Term Paper

On
Marketing Analysis of Puma

Prepared For
Professor Dr. Md. Mahmodul Hasan
Faculty EMBA/ MBA Program
North South University
Plot: 15, Block: B, Bashundhara, Dhaka-1229

Prepared By

Bang-Er-Chata
BUS 620: Marketing Management
Section: 4

Date of submission: April 2, 2

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 Letter of Transmittal
April 2, 2016

Professor Dr. M. Mahmodul Hasan

Faculty EMBA/ MBA Program, North South University
Plot: 15, Block: B, Bashundhara, Dhaka 1229

Subject: Submission of Term paper on marketing analysis of Puma

Dear Sir,
It is a great pleasure to present the term paper on Marketing analysis of Puma (BUS
-620) which had been a great experience for us to work with such a real life issue.
Throughout the study we have tried with the best of our capacity to accommodate as
much information and relevant issues as possible and tried to follow the instructions
as you have suggested. We tried to make and let it look like a professional and
informative one. We sincerely believe that it will satisfy your requirements.

We are very grateful to you for your guidance and kind cooperation at every step of
our endeavor on this term paper. We will remain deeply grateful if you kindly take
some pen to go through the report and evaluate our performance.

Thank You.

Sincerely,

N Name ID No. Signature

o
1 Shaima Islam Shatu 153 1014 660
2 Redwan Rezvi 153 0709 060
3 Md. Shariotullah Sharif 153 1254 660
4 Md. Rakibul Hussain Shah 153 0577 660

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 Acknowledgment

At first we would like to thank Almighty Allah and then we want to give special
thanks to our honorable course instructor, Professor Dr. M. Mahmodul Hasan,
Faculty EMBA/ MBA Program, North South University to give us such an excellent
opportunity to prepare this term paper on Marketing analysis of Puma. He gives us
the inspiration and guidance to learn marketing management. We strongly believe
works like this will surely help us to have a clear concept about this area and to make
us better adapted as well as capable to cope with the issues & practical exposures in
this field.

We want to thank our every group member. Each and every member tries their best
to complete the term paper as per the guideline.

Therefore, there might have some technical mistakes or error due to our limited
aptitude, related knowledge and time constraint. In this regard, we do believe to get a
kind consideration from you and those who will be exposed to this report.

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 Executive Summary

PUMA is one of the leading athletic footwear, apparel and accessories company in
the world. Their journey started in the year 1924 with Rudolph Dassler the original
founder starting a manufacturing company with his brother Adolf. PUMA has more
than 600 stores and their products are also featured in Multi Brand stores as well.
They have employed over 10,000 employees worldwide who are highly trained to
serve their customers. Puma offers performance and sports style products to
different customer segments. It focuses more on quality, innovation, design, and
performance of their product.
This report is carried out in order provide the marketing insight of PUMA by
implementing some marketing theories and provide analysis based on that. This
report covers the following topics which were taught in our class by our Honorable
Faculty Professor Dr. M. Mahmodul Hasasn. The theories we learned in our class we
used that to an analysis of the marketing of PUMA to produce analysis done by us
which will show how PUMA can be more effective and be in a competitive advantage
by implementing these theories in practice.
After the analysis of the report we will give a recommendation suggesting few steps
to be used by PUMA that will help them in gaining a competitive hand over its
competitions by better enhancing their marketing strategies. Puma firstly focuses on
its product expansion according to their target market’s needs and wants. It develops
its existing product and expand new product. It entered into fashion based product
with sports products. Puma emphasizes on innovation, performance, quality to
design its new products to make it unique from its competitors
From the overall study we will be able to conclude how marketing strategies can be
more competitive with the help of our analysis and if implemented properly it will be
really beneficial for a company leading to a larger customer base and increased
profit.

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 TABLE OF CONTENT

Contents Page No.

Letter of Transmittal
Acknowledgment
Executive Summary
1.0 Defining Marketing Management
1.1 Definition of Marketing Management (Theory 2000 – 2011) 1
1.2 Definition of Marketing Management (Theory 2012 – 2016 ±) 1
1.3 Marketing Management of Puma 1

2. Mission – Vision – Business Plan – Corporate Strategy 2-3

3. SWOT Analysis of Puma 3-4
1. 4. PESTEL 5-6
2. 5. Michael Porter’s Five Forces 7
6. Marketing Strategy & Core Marketing Concept 8-10
3. 7. Market Segmentation 11-12
4. 8. Marketing Mix ( 7P) + 4C 13-14
5. 9. Value Chain Model 15-16
10.TQM – Loyalty – Quality & Control 17-18
11. Brand & Branding 18-19
12. Box Analysis of Brand Elements (6 Categories) 20
13. Brand Dynamic Pyramid 21
11. 14. The Five M’s of Advertising 22
15.0 Mass Communication 22-25
15.1 Advertising Budget & Campaign Cost 23
15.2 Sales Promotion & Budget 24
16 15.3 Events & Experiences/Sponsors 24
17 15.4 Public Relation/Government Lobbying 25
15.5 Corporate Social Responsibility 25
15 16. Marketing Budget & Expenditure 26
16 17. Pricing Strategies 27
17 18. Breakeven Analysis with Chart/Graph 28-29
18 19. Recommendation 29
19 20. Conclusion 30
References 31

TABLE OF GRAPHS

Content Page No.

Graph 6.1 Marketing Strategy of Puma 10

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Graph 9.1 Value Chain Model of Puma 15
Graph 10.1 TQM of Puma 17
Graph 15.1 Advertisement Cost of Puma 23
Graph 16.1 Marketing Budget & Expenditure 26
Graph 18.1 Break-even analysis of Puma 29

Definition of Marketing Management

1.1 Definition of Marketing Management (Theory 2000 – 2011)

Marketing management is the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating
superior customer value.

1.2 Definition of Marketing Management (Theory 2012 – 2016 ±)

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Marketing management depends on the size of the business and the industry in
which the business operates. Effective marketing management will use a company's
resources to increase its customer base, improve customer opinions of the company's
products and services, and increase the company's perceived value.

1.3 Marketing Management of Puma:

As the business and industry size of Puma is very big and competitive, Puma faces a
huge competition, complexity and different marketing activities. Puma obviously
uses the latest definition of marketing management where they focus on the
increased customer base by using their resources. Puma offers performance and
sports style products to different customer segments. It focuses more on quality,
innovation, design, and performance of their product. It engages in exciting
collaborations with renowned design brands such as Alexander McQueen and
Mihara Yasuhiro to bring innovative and fast designs to the sports world. That
increases the company’s perceived value.
{Shatu, ID# 153 1014 660}

2. Mission, Vision, Business Plan, and Corporate

Strategy of Puma

2.1 Mission of Puma:

The mission statement of Puma is “ PUMA WILL
BE THE FASTEST SPORTS BRAND IN THE
WORLD”

2.2 Vision of Puma:

Puma’s vision looks at the world which is safer, more creative, sustainable, fastest
brand for the generations to come. They believe that by staying true to their values,
inspiring the passion and talent of their people, and working in sustainable,

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innovative ways, will bring customer satisfaction and at the same time bring that
vision of a better world a little closer every day.

2.3 Business Plan and Corporate Strategy of Puma:

Proper business plan and corporate strategy is very crucial for any organization. They
give the direction of a corporation about the activities of each business unit to
achieve the organizational goals.
PUMA is one of the world’s leading Sports Brands, designing, developing, selling and
marketing footwear, apparel and accessories. Puma firstly focuses on its product
expansion according to their target market’s needs and wants. It develops its existing
product and expand new product. It entered into fashion based product with sports
products. Puma emphasizes on innovation, performance, quality to design its new
products to make it unique from its competitors. Puma’s corporate strategies
encompass five strategic priorities. They are:

Puma’s five corporate strategic priorities

1. Reposition PUMA as the World’s fastest Sports Brand in the world and
create brand heat.
2. Improve the product engine.
3. Optimize the distribution quality.
4. Increase the speed of Puma’s organization and infrastructure
5. Renew the IT infrastructure.

{Shatu, ID#153 1014 660}

3. SWOT Analysis of Puma

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SWOT Analysis

1. Puma has a very strong brand image and it is one of the world’s
leading sports brands.
I
2. It produces innovative, high quality, comfortable products for the
N
fastest athletes on the planet.
T
3. Puma has entered into partnership with famous companies like
E
Ferrari, BMW.
R Strength 4. Puma has entered into sponsorship with various players and team
N
in different sector of the sport industry.
A
5. Puma was the official sponsor of the FIFA Football World Cup.
L
6. International celebrities like Usain Bolt, Rihanna, star striker
Sergio Agüero etc represent Puma as brand ambassador.
7. It has strong marketing and distribution strategies.

1. Price is one of the major weaknesses of Puma.

2. In case of economic slowdown it cannot reduce its price product
and cannot reduce price as sales promotion to compete with
Weakness competitors due to product positioning and pricing strategy.
3. It has huge competition and limited market share.
4. It has less financial strength compared to others big competitors
in the industry.

1. Puma can enter into more sponsorship with International events

related to sports.
2. It can expand its market segment according to the customer’s

E Opportunit demand through effective marketing research.

X 3. Puma can attempt to increase efforts toward loyalty programs that

y
T will help them to create strong customer relationship and increase
customer base.

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E
R 1. New players in the industry with more financial power and
N marketing activities will be a great threat for Puma.
A 2. Imitation of product is increasing. So, fake or cheap imitation can
L Threats damage the brand image.

3. Increasing tax, government restriction, and economic downturns

can slow down the performance of the company.

{Shatu, ID#153 1014 660}

4. PESTEL Analysis of Puma

A PESTEL analysis is a tool used by marketers to analyze and monitor the macro-
environmental (external marketing environment) factors of an organization.

Political Economics

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1. Political instability effect the business. 1. Exchange rate fluctuation influence
Puma try to expand its market in the the business as puma operates its
political stable country and they business in different countries.
become success. 2. Inflation increase the cost of goods
2. Political situation of outsourcing sold.
country affect the business. 3. Higher rate of interest may affect the
3. Puma have to comply with any financial position of puma.
restrictions imposed on users. 4. Economic slowdown or downturn may
4. New tax or tariff imposed by affect the consumers purchase and
government affect the business. decrease the sales of puma.
5. Increasing material price and labor
cost has a great impact on Puma.

Social Technological

1. Consumers are more health conscious 1. Technological advancement increasing

and participation in the sports are sales and enable cost efficiency.
increasing that increase the demands 2. Up-to-date technology adoption,
of sports products. increase the change of products
2. Consumers are aware about CSR features and quality.
3. Increasing market share of female 3. Rate of technological obsolescence
consumers have positive effect on increased due to new technologies.
Puma. 4. Innovative and superior products
4. Perception and preferences about the increased because of advance
sports products are changing. technology.

Environmental Legal

1. Tackling climate change becomes a 1. There is a risk for the violation of

challenge for organization. employment laws and environmental
2. Attaining the sustainable goals is a issues.
great issue for the company as there
2. Tougher business rules may hamper
remains a possibility to fail.
the business activities.

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3. May have to reduce energy 3. Trade agreement to safeguard for
consumptions. business operation is important.
4. As the popularity of green products
4. Risk of contract manufacturers
increased, Puma may have to adopt
copying of product (Intellectual
more waste disposal, recycle and reuse
property rights) is a great concern.
policy.

{Sharif, ID# 153 1254 660}

5. Michael Porter’s Five Forces

Buyer power:

 Higher bargaining power of buyer due to competitors fighting for the

same target market.
 Nowadays consumers are very much intelligent and knowledgeable.
 Due to Information Technology price is more transparent to
customers.
 Number of substitutes is comparatively high.
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 Threat of Barrier to entry:
substitute:
 Low cost due to high
 Customers can easily
rivalry.
switch to competitors
 Lots of brands lead to
products.
lots of entry.
 Innovative product line
of competitors. Rivalry  Lots of potential
customers who want the
 Major competitors
same product.
Crocs, K-Swiss, Nike,
Adidas.

Supplier power: Competition of rivalry:

 Supplier’s power is very low but retailer
power is high.
 Puma have 187 suppliers all over the world
 Branded retail outlet is not increasing
comparatively.
 Jeye, Kmart, Target, and David Jones etc. are
multi brand store of puma.
 Intense competitions as there are
major sports Nike, Adidas, and
Reebok etc.
 Exit barrier is highly due to huge
entry cost.
 They are using top athlete and
player to their brand leveraging.

{Sharif, ID# 153 1254 660}

6. Marketing Strategy, Core Marketing Concept

and Market Segmentation of Puma:

Marketing Strategy, Core Marketing Concept:

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Marketing strategy combines all the marketing activities into a comprehensive plan
that focuses on right segment, right products mix, and right promotional tools to
achieve the organizations goals.
Core marketing concept of Puma is to identify the needs, wants and demand of their
target customers and provide them best quality, comfortable, stylist, performance
products. PUMA offers performance and sport inspired lifestyle products in
categories such as Football, Running and Training, Golf, and Motorsports. They want
to be the fastest sports brand in the world. To achieve this mission their marketing
concept focuses on fast products, the fastest athletes, fast in reacting to new trends,
fast innovators, fast in decision making, fast in solving partners for the partners.

Positioning of the Brand:

Positioning is the act of designing a company’s offering and image to occupy a

distinctive place in the minds of the target market.
Puma is positioning its brand as an international brand with creativity, energy,
comfortable, performance and stylist products in the sportswear industry at a
premium price.

Marketing Strategy of Puma:

 Repositioning the Brand with Brand Ambassadors and sponsorship:

Puma invested several million Euros in 2015 for brand ambassadors to reposition
their brand. They show how they are training with PUMA products to get into peak
form for the major competitions. Rihanna joined Usain Bolt, Arsenal London and
other athletes for the campaign on a number of fronts, including the first TV spot for
their training shoe IGNITE XT. Leading up to this, she ensured a high level of
attention in the media and on social networks.
Puma entered into sponsorship with FIFA World Cup and other famous players and
teams. It also created partnership with Ferrari and BMW. It helps the company to
increase their market share significantly.

 Improved quality of sales and distribution strategy:

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 Puma introduced joint product and marketing programs with their key retailers to
showcase their brand in the right retail environment and drive sell through with their
partners. During the year we began collaborating with other well known retailers
with the aim of improving the presence of the PUMA brand in stores, better
communicating our product promise on site, and thereby achieving a sustained sales
increase.

 Online web shop:

To further expand their online presence, they launched an improved, integrated web
shop and rolled it out in other markets in 2015. The continuous optimization of the
website and their online product offering is a high priority for PUMA.

 Expand Market Segment with different strategy:

Puma expand their market segment. They introduced life style products and
products for female and kids. Female consumers are above average performer for the
sports products. Every year a large number of female enter into the sports world.
Puma identify their preferences and collaborates with the designers. Here, the key
element of strategy is to enter into the partnership with international star Rihanna as
brand ambassador. She plays a vital part in product offering for female in their
performance and sport style categories.
Puma entered into a new exciting partnership with Warner Brothers fulfilling
childhood dreams by offering co-branded apparel, accessories and foot wear
collections.

 Advertising on Media:
Puma has been invested huge amount of dollar on TV Ads, super support website
Banner Ads, Twitter promos, YouTube, Google Ad words, advertising agency, bill
board etc.

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 Graph 6.1: Marketing Strategy of Puma

{Shatu, 153 1014 660}

7. Market Segmentation of Puma

A market segment consists of a group of customers who share a similar set of needs
and wants. Marketing segmentation is to divide the customer base in cluster groups
with different needs and behaviors in order to create different and appropriate
marketing proposition.
Puma segment its market based on geographic, demographic, psychographic
behavioral factors.

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 Geographic Segmentation

 Geographic segmentation divides the market based on nations, states, country,

and regions. Cities etc.
 Regions covered by puma: EMEA (Europe, Middle East and Africa), Americas
(North and Latin America) and Asia/Pacific.

Demographic Segmentation

 Variables like age, family size, gender, income, generation, social class,
occupation, education, religion etc are considered in case of demographic
segmentation.
 Puma’s demographic bases:
 Age: Kids, young, middle age (10-30 years)
 Gender: Male, Female.
 Income: Upper middle, High
 Occupation: Mainly Sportsperson

Psychographic Segmentation

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 In psychographic segmentation buyers are divided into group based on
personality, life style, values.
 Bases of puma:
 Lifestyle: Sports-oriented, Outdoor-oriented
 Personality: Energetic, ambitious.
 Main bases of Puma on VALs Framework:
 INNOVATORS: Successful, active
 ACHIEVERS: Successful, goal oriented
 Experiencers: Young, variety and excitement seeker.

Behavioral Segmentation

 Here, Marketers divide the groups on the basis of their knowledge, attitude, use
of, or response to a product.
 Puma’s Bases:
 Benefit: Quality, performance, comfort
 Loyalty Status: Sports persons are highly loyal toward the brand
 Attitude towards the products: Majority of the customers have positive
attitude towards the product.

{Shatu, ID#153 1014 660}

8. Marketing Mix ( 7P) + 4C

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 Product Price Place

Bolt Evo Speed, Premium pricing is Stores are available

Ignite Ultimate, Speed used by Puma. throughout the
600 Ignite, Faas, Products are of top globe.
Whirlwind Classic, notch quality. It operates its
Suede Classic etc business over 120
countries
Featured on Global
Multi Brand Stores.

Promotion Marketing Mix

People
7p’s of Puma
Advertisement Multicultural
through television, workforce
magazines, dedicated to
billboards. server better.
Social Media, Employed 10,830
Digital ads and diversified
Google ads is also workforces
used. worldwide.

Process Physical Evidence

They continuously They market their

monitor their Products in such a
management way that create
process. physical evidence in
This helps to build the mind of the
top notch service. customers.

{Rezvi, ID# 1530709060}

4C’s of Puma

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 Cost – PUMA carefully plan their pricing strategies by considering people. They set
their prices according to the customers purchase power making the products saleable
and mostly premium pricing is used.
Consumer – PUMA make products by targeting the needs of the customers. From
sportswear to casual wears and clothing all are designed which the customers prefer
thus satisfying the customers.
Communication – PUMA keeps effectively communicates with their customers in
events held by PUMA giving valuable insights about their products and even taking
feedbacks.
Convenience – The exclusive stores of PUMA are located all around the world
where the customer has access to wide range of their products. Their products can be
also found on multiband stores as well and for even more convenient shopping
customers can order online sitting from their home. {Rezvi, ID#1530709060}

Cost –
Premium pricing is used for
premium target market.
Prices are set based on people
purchase power.

Consumer –
Age group: 10-30
Income level: upper middle,
high.
Customization is also
available for the consumers
Communication –
Constant interaction with
customers are made to create
a greater bond.
Puma uses TVC, digital
4c of Puma media, print media, social
media etc

Convenience – Customer have greater

convenience due to availability of Puma
products around the world.
Different stores and online enable it.

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 9. Value Chain Model

Value Chain is the process or activities by which a company adds value to an article,
including production, marketing, and the provision of after-sales service. Below
diagram represents the sections of PUMA’s value chain.

Tier 4 Tier 3 Tier 2 Tier 1

Raw Materials Processing Outsourcing Manufacturing

Cotton field, cattle Dye house, Embroidery Footwear,

Firm, rubber tanneries, cutting, apparel,
Plantation Packaging Printing Accessories

Retail

Puma
Office Operation Logistics

Warehouse

Graph 9.1 Value Chain Model of Puma

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PUMA outsources the majority of its production and approximately 90% of this
production takes place in the Far East. With outsourced activities, it is more difficult
to control the impact on issues such as sustainability. The range of environmental
impacts that occurs across the value chain differs significantly.

Tier 4 represents both natural and synthetic materials in their raw state, for example
cotton plants, raw hides and rubber trees. Leather and cotton production require
significant quantities of water, land, herbicides, insecticides and fertilizer.
Tier 3 represents the processing of raw materials, for example a leather tannery or a
rubber processing facility. The tanning process transforms a wet blue hide into a
useable form of leather and is associated with large environmental impacts.
Tier 2 represents any outsourced processes, for example embroiders, cutters and
printers. The impact at this stage is relatively minimal compared to other stages in
the value chain due to the minimal and often simple processes undertaken.
Tier 1 represents the manufacture of the finished product and is the last stage in the
manufacturing process. Some of our suppliers have vulcanization processes.

PUMA’s Operations:

Warehouses, retail and offices have relatively little impact compared to other areas
of the value chain, the most important being water and energy consumption and
municipal waste generation. Logistics represents the transportation of goods from
the Tier 1 suppliers to the warehouses, storehouses and subsidiary businesses. Modes
used to transport freight include shipping, road, rail and air. The majority of the
impact caused by logistics relates to the combustion of fossil fuels such air pollutants
produced and include carbon dioxide, nitrogen oxides, particulate matter, and ozone,
VOCs, water vapor, carbon monoxide, hydrocarbons and sulphur dioxide. There can
also be significant marine pollution caused by the shipping of products.

{Sharif, ID# 153 1254 660}

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 10. TQM-Loyalty-Quality & Control

Total Quality Management (TQM) is a management approach that seeks to improve

quality and performance so that the company can achieve long term success by
meeting or exceeding customer expectations. This can be achieved by improving
processes, products, services, and the culture in which they work by all the members
of the organization.
Wilkinson and Witcher (1993) summarized TQM as having three major requirements
as follow:
Total - involving the whole company,
Quality - with all its complexities has to be defined
Management - the structure of managing the process by following some steps like
Planning, Organizing, Controlling, Leading, Staffing.

Followings are the main factors which influences and ensures Total Quality
Management OF Puma.

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 Graph 10.1 TQM of Puma

Quality and Control:

  Quality is "the totality of features and characteristics of a product
or service that bears its ability to satisfy state do implied needs. "Puma always think
about the maximum quality. So, they established a commercial department which
identify customer expectations and their satisfaction and constantly monitor them.
They use different software to save data, so that they can compare it overtime.

Customer Loyalty:
Customer loyalty is the tendency to favor one brand over all others.
Puma has a very strong customer loyalty. Puma achieve this loyalty due to better
quality, performance and comfortable products. It arranges different types of
customer loyalty programs. This loyalty encourages consumers to shop more
consistently and feel positive about a shopping experience which attract other
consumers in this competitive market.
{Rakib, ID#1530577660}

11. Brand & Branding

A brand is a name, term, sign, symbol or design, or a combination of them, intended

to identify the goods or services of one seller or group of sellers and to differentiate
them from those of competitors.

Puma is a worldwide well-known brand by everybody. This is because puma

maintains a strict rules and use of its logo and other symbols, patterns etc.

Logo: Puma is committed to make best quality, performance

sports products and their logo is a visual expression of that
commitment.

Living at the edge of fashion, PUMA’s identity has become a

trend setter and sports lifestyle for the youth. From the maker of

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sportswear now they are well known all over the world for premium quality athletic
and casual footwear, apparel, accessories and many more. Their effective branding
strategies has helped PUMA maximized their brand value steadily competing with
other major brands. When people talk or hear about PUMA the few things that pops
up on their mind are comfort, accessibility and quality. This proves PUMA’s
successful branding strategy.
The PUMA Group owns the brands PUMA and Cobra Golf, as well as the affiliate
companies Dobotex and Brandon. These brands are closely interlinked with PUMA’s
core business and will adapt and implement PUMA's new brand direction under the
Forever Faster platform for their own strategies.

Cobra Golf

Brandon

Dobotex

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 {Rezvi, ID#1530709060}

12. Box Analysis of Brand Elements (6 Categories) of

Puma

Memorable Meaningful

Likeable Transferable

Adaptable Protectable

1. Memorable: How easily do consumers recall and recognize the brand

element, and when—at both purchase and consumption? Puma is very well
known and recognized by everybody.
2. Meaningful: Is the brand element credible? Does it suggest the
corresponding category and a product ingredient or the type of person who
might use the brand? Puma’s products remind the name of different players
and it reflects the sports ob heart.
3. Likability: How aesthetically appealing is the brand element? Puma spends a
lot to make its brands likable and as the customers can feel the attachment of
the brand proposal and their needs they are very likable.

{Rakib, ID#1530577660}

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 13. Brand dynamics pyramid for PUMA

Strong Relationship

Bonding
(Puma)

Advantage

Performance

Relevance

Presence

Weak Relationship

Bonding: Bonding happens when a company is doing business at least for 20 years
and well received by the customers. Puma is doing its business since 1924 and it
keeps it reputation successfully. So, it is in the bonding section.

{Sharif, ID# 153 1254 660}

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 14. The Five M’s of Advertisement

The following Five M of advertising is for a new product launch proposal of Puma in
which is Puma Glow shoe that provides high quality, performance, flexibility and
comfort to sports lovers.

Message

Feel comfort
always

Media

Mission Money  Electronic Measuremen

media t
25% Market $80 million  Celebrity
share by first for Endorsement  Measure
year promotiona  TV Commercial Customer
l activities  Outdoor Satisfaction
advertisement  Digital Ad
 Sponsorship rating
 Facebook and  Online
You Tube Ad Survey

{Rakib, ID#153 0577 660}

{Shatu, ID# 153 1014 660}

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 15. Mass Communication

15.1 Advertising and Budget Campaign Cost

PUMA the famous German sportswear company recently reported they had better
sales than expected in new products thanks to its marketing as it has started to pay
off leading to an increase in shares as much as 3 percent. Following this the brand is
now tripling their advertising campaign cost increasing their budget campaign as
well globally. This led to an increase in advertising cost from 4% to 12% in Australia
to drive sales and improve performance. This was indeed a very splendid step taken
by PUMA to cover the loss they had recent years when competing with its giant rivals
Nike and Adidas. PUMA also started sponsoring Arsenal for their ad campaign to
create more brand awareness among its customers. This all lead to an increase or
advertising and budget campaign cost by 10.2% from € 544.1 million to € 599.7
million.
{Rezvi, 1530709060}

Allocation of Advertisemet Costs

Television Social Media Outdoor Magazine Others

3%

13%

38%

27%

18%

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 Graph 15.1 Advertisement Costs of Puma
15.2 Sales Promotion and Budget

PUMA’s marketing promotion to enhance their sales plays a crucial role in increasing
their overall sales starting from footwear’s to other various products made by PUMA.
For PUMA’s sales promotions they endorse many athletes in order to boost their
sales. Endorsing athletes as a sales promotion is a very quick way to build strong
sales figure as people follow their favorite players and seeing them using such
product leads to buying of suck products. PUMA also features their product in their
website and stores as well with attractive discount which acts as a solid sales
promotion mostly in developing countries. Another sales promotion strategy used by
PUMA is giving customers tickets when entering the shop. Their success is backed by
sweet marketing in India that leads to the highest number of sales having RS1600
cores leaving Nike and Adidas behind by making and expects to make RS 2000 corers
by the end of the year. This success has lead to an increase in consolidated retail
sales of € 726.2. PUMA expects to increase their sales promotion budget by 18% due
to increase in sales of their products following the huge popularity that amounted to
consolidated sales of €3387.4 million. In Footwear it amounted to €1506.1 million,
Apparel it amounted to € 1244.8 million and in Accessories it amounted to €636.4
million.

15.3 Events and Experiences/ Sponsors

PUMA in their business years had done many events showcasing their products to its
customers so that they can have a experience of each product before actually buying
it. This concept of PUMA has a very positive reaction from its customers as they had
such opportunity. They were also shown beta products and ask for feedbacks which
would PUMA reconsider if found valid and made changes on their final product.
PUMA also launches their new products in numerous events one such example
would be in the Red Bull Racing Event where PUMA worked with Innovation in
marketing their products. PUMA also sponsors many sports teams starting from

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Football, Cricket, Baseball and more. One of the recent sponsorship is with the Great
Sun Series, PUMA will be the official sportswear and merchandise supplier for the
series. {Rezvi, ID# 1530709060}

15.4 Public relation and Government Lobbying

PUMA always try to keep interacting with the public in every different ways possible.
PUMA believes maintaining good relationship with the public helps create a positive
image and maintain strong relationship with them. As PUMA is now a global brand
that is well known all over the world it becomes increasingly difficult for them to
maintain good public relation which is why PUMA hires the best Public Relation
Agencies based on those countries who knows the people better and they do all the
public relation work for PUMA.

15.5 Corporate Social Responsibility

PUMA has received many corporate social responsibility awards for their countless
efforts and contributions to world peace with the recent most recent award PUMA
Energy in 2014. To make the world a better place to live, PUMA reduced their use of
hazardous chemicals, to minimize packaging waste they redesigned their shoe boxes,
they started to made products that are environmental friendly. They also took many
initiatives after tons of research such as cleaning water, recycling of products, and
wild life habitat and storm protection when in time of danger. This way PUMA is
giving back to the community in many ways thus helping and making each
individual’s life better with one sole vision on creating a better world for future
generations.
{Rezvi, ID# 1530709060}

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 16. Marketing Budget & Expenditure

Puma spends a significant amount of money for its marketing activities. Through
TVC, Facebook, You Tube Ads, Twitter promos, billboard, magazine Ads etc Puma
markets its products. In 2015, Puma increase its marketing budget to increase its
sales and gain market share. Puma’s marketing budget and expenditures are
following:

Year 2015 (€ Million) 2014(€ Million) 2013(€ Million)

Marketing
1,140.4 997.7 899.5
Expenditure

1,200.00

1,000.00

800.00

600.00

400.00

200.00

0.00
2015 2014 2013

Figure: Marketing Budget and Expenditure (€ in Millions)

Graph 16.1 Marketing Budget & Expenditure

{Shatu, 153 1014 660}

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 17. Pricing strategy

Proper pricing strategy is very important for every organization. Puma follow the
following pricing strategy:

 Puma flow the competitive pricing strategy. Puma compete with adidas, Nike and
other fashion shoe retailers and brands.
 The pricing is based on the basis of premium segment as target customers also. So we
can say puma also flow the price skimming strategy to attract the premium customer
who have high income and want to take the best value of the product from the
market.
 Puma also set its price by considering the geographic area. For example, In Asia,
puma reduce its product price and capture the whole market and ensure a large scale
of sales in each year.

Puma follow some steps to set price:

Select the price objective

Determine Demand

Estimate Cost

Analyze Competitor Price Mix

Select Pricing method

Select final Price

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 {Sharif, ID# 153 1254 660}

18. Break-even analysis of Puma

The break-even level or break-even point (BEP) represents the sales amount—in
either unit or revenue terms—that is required to cover total costs. Total profit at the
break-even point is zero. The main purpose of break-even analysis is to determine
the minimum output that must be exceeded in order to make profit.

Price per unit in 2015= $90.50

Variable cost per unit in 2014= $39.50

Fixed cost = $22570500

So, Break even Volume in 2014 = fixed cost/ (price-variable cost)

= $25570500/ ($90.50-$39.50)

= 501,382 units

  2013 2014 2015

Total Fixed cost $25,570,50

$25,570,500 $25,570,500
0

Total Variable cost $22,580,27

$20,271,071 $19,804,589
0

Total cost $26,653,57

$26,753,570 $45,375,089
9

Variable per unit $41.39 $40.50 $39.50

Price per unit $86.50 $87.00 $90.50

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 501,382 units

Graph 18.1 Break-even analysis of Puma

19. Recommendation

1. Puma must have more company owned distributors to increase their sales
2.Puma must do an actively advertisement of non puma brand to increase market
awareness
3.Create more sponsorship with professional athletes especially with NBA basketball
star players.
4.It can increase its store outlets worldwide
5. Puma should advertise their products differently. Creating a differentiation to Nike
and Adidas.
6.It can increase its product line to give variety of choices to its customers.
7. Puma should produce more eco friendly products like their re-suede shoes.
8.They can more focus on basketball because it is one of the popular sports in the
world.

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 20. Conclusion

Marketing is a very crucial part of every organization. Puma adopted different

strategies that the repositioning of PUMA as the World’s Fastest Sports Brand, the
improvement of our product engine, and the optimization of our distribution quality,
increasing the speed within our organization and infrastructure, and renewing our IT
infrastructure. PUMA was also trying with the ad campaigns to reposition itself on
the mind of the consumers as a sports performance brand instead of everyone taking
them as the casual thing. PUMA even signed a Multi-year deal with the famous
singer Rihana and making her the brand ambassador to promote women fitness
footwear’s. It also focuses on sustainability that fosters its success.

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 References

1. Kotler, P. & Keller, K.L. (2015). Marketing Management: A South

Asian Perspective (14th edition.) Upper Saddle River, NJ: Prentice
Hall
2. www.puma.com
3. Annual report of Puma 2014
4. http://www.businessinsider.com/rihanna-becomes-creative-
director-of-pumas-womens-business-2014-12
5. http://www.pumaenergy.com/2014/03/20/puma-wins-award-for-
corporate-social-responsibility
6. http://www.scoop.it/t/entrepreneurs-in-the-shoe-industry
7. http://in.puma.com/sale.html
8. http://about.puma.com/en/this-is-puma/strategy
9. http://www.marketingweek.com/2013/02/19/puma-unveils-
strategy- to-unify-brand
10. http://in.puma.com/?mktID=PL:Brand%20Marketing:Puma.com-
CatchAllPage:India-en&plinkID=Brand
11. http://www.humankinetics.com/excerpts/excerpts/five-
competitive-forces-in-sport-business-environments
12.http://about.puma.com/en/this-is-puma/business-units

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