Globes Business and its Operations
Globe International is a multi-brand footwear, apparel and boardsports ‘Youth Culture’ company. Initiated in 1984, the Company today is consists of its Australasian, International and North American divisions. Globe International designs and develops a product range of proprietary, licensed and distributed brands. Each of these brands is strategically targeted at specific sectors of youth culture in the surf, skate, snowboarding and urban/street fashion markets for both males and females.
Globe International aims to offer quality products that integrate style, performance, durability, and comfort.
Prices start at $10
Prices start at $12
Prices start at $120
Prices start at $11
Globe International main operation functions involve the design, development and distribution of youth fashion, footwear and skate equipment. The company does not undertake any manufacturing of its products; rather production is outsourced to third party suppliers.
Nature of the “Action Sports” Market
Age Group: The problems associated with this market include keeping up with always changing youth fashion trends businesses in this market (Globe International Included) must stay in touch with the “alternative” market and cannot become “mainstream”, in essence they must realise that consumers between the age of 10-24, “generation y”, prefer individualism and independence.
Market Forces: Many of these products are sold through independent retailers. They markets globe operates in can be said to be wealthy (market possesses high wealth). Therefore Changes in the economic environment (eg. Interest rates, inflation, consumer sentiment and the unemployment rate) along with government policy (fiscal, monetary and regulatory) may negatively alter the level of disposable income of customers and thus impacting on their enthusiasm to purchase products.
Size: The size of the Actions sports market is generally hard to measure as it is relatively new. However it can be said there is a growth trend because:
- Between, 1994-1999 there was a 43% increase in skateboarding and a 57% increase in snowboarding participation rates (US).
- 89% of skateboards, 85% of skate shoes and 70% of snowboards are sold to Generation Y (US).
- Generation Y is the largest teenage population segment in America, and it predicted to overtake the “baby boomers” by 2010.
- ABS published that over 30% of young Australians are involved in skateboarding related activities
Location: All these factors suggest a growing today and an even stronger one in the Future.
Many of these business types must compete on an international level (eg. Globe International, Billabong, etc). To do this they must take into account currency exposure. This means currency fluctuations can affect the pricing of products in overseas markets and affect competitiveness with domestic based products.
Detailed Description of Globe Internationals Target Market
Figure 1: Globes Overall Target Markets (Note:*is the intersection of brands between Surf and Skate, ** is the intersection of brands between Surf and Urban, and ***is the intersection of brands between Skate and Urban)
A target market is a group of customers with similar characteristics who currently, or who may in the future, purchase the product.
General Area: Globe International has identified its general target market as “generation Y”, meaning they are targeting persons both male and female between ages 10-24, more specifically in the category of Action Sports. A characteristic of such a target market is that consumers (the target) are generally “alternative” and always looking for something new and unique. However, referring to Figure 1, it can be said that globe also segments its market into smaller micro groups to more suitably meet customer needs and thus respond to the new area of products consumers are demanding. It can be seen that the three main splits are in the form of Surfing Brands, Skating Brands and Urban Streetwear Brands.
Surfing Brands: Globe has distinguished various needs within this group breaking it up into 3 categories: male; female; and both male and female. Within this group there are varying target markets mainly distinguished by age with Trans Element having a target range between 12-30 year old males and focusing on footwear for Action Sports. The female brands vary with Sista having an age target of 16 plus, while Gallaz focuses it resources on 12-30 year olds. Spilt focuses on a micro market within this niche market that is BMX, Surf and is targeting both men and women between 10-25 years.
Skating Brands: Skating is another niche market globe focuses on. The same 3 main categories apply. Again the target markets vary with differing products. This time Skate products are included more easily due to affordability. World Industries targets men from 10-30 years of age. Freshjive provides skate gear for men and women between 15-30 years of age ideally.
Urban: The final segment of globes target market is the urban sector, which is probably the most accessible area to all groups. Illustrating this is the numerous number of Globe international brands that fit under this umbrella. While there are specialised target markets for girls such as Undergirl (which is underwear for women between 16-25 years), there are no distinctions for men. Rather men and women are grouped together for the majority of the target market. Brands such as Mooks, Ecko, Mone11, etc. all have similar targets between 15-35 years of age for men and women.
Cross Sections: Globe International has recognised that some areas do overlap as illustrated in Figure 2 bellow.
Figure 2: Globe International Branding Targets
This illustrates the similarities such product brands as Globe and Gallaz (Skate/Surf), Sista and Stussy (Surf/Urban) and, Stussy and Freshjive (Skate/Urban), all have with eachother. It is also important to note that Globe Internationals “perfect brand” would be Stussy which has no restrictions on age for its target market, only on being a Surf, Skate and/or Urban product for the consumer.
Another aspect of Globe Internationals Target Market is the fact it also provides licensed brands. This also enables the company to compare its performance (that is how accurate their target markets are) against their own brands.
Factors that will influence the purchasing decisions of Globes target Market
There are 4 main variables used that influence the spending decisions of consumers in today’s conditions. They are :
• Psychological Influences- in Globe Internationals environment this in essence is the Youth Culture it represents. The perceptions and attitudes towards their products as being “alternative” are taken into account. Adding to this is the motives and personalities of globe Internationals Target Market – that being a preference to being an individual, purchasing Globe international brands because they are unique and different.
• Sociocultural Influences- these are other people’s influences on consumers pushing them to buy or not to buy Globe international Products. Family will play a major role in this as the target market is set between 10-24 years generally; this means parents will be making the spending decisions for a large section of the market. Social Class will have the effect of price setting; products are aimed at affluent consumers. Generation Y is a peer group in itself and therefore the trends of this age bracket will affect consumer spending. The actions sports industry is largely a subculture and is dependent upon people being interested in it for them to buy their products.
• Economic influences-globe aims its products at young affluent consumers. Therefore in economic prosperity Globe international would benefit, while in a downturn consumer spending would be down. Factors included are Unemployment, Interest Rates, Inflation Rates, etc.
• Government Influences- Governments can use a number of economic policy actions to influence the level of economic activity. The level of economic activity has a direct impact on spending on Globe international brands. Economic growth has been sounds in Australia over the last 2 years with Australia leading the way for OECD countries. This has had a positive impact on the Australian consumer in buying globe products. An example of
Marketing Strategies used by Globe International – Marketing Mix
Globe has a three prong approach to its products: Surf, Skate, Urban streetwear. Within the three the main focus is obviously the clothing aspect of the aspect of the business. This is reflected in the target markets of each individual brand. Globe International has adopted Multi- branding; this has created a portfolio of well managed brands. Their products are of high quality because this is expected from the Action Sports target market.
Primary research of globe Internationals displays of products shows that high quality packaging is used for footwear and accessory products. Branding plays a vital role in Globe Internationals marketing as illustrated by Figure one – Globe International has various brands. Each of Globes brands are created for a distinct element of Youth culture. It is also important to note that product design and development is split between:
- Footwear and apparel/accessories; and
- Australia and the USA
Globe International does not produce many of their products, rather they are outsourced. This already places a strain on the pricing strategy used by the company. It is accepted that Action Sports devotees will pay for quality brand apparel, footwear and accessories. This supports statements that globes consumers are affluent. Adding to the price is the niche market mentality which has been further subdivided into micro markets with the various branding. Proof that Globe international’s pricing strategy is within the market expectations can be found by looking at Figure 3 bellow.
Figure 3: Distribution of Globe International Sales
This shows that Globe Internationals sales have been increasing over the period form 1999-2002. If consumers are increasingly buying the product then the pricing must meet their expectations.
Globe international undertakes a number of actions to advertise its brands. One of these methods is the use of opinion leaders. Globe sponsors a number of Action Sports “hero’s” who the Youth Culture can identify with. Globe believes in undertaking promotions from the bottom up, this involves event sponsorship in partnership with local entities such as Globe Worldcup Skateboarding. Another assumption Globe International has made is that Generation Y is a user of the internet, Globe measures total hits on internet sites illustrated in Figure 4.
Figure 4: Distribution of “hits” on a Globe International Web site
Place – Distribution
Globe international outsources its production of products meaning the distribution of these is generally from the factory to the storefront. Globe has speciality shops that sell only individual brands (concept stores) and also distributes its brands to other retailers. Distribution is critical in the position of the businesses brands. Globe is currently looking to establish distribution arrangements in currently untapped markets. Referring to Figure 3 it can be seen there are three main distribution categories for Globe International at present:
- North America
Laws that influence Globe Internationals Marketing
Trade Practices Act 1974- covers:
- Anti-competitive and unfair marketing practices. These include:
I. The misuse of market power – where a business uses its power in a market to damage or dispose of a competitor or to prevent another competitor from entering the market
II. Exclusive dealing – where a supplier tries to restrict who its customers can deal with
III. Resale price maintenance where the supplier tries to control the price at which the goods can be resold
- Mergers and acquisitions which have the potential to decrease competition within a market
- Product safety liability
This has resulted in the formation of the ACCC the consumer watchdog.
The Sale of Goods Act 1932 (NSW) – covers:
- The seller has the legal right to sell the goods
- The goods sold by description are the same as the description
- That if the buyer is relying on the seller’s skills and judgement, and the seller usually sells these goods, then the goods will be fit for the purpose for which they were sold
- That in a sale by description where the merchant commonly sells these goods, the goods must be of merchantable quality
- That in a sale of goods by sample the bulk must match the sample.
Fair trading Act 1987 – covers:
- Unfair practices
- Conditions and warranties in consumer sales
- Actions against manufacturers and importers.
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