Toms Shoes- Case Study

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Table of Contents

1. Executive Summary....3

2. Situation Analysis .....................................................................................4

3. Analysis of case issues using marketing theory

3.1. The trends in the marketing environment .. 5

3.2. Creating value for customers.......................................................6

3.3. Fitting in with the changing marketing environment...................7

4. Conclusion...............8

5. References...9

1. Executive Summary

In the era of globalization and highly competitive business world, it is the goals and
desire of every company to take a good portion of market share for their products in the
market place. People in different geographic locations are more connected ever than
before with advancement of internet and air travels. Online blogs, YouTube and social
networking web sites have changed new socio culture across demographics especially in
younger generations. Consequently, consumers are also becoming well informed about
the brand and products, value conscious and their purchase decision are made beyond the
quality of product and its face value alone.

The aim of this study is to analyse the key concepts of Toms Shoes Company marketing
strategies and important factors that influence the success of this relatively new shoes
company under current market environment. Toms is a shoes company that gives a new
pair of shoes to a child in need for every pair of shoes a customer purchases. The
company was founded in 2006 by an American entrepreneur who inspired to start a shoes
company after his visit to Argentina where he saw shoes giving movement by non-profit
organizations. Toms shoes has capture hearts and mind of many customers because its
strategies and well executed actions and the company is gradually growing in relatively
short period of time.

2. Situation Analysis

The shoes are basic need product in everyones daily life. There are numbers of well
known shoes brands and companies in global shoes market and as a new brand, Toms
shoes has to face challenge to win over all other established competitors in the market. In
order to attract new customers, Toms need to implement strategy that consumers can
differentiate the new brand and the value in its shoes. Toms shoes has successfully
implemented with its own customer driven marketing strategies in order for the company
to penetrate the market, position itself and to take the market share with the lowest cost.
Toms shoes applied Cause- Related Marketing (CRM) and it use one for one strategy
that the company states with every pair of shoes a customer purchase, Toms will give a
pair of new shoes to a child in need.

Cause-related marketing is effective because consumers can directly link it to corporate
social responsibility (CSR) of the company. CSR can be defined as concept of business
integrates social and environmental concerns in their corporate operations and in their
interaction with their stakeholders on a volunteer basis (Demetriou et al, 2010). Studies
have shown that cause-related marketing can benefit enhancement of corporate brand
reputation, demonstration of corporate or brand values, raising of brand awareness,
development of customer locality, differentiation of products and services, increase in
sales volume, building relationships with stakeholders, providing differentiation, and
making CSR and corporate investment visible (Adkins, 2005, as cited by Demetriou et al.,
2010).

Because of globalization and interconnected world, increasingly, a combination of
heightened sense of empathy or awareness among consumers, coupled with the
increasing significance of world-wide social causes or movements has resulted in
consumers who are more interested in consequences of their purchase behaviours
(Brunswick,2010). Toms has successfully captured this trend and applied appropriate
strategy in the right time. For consumers, brands play an essential and important role in
identifying and differentiating products and services through their symbolic nature
(Enally and Chernatony, 1999 as cited in Alcaniz et al, 2010). Consumer perception on
Toms brand is becoming an ethical brand for doing-good cause and its shoes bring more
value for consumers.

3.1 The trends in the marketing environment

Cause-related marketing become more popular in recent years due to increasing trends of
consumers perception on corporate social responsibility and socially connected
marketing environment. Toms understand the concept exposure to any type of well
conceived promotional initiative for a brand leads in theory to more positive feelings and
judgements about the brand in consumers mind (Bloom et al., 2006). Tomss strategy is
also more effective especially in the environment internet and social networking sites are
influencing word-of-mouth marketing as never before.

With this changing market environment and social trend, Toms shoes has successful take
leverage of cause-related marketing combined with word-of-mouth marketing into its
strategy. In addition, the consumers in its target market segment are also the most active
demographic in online as well as they are highly interactive in the actual world. Some
research has reported that word-of-mouth marketing strategy has very strong impact on
new customer acquisition and it can have larger and longer lasting effects than traditional
marketing activities (Trusov et al., 2010).

If a company has the best product, but if its strategy does not fit with the market
environment, it will not be successful in the target market. In fact, scanning and
understanding market environment is vital for the success of a company. The clear
marketing strategy of Toms was already in place when the company started
manufacturing shoes. Toms shoes creates the strategy to fit to the changing market
environment, consumer behaviours at target segment of demographic. The company
founder and most of the staffs at the Toms shoe are in the same demographic and as
majority of its customers and that factor can also be advantage for Toms in brainstorming
strategies and executing its plans.

Tomss on online marketing video convey the message to its customers in the form of
social awareness movement rather than commercial advertisement. For example one of
Tomss 2011 one day without shoes movement video convey the message of how poor
and bare foot children in developing nations have to walk for miles for food, clean water
or to seek medical help and cut and sores on their feet, serious infection or even not being
able to go to school. It also share the story of some children with disfiguring disease like
Podoconiosis, caused by walking bare foot on the volcanic ground in Ethiopia, and how it
can be prevented by making them wear a pair of shoes. These kind of messages and
narrative are effective and appealing to its target segment of customers.

3.2. Creating value for customers

It is the simple fact that a customer will not buy a product that he or she perceives if the
value of product or service is not up to his/her expectation. The main factor for Tomss
success is its ability to add value in Toms shoes beyond the face value of its simple
product like shoes.

Tomss marketing strategy and primary goal is about creating value for customers rather
than just to serve children by giving away shoes for those in need. Giving away shoes is a
key part of Tomss marketing strategy and also a mission to make partnership with its
customers and other stakeholders. By allowing individuals to participate to its cause
related mission of giving away shoes to the needy children in developing countries, Toms
has created more value to its customers. For the customers, every pair of shoes they
purchase from Toms will make them achieve additional benefits of charity work .As the
consequence their purchase decision will make the customers feel good and fulfilment
and longer lasting satisfaction. Those existing customers will retell about Tomss stories
to the other people around them after their purchase of products from Toms as they
become a part of Tomss greater good cause and Toms movement.

Tomss marketing strategies satisfy four requirements for effective segmentation;
measureable, accessible, substantial, differentiable and actionable (Amstrong and Kolter,
2010). Its target segments of shoes market are mainly young adults who are internet
savvy generation and the most active age group in online community. Toms understand
the interest, purchasing power, psychographs and behaviour of its targeted demography.
This segment of market is substantially growing and it can be easily and effectively
accessible via online with lowest cost for the company to engage in regular basis.

Under those given market environment, Toms uses appropriate and effective marketing
mix concepts of four Ps; product, price, place, promotion (Amstrong and Kolter, 2010).
Toms essentially sets the price for a pair shoes at around 30$-80$ range and it is
reasonable and affordable to majority of target segment consumers especially young adult
age group. The shoes are sold online or in the stores. Toms marketing advertisement are
mainly word-of-mouth in person or online. Advertisement and promotional events are
almost no cost for the company as they are mainly done in the form of cause-related
events and through online media by stimulating social interest.

3.3 Fitting in with the changing marketing environment

Toms shoes created its strategy to fit this changing social environment as internet
becomes one of the most active market place for marketers, customers and competitors
nowadays. Consumer also share enormous amount of information related to market,
brand or product and company activities online easily and instantly. This changing
internet social culture also nurtures the word-of-mouth marketing in this new market
place. Word-of-mouth marketing strategies significantly lower costs for the Toms shoes
as the company save millions of money from expensive commercial advertisements such
as on TV. This type of customer communication and engagement also help first delivery
through internet especially social networking sites.

One of Toms shoes strategies for cause related marketing and mobilizing the people is its
annual event called one day without shoes. There were 250,000 people from different
countries participated in 1,600 events for TOMSs one day without shoes events in 2010.
The participants of the event walk one day without shoes as part of the movement or
public awareness campaign to remember those children without shoes and to remind their
suffering consequence of walking in bare foot. One day without shoes event is a big
success for Toms marketing campaign and the company gains substantial amount of
public interest as well as main stream media attention. Free media coverage of the event
can be translated as free advertisement for the Toms shoes brand. Moreover, Tomss one
day without shoes movement is a fun activity for the good cause and the event creates the
environment for emotional bond of the people and the brand.

Part of the marketing activities, Toms organizes to form TOMS campus clubs in
different university campus. The company also actively recruit interns and its internship
program is also designed to bond young students with the company and its movement.
Both Toms campus clubs and internship programs allow the participating students to
develop valuable experience in marketing, promotions, viral marketing, event planning,
networking and leadership. These activities will again bond the participants with the
brand and all respective individuals involve the company marketing activities and all of
them collectively become part of the marketing force of the company.

Toms one for one strategy, its shoes donations and shoes delivery to needy children
also stimulate the interest of individuals with volunteerism. About 62.8 million people
volunteered through or for an organization at least once between September 2009 and
September 2010 in the United States which is 26% of nation total population (U.S
department of labor, bureau of labor statistics 2010). These numbers are also indication
of increasing people interests in volunteer in developed countries especially in the United
States. Toms is also able to tap into this segment of market by its strategy.

Stories, events, news and personal activities are shared by millions of people in every
hour in online social media. Toms effectively use online social media and continuously
communicate and engage with its customers. In addition to the interested individuals who
view Toms web site, Toms shoes company now has over 1.4 million Facebook fans and
twitter followers. These fans and followers continue retelling Toms shoes story to other
people around and consequently maintaining the good reputation of brand and expanding
the market.

Conclusion

Because of Tomss brand innovation by the use of caused-related marketing, the
company is respected as ethical company and consequently builds trust by its customers
and achieve retention of customers. Toms driving of cause-related mission and words-of-
mouth marketing strategies make the company is uniquely stand out and Toms brand and
product are differentiated from among many other shoes brand in the market. Its socially
responsible mission also attracts advertisement of big brand marketing partners such as
AT&T.

Rapid change of socio-culture and market environment, the trend of cause-related
consumption will continues and increasing numbers of consumer will engage more with
the brand that has good reputation as socially responsible behaviour. In its own website,
Toms states that the company has given over one million pairs of new shoes to children
in need through giving partners around the world as of 2010 which is the strong indicator
for the success of this relatively young shoes company.

Because of its continuous engagement with customers by using effective tools and fitting
in with changing market environment, Toms is expected to well maintain its customer
equity. As long as Toms keep promoting its brand image as socially responsible company
while improving appealing shoes design with competitive price and quality for its target
market, Toms is expected maintain its long term sustainability and high growth in the
years ahead.

References

Armstrong, Gary and Kotler, Philip. (2011). Marketing: an introduction, 10th edition,
Pearson Prentice Hall, USA.

Alcaiz, Enrique., Cceres, Ruben., Prez, Rafael. (2010). Alliances between brands and
social causes: The influence of company credibility on social responsibility image.
Journal of business ethics, 96 (2), p169-186

Brunswick, Gary J. (June, 2010). Consumer purchase behaviour and helping: An
exploration of this approach to marketing strategy. Summer Internet Proceedings, Vol. 12,
p108-112

Bloom, Paul N., Hoeffler, Steve., Keller, Kevin Lane., Meza, Carlos E. Basurto.( 2006).
How social-cause marketing affects consumer perceptions. MIT sloan management
review, 47 (2), p49-55

Demetriou, Marle., Papasolomou, Ioanna., Vrontis, Demetris. (2010). Cause-related
marketing: Building the corporate image while supporting worthwhile causes. Journal of
brand management, 17(4) p266-278

Trusov, Michael; Bucklin, Randolph E.; Pauwels, Koen. (2010) Monetary value of word-
of mouth marketing in online communities. Marketing intelligence review, 2(1), p26-33

Bureau of labor stastics, United States department of labor (2010): Economic news
release, Volunteering in the United States 2010. Retrieved from
http://www.bls.gov/news.release/volun.nr0.htm

Toms Blog (2011). Retrived from http://www.toms.com/blog/

Tomsshoes channel (2010). One day without shoes .Retrieved from
http://www.youtube.com/user/tomsshoes#p/c/D5837B5856648DC1