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Campus: Stream: Level: ACL-II Year/Semester Module Name: Student’s Name: Issued on: Actual Submission Date: MME Assignment Type: Assessor’s Name: Reqd. Submission Date: Submitted to : Weekly Assignment

Higher Level Skills Students are expected to develop the following skills in this assignment: • Cognitive skills of critical thinking, analysis and synthesis. • Effective use of communication and information technology for business applications. • Effective self-management in terms of planning, motivation, initiative and enterprise. Certificate by the Student: Plagiarism is a serious College offence. I certify that this is my own work. I have referenced all relevant materials. ________________________ (Student’s Name/Signatures) EXPECTED OUTCOMES Assessment Criteria – To achieve each outcome Achieved (Y/N) a student must demonstrate the ability to : Explore various models of consumer Compare and contrast the effect of buying behavior. behavior model. Explore various techniques of market segmentation. Compare, contrast and develop segmentation strategy. Achieved Yes/No (Y / N)

Assignment Grading Summary (To be filled by the Assessor) Grades Grade Descriptors A Pass grade is achieved by meeting all the requirements defined. P Identify and apply strategies to find appropriate solutions. M1 Select/design and apply appropriate methods/techniques. M2 Present and communicate appropriate findings. M3 Use critical reflection to evaluate own work and justify valid D1 conclusions. Ability to anticipate and solve complex tasks in relation to the D2 assignment. Demonstrate convergent, lateral and creative thinking. D3


Assessor’s Name / Signatures:

Case Study ROLLERBLADE: ON TOP OF THE MARKET What's the hottest sports/leisure activity in the United States? Basketball? Soccer? Running? Dancing? None of these: It's in-line skating. Since 1995, when in-line skating jumped from third to first place, more Americans have put on their skates and taken to the asphalt than have joined any other participation sport. And as all those Americans hit the asphalt, companies such as Rollerblade have produced a flood of new in-line skate models and types. Knowing that idols such as Madonna and J.F.K., Jr., like to in-line skate enhances the popularity of the sport even more. The number of new models and skates attests to the wide ranging motivations Americans have for skating. For some, it's just fun—afternoon exercise in the park and a chance to get some fresh air and sunshine. For others, in-line skating is serious exercise ideal for maintaining fitness. Still others race or compete on skates or participate in sports associated with in-line skates, such as hockey. To keep up with the market, manufacturers of in-line skates carefully study market statistics, looking for changes. For example, an examination of data on the Rollerblade Website ( indicates rapid growth in the total number of in-line skating participants, even if growth is slowing a bit. Between 1994 and 1995, in-line skating participation grew 20 percent (compared to growth rates higher than 30 percent in the preceding five years.) Growth reached 22 percent between 1995 and 1996. What do changes in the popularity of in-line skating mean for a company like Rollerblade? Rollerblade pioneered inline skating in the United States when Brennan and Scott Olson decided to sell in-line skates to hockey players during the off-season in the early 1980s. Throughout most of the 1980s, Rollerblade had market shares of around 80 to 100 percent. But as in-line skates sales grew, so did the competition. Firms such as K2 entered the market and the competitive pressures forced all firms to create distinctive differences between their brands. With its early jump on the competition and aggressive marketing, Rollerblade has maintained a market share greater than 40 percent, but doing so requires paying close attention to the market. Recent declines in the growth rate call for examining market data even more closely. To understand the market, you must first answer the question, “Who skates”? Thirty-five percent of all skaters are children under 12, and 29 percent are teens. But the greatest growth in number of skates in 1996 versus 1995 occurred among adults aged 35 to 54 years (a 61 percent increase). When you couple that with the fact that baby boomers—yes, those same 35- to 54-year-olds—are the largest age group in the United States, it doesn't take a rocket scientist to figure out where the potential market growth is. Nor does it take much science to realize that the kids, teens, and adults skate for different reasons. Kids and teens may be in the sport for fun, transport, or sport. Adults are more likely to skate for fitness. Aging baby boomers are attracted to in-line skating because a 30-minute workout on skates burns the same number of calories as a 30-minute run. But it has less impact shock on joints, stronger cardiovascular benefit than stair-stepping machines, and higher activity for muscles of the hips, thighs, and shins than running or cycling. Furthermore, because they find in-line skating to be more fun, participants tend to skate longer than they run or cycle. Besides understanding customer motivations for skating, Rollerblade needs other information, such as where skaters live, how frequently they skate, their skill levels, and other facts. An examination of statistics on the Rollerblade Website indicates that big states like California, Texas, and New York have the largest numbers of skaters; smaller states such as Utah, New Mexico, and North and South Dakota have a greater percentage of skaters. Thus, the big states are attractive markets because of their size, but in smaller states, in-line skating is actually more popular and sales may be easier to obtain.

Children are the most frequent skaters—they skate 11 times per month. Teens skate about 10 times a month and adults only seven times. Overall, the average skater skates about 30 days per year. What does information about usage rates mean to Rollerblade? Heavier usage might be associated with more frequent skate purchases to replace worn out equipment or to trade up to skates with different features such, as faster wheels, better brakes, better fit, and greater comfort. For these skaters, Rollerblade has to design new models in colors and styles that appeal to each age group. As a result, there may be more models and styles aimed at kids and teens than at adults. Statistics tend to support this reasoning—more children (83 percent) and teens (84 percent) are classified as advanced skaters than adults (66 percent). More advanced skaters typically will pay more for skates than beginners. A Money magazine article indicated that beginners should purchase skates that cost about $100 but more advanced skaters might well pay as much as $339. In-line skaters are evenly divided between men and women. But men and women often have different motivations for skating and look for different skate styles and colors, prompting Rollerblade to think in terms of men's versus women's skates. In-line skaters also tend to be more upscale, with an average household income of $53,000 versus the U.S. average of $46,000. This could be interpreted to mean that this is an upscale sport— reserved for those with the money— or that companies such as Rollerblade have priced themselves above the mass market. Believing the latter, in 1992 Rollerblade introduced its Blade Runner line of affordable skates, protective gear, and accessories for kids and adults. These products are sold by mass merchandisers to separate them from the more expensive products found in specialty and sporting goods shops. In order to maintain leadership in an industry, a firm must sell to the market segment that sets the industry standard. In many industries, that's the high-end, high-price product segment. For in-line skates, it's the segment of aggressive skaters who are the ultimate consumers and who set the standard for performance. For this market, it is extremely important that a brand be distinguished from the skates their parents use. For them, Rollerblade has developed a new line of skates with a logo consisting of a backward R and a B. To understand the needs and wants of these users, and to build a stronger relationship with this segment, Rollerblade invites aggressive skaters such as Chris Edwards to its facilities several times a month to work with its R&D people and to test skates. Competition also forces changes. K2 came out with an athletic shoe on wheels, which forced Rollerblade to take a close look at this concept. In fact, Rollerblade brought out the Synergy line of soft-shell skates—not a fabric skate but also not the hard model skates of the past. Although Rollerblade officials think most consumers will like the feel of fabric skates in the store, they worry that customers might well be turned off to in-line skating if the fabric skates don't last very long or give poor performance. Skating with your toe poking out the front of the shoe is neither fun nor safe. Moreover, fabric shoes fail to give sufficient ankle support and to transmit energy, with the result that they are slower. The Synergy line is intended to remedy some of the defects of fabric skates while still providing the consumer with a softer shoe. In a market with a slowing growth rate, firms must look for sales in areas beyond their core products. For Rollerblade, these additional sales come mostly from selling active wear. For example, Jacques Moret, an apparel firm, signed a three-year contract with Rollerblade to sell active wear items, such as T-shirts and mesh shirts, under the Rollerblade and Blade Runner labels. Many of these items are aimed at women, who are more likely to buy outfits and athletic wear for specific activities. And, of course, Rollerblade sells protective gear for skaters—helmets, knee pads, and elbow pads. Sales of these items could add millions of dollars to revenues and help to promote the Rollerblade and Blade Runner names. But keeping up with the competition is tough. Nike and Reebok are both entering the in-line skating market and both bring hundreds of millions of dollars to support product development and promotion. Both of these well-known brands have strong consumer appeal. Nike has developed a “Reuse-A-Wheel” recycling program in which the substance from used skate wheels is reused to make new athletic courts and playground surfaces. Rossignol plans to

Market skates with removable wheels that will allow skaters access to areas that are currently closed to them. Competing with well-known firms such as these, and preventing any more slides in its market share, demands that Rollerblade stay in close contact with its market.


Using the four categories of buying behavior, describe the first-time purchase of in-line skates and a fourth-time purchase of such skates. How? How might the entry of Reebok and Nike affect Roller blade’s position in the in-line skating industry? How could Rollerblade respond to the marketing efforts of these competitors by proper market segmentation? Fabric skates are an innovation in the in-line skating industry. Evaluate these on the basis of relative advantage, compatibility, complexity, divisibility, and communicability. Has Rollerblade made the best response to fabric skates with its soft-shell skate?  



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