Summary

The Geox footwear company, founded by Mr. Mario Polegato in 1995, became the world’s second largest manufacturer of shoes in the lifestyle market. Until the early 1990s, Mario was involved in his family’s wine-producing and exporting business based in Italy. Polegato got the idea “the shoes that breathes” in the summer of 1992, at a wine trade fair in the arid American state of Navada. Then he came back to Italy and looked for the breathable soles in the local sports shops and he couldn’t find them. So he used the laboratory of a small shoe manufacturing company owned by his family and tried to transform his idea into a product. Polegato immediately patented the new technology and tried to sell the invention to leading shoe companies in Italy. However none of them showed any interest. So he got into partnership with his friends and started making children’s shoes and later on started manufacturing shoes for adults. In 2000 the company expanded into the international market and boosted its sales through both exclusive and multi-brand channels. Also the company started Geox School in 2001. This was a training centre which prepared new recruits, providing training on company policy, the characteristics of Geox products and the business development needs of the group. Geox operated in a fashion-conscious industry, so he the best designers so that each new collection of shoes is created by them. In 2002 the company entered into the apparel market with a patented jacket that allowed air through at the shoulders. In December 2004 Geox was listed on the Milan’s stock exchange. In April 2009, Geox added to its sporting goods products and launched its product range, which Polegato claimed was in response to customer requests. Geox outsourced most of its production to factories in China, Vietnam, Indonesia and Brazil. Geox was affected by the recession in 2009 that lead to a 9% drop in shares value so the company took a decision not to open any new stores during 2009 in the US.

Key facts & issues –
    Brand name – Geox was established by Mario Moretti Polegato in 1995. Consolidated sales for Geox – as on 28th July, 2009 - $ 653 million. Geox entered apparel market in 2002. In 2009, after 14 years of operations, Geox became 2nd largest player in casual lifestyle footwear market. Presence in 68 countries – 10000 multi-brand and 997 single brand (Geox) shops (77% franchise stores & 23% directly operated stores DOS). Geox developed the concept of “shoe that breathes” – By using breathing membrane in sole of both rubber & leather footwear, which allows vapours to exit and keeps them water tight. It started with children’s shoes and then covered adult footwear. International sales started in 2000. 1st Oct, 2004 - Got listed on Milan Stock Exchange. 71 % stake remained with Polegato. 2008 – Polegato’s son, Enrico Moretti was appointed as Deputy Chairman of Geox. 2008 – Net sales of € 892.5 million (20 million pair of shoes & 2 million clothing), Net income of € 118.2 million.

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research and developments by patents for sustainable competitive advantage. In 2006. In 2001. 5 % of products were manufactured at Geox owned factories in Romania & Slovak republic. contributing 7 billion pairs. 2009 – Geox entered into Golf (Sports) footwear market. India & China considered as the attractive markets in future. introduced “NET system technology”. In 2007.5 billion). Rubber sole shoes & apparels. The company targeted 50-50 % split in both categories in future as apparels have a higher profit margin of 24%. Geox protected its inventions with patents (50).            2009 – Polegato was recognized as 469th richest person of World by Forbes ($ 1. including patents for 3 original concepts – breathing membrane in Leather sole shoes.S.e.S. Men and Women. mainly to China. global production of footwear reached 16 billion pairs. Vietnam. Vietnam. Indonesia and Brazil. identification of needs and required developments. Geox School was opened for preparing new recruits & training them on company’s working and characteristics. Brazil. Protecting the inventions by patents – Geox believed in protecting its ideas. Ideas are the starting points for new inventions and it’s necessary to protect them for business  . Italy. Geox took remedial steps of boosting promotional activities and halving its capital expenditure by not opening new stores in U. casual footwear was the largest and fastest growing segment. followed by Geox Geox Products were differentiated on basis of target consumer – Children. Geox bought Diadora – Italy’s famous sportswear brand. Geox’s sports products also capitalized on breathing membrane concept. Company carried forward its core competency as the major competitive advantage. 95 % of production was outsourced by Geox. 63 % i. Also. U. Products were further categorized in 2 ways – Classic (Elegant & Traditional) and Casual (Wearable & adaptable). Market leader – Clarks shoes. leading to lower risks – Geox started with children’s school shoes. Later on. 10 billion pairs contributed by China. Geox faced 9% drop in shares due to recession and 13% drop in demand of products for winters. Geox entered into apparel market. Geox entered into strategic partnership with Belle Company (Largest women shoe retailer in China with 22% market share). approx. still carrying forward the core feature of breathing membrane in its products. 90% Geox sales were contributed by footwear and only 10% by apparels. Thailand. Key Learning’s  Step by step product diversification with same core feature. followed by India. In 2008. consumed approximately 1/3rd of total production of footwear. In mid-2009. Similarly. then started manufacturing casual and lifestyle footwear for both women & men. Sports category in Geox was divided into “running & gym” and “golf” footwear.

which assured Geox of opening 200 new points of sale in China within next two years.1 – What do creativity and innovation signify and entail? What are the key types of innovation? Creativity is the capability or act of conceiving something original or unusual. whereas innovation is measureable or can be measured by our senses. Most businesses and most managers are good at incremental innovation. Innovation is the implementation of something new. Larger organizations and most managers are poor at radical innovation. Hence. famous but debt laden sportswear brand in Italy. which prepared new recruits for efficient and effective working in the company. Similarly. designing and development of new products and management of sales. So every invention is an innovation. Flexible business model – When recession hit the company in 2009. largest women shoe retailer in China. Constant innovation is needed to keep customers attracted towards your products. If we think about something new. Technical aspect of Geox differentiated it from its competitors. . We need to constantly look for incremental as well as radical innovations. It reduced promotional costs and also helped in displaying the latest inventions of Geox. the company can perform better in one market if the results are bad in other. This helps in managing the uncertainties of different markets. there was a constant supply of talents which generated new ideas. Hence. Radical innovations involve finding an entirely new way to do things. method. higher adaptability to cope up with external factors Geox focused on both international expansions as well as retaining its national leadership (Italy). But every innovation is not an invention. Cost cutting – The company used images of its products instead of celebrities for advertising its products. As such they are often risky and difficult to implement. Creativity is subjective. Careful choice of Strategic partners and companies for acquisitions – Geox entered into strategic partnership with Belle in 2008. Hence.      purposes. Innovations can be incremental or radical. business model. you can innovate with a new process. Geox dropped its plan of opening new stores in US to reduce its capital expenditure. So. it helped Geox to make a good start in emerging footwear market in China. route to market or marketing method. Recruitment & training practices – Geox opened Geox school in 2001. in 2009. Somebody has to take a risk and deliver something measurable for a creative idea to be turned into an innovation. but it becomes an innovation only when it is implemented. it is called creativity. Focusing on a particular process – Geox outsourced most of its production to countries like China. An invention might be a product or device or method that has never existed before. Every improvement that you make in products or services can be seen as an incremental innovation. where the production costs were low and itself focused on research. This helped Geox in strengthening its leadership position in China. We need to develop creativity and turn it quickly into innovation. Geox bought Diadora. partnership. Q.

Geox has invested in state of the art R&D facility to continuously keep improving their technology and patenting all their designs and innovations thus managing to keep their product differentiated from its competitors. Marketing: Geox’s marketing strategy differentiated them from its competitors as they focused on the innovative features of the shoes and advertised the shoe itself without using brand ambassadors. Also. They carefully monitored the manufacturing activities to maintain high quality standards. While 90% of sales were via the shoes only Geox introduced the technology into fabrics as well and created a clothes line using that fabric.    . Pricing Strategy: Geox targeted middle to high income consumers and kept a price range for the same. Q. other than product innovation. does Geox owe its competitive advantage to? The innovation in Geox products came from the different design of shoes that have membranes in their sales having tiny rubber holes to allow the circulation of air within the shoes.There are 4 key types of innovations for an organisation     Product innovation – Changes in the products or services which an organisation offers Process innovation – Changes in the ways in which products and services are created or delivered Position innovation – Changes in the context in which the products and services are framed and communicated to customers Paradigm innovation – Changes in the underlying mental models which shape what the organisation does or what it is about. along with being comfortable and innovatively designed. This innovative design was patented by Geox and became their key differentiating factor and USP of the product. the focus is the shoe and its unique qualities. Geox did not compromise on style and kept the designs of the shoes trendy making the product more popular. What are features of this strategy that have made Geox shoes a success? What factors. Wide distribution network: Geox maintained a very wide distribution network in both multi-brand and single brand stores which were franchises and directly operated stores. but due to its unique design and technology the product was popular in all income groups. Other Factors for Competitive advantage that Geox has:  Production: Geox optimised production resources by outsourcing its production activities giving them flexibility.2 –Analyse Geox’s innovative strategy in detail. Also by not using any brand ambassador the company saved a lot of money which was invested in heavy promotion using billboards and postings.

rising population and disposable income levels. Geox should continue to launch quality signals. In particular. it will continue to build its brand both in Italy and abroad.e. and to invest in marketing and R&D since they constitute sources of its sustainable competitive advantage. The global footwear market is segmented into Men.Q. Nike and Adidas. In order to become the world’s biggest shoe maker. growing awareness about healthy and active lifestyle. The major competitors of Geox are C&J Clarks Ltd. and to fight against imitations. Kids footwear market is expected to grow at a CAGR of 3. Who are Geox’s key competitors? What Strategies and options are available to Geox for sustaining its position in these industries? Geox operates in two industries i. the global footwear market is experiencing a stable growth rate due to changing fashion trends.7% due to the high demand of comfortable and designer footwear for kids. and celebrity endorsement is driving the non-athletic footwear market. Various fashion trends in the market such as demand for innovative designs and styles. Footwear industry and Apparel industry.4 billion by 2018. In this way. innovation allows to create new opportunities in a mature market. patenting and implementing new solutions. .3 –Assess the market environment of the industries Geox operate in. the company should enter into casuals and sports market. Also the following strategies Geox should adopt in order to sustain its position in the industry Product Innovation: The Company should continue researching. This market has exhibited sustainable development owing to driving factors such as rising demand for innovative designs.  Consolidation of the leadership position achieved in Italy: Geox should open shops in high traffic city centres and key shopping malls and increase the market share and strengthen the brand through a greater use of corner shops and shop-in-shops. and rise in retail culture. Talking about the Footwear industry in which Geox operates. Non-athletic footwear is the largest market segment and is expected to grow at a faster CAGR as compared to the athletic footwear segment. The athletic footwear market is expected to grow at a CAGR of 1.8% from 2011 to 2018 to reach USD 84. Men’s footwear market is a leading segment with 52% market share of the overall footwear market. to make the shopping experience increasingly nice and different from its competitors. Women and Kids footwear.

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