provide the consumer with upgraded. it was possible for Rollerblade to recover and increase its business. Additionally. transportation. recreation. and improvements and design modifications were made continually. Yet again Rollerblade succeeded in expanding its product offering to uncharted territory while maintaining quality image consistency. it also has to respond to consumer trends. The company needed alternative marketing strategies to combat the sales slump it was experiencing. The skate's technology accommodated children's growing feet by creating an adjustable frame that extended four full sizes with the turn of a screw. would join Rollerblade's 2000 line. The product functioned as a high-end skate with a removable frame so that the boot could be worn separately. Included in the 2000 skate line for children was the SAX. featured a boot designed by Benetton Sportsystem partner Asoto. By the start of the new millennium Rollerblade offered consumers many products in five major product lines: fitness/performance. The previously mentioned transportation skate models. and industry trends before executing a strategy aimed at increasing sales. and performance. was designed for grinding on curbs and rails. RB Kids introduced the Xtenblade in 1996. children's and high-performance fitness skates are becoming the focus. Rollerblade had to evaluate consumer desires. and kids. The 2000 skate line reflected technical and innovative improvements on existing products. it was imperative to recognize the age and benefit segments to which Rollerblade catered with its product offerings. first footwear offering. The success of the Nature skate among consumers led to the development of three new models launched in January 2000: Derby. Long-range in-line market conditions and opportunities had to be considered before Rollerblade could implement its future marketing strategy. approximately 43 percent). accompanied by improvements to the aggressive skates as well as the debut of two new grind shoes. the Nature. Rollerblade segmented its market in multiple ways. Much of the 2000 line would reflect design changes to Rollerblade's high-end fitness skates. and Drop skates (boot designs differed among the three). Children's in-line skating participation was steadily rising. core group between 25 and 40. Focus on the Future While in-line skating had entered a stage of maturity and sales had decreased significantly. and jumping. A study outlining the fitness benefits of in-line skating resulted in Rollerblade focusing its energies on a fitness campaign. aggressive/specialty. sliding. The previously mentioned product lines correspond with certain markets: Fitness/performance: men and women ages 20 to 50. highperformance fitness skates but also to re-enter the market segment at higher prices than it had had in the recent past (due to the presence of competitors who were forcing prices down). The skate. This everyday shoe. female. Inc. Derby-Grey. Unveiled in late 1999. it was challenged with the task of recognizing future opportunities in a changing consumer market as well as focusing on marketing efforts that would capitalize on those opportunities. As Rollerblade faced growth in a declining market. a new softboot offering an ABT brake designed to accommodate users' short legs and limited braking leverage.

Kids: under 18 years old Recreation: 18 to 55 years old In-line hockey: children. If the company capitalized on the increase in contemporary health/fitness consciousness and took advantage of the rising interest in alternative methods of exercise. students. 4. Question: Given the four options. and muscular endurance fitness activity could be beneficial to Rollerblade's future. and children. The new aggressive line. and Trinidad). Philippines. Hong Kong. In developing new and innovative products for this growing market. Israel). While it had expanded in Europe (Finland.  An option for growth could lie in the development of product lines outside the inline industry. the United Arab Emirates. Columbia.  Recent studies suggested that in-line skating was linked to being fit. must examine the following four potential growth areas: 1. if not the general in-line skating market (men and women age 18 to 55). Product Development  Rollerblade had consistently delivered new and improved products to the market over the last 20 years. Perhaps making some efforts toward the creation of an educational/developmental children's market focusing on the psychological and physical benefits of in-line skating would prove beneficial to company sales. Singapore). Rollerblade could simultaneously increase profits and gain a larger customer base. Italy. along with the introduction of all-terrain skating as a sport. Rollerblade could extend its product lines to include other extreme sports. which one(s) would prove to be most lucrative in the long term? According to your group. Market Development  Rollerblade could continue to grow internationally. Perhaps introducing another skate product category to the existing market would spur sales. such as skateboarding and snowboarding. and younger adults Transportation: local commuters and students To develop an effective marketing strategy. Netherlands. Panama. festivals.  The introduction of aggressive skating products to the consumer market in 1998 aimed to boost sales in the existing in-line market. in keeping with its image as an alternative sporting goods manufacturer. more obscure markets. 3. balance. Rollerblade could seek to permeate new. Perhaps. Central and South America (Argentina. Rollerblade. Rollerblade would reintroduce its consumers to its products. 2. Rollerblade could develop its existing fitness market into a top money maker. do to be successful in the selected growth area(s)? . the Middle East (Saudi Arabia. Mexico. The product expanded Rollerblade's market penetration to encompass footwear. St. The company must then direct its promotional efforts toward the chosen market. Maarten. the Caribbean (Dominican Republic. seminars. Chile. In-line skating was credited with aiding developmentally delayed children in their mental and physical progress. Greece. Inc. Diversification. Turkey. Malaysia. adults. The focus on inline skating as a top cardiovascular. Japan. and other various events. the United Kingdom). Market Penetration  Rollerblade could engage in grassroots marketing efforts which would involve marketing directly to its customers through promotional activities and events. what should Rollerblade Inc. adolescents. it will focus on. In providing interactive workshops. Venezuela). Rollerblade could possibly capitalize on the recent scooter craze and introduce its own line to the consumer market. led the market to change to a more challenging skate. Rollerblade must identify which market(s).  Recent research had noted that in-line skating was tremendously helpful for children in mastering motor skills. Brazil. Investment in this current trend could prove profitable for the company. shows. Asia (Korea. Two-wheeled. The development of innovative products had been the key to its success as well as its market domination. lightweight portable scooters had become popular among short-range commuters. and Australia and New Zealand.  Rollerblade took the first step in this direction with the development of the Grind shoe in 1998.

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