BOA Technology Case Study Notes

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North Carolina State University *

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468

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Marketing

Date

Feb 20, 2024

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pdf

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Uploaded by DeaconThunder13325

Boa Technology: Marketing an Ingredient: Garett Graubins, the Global Marketing Director at Boa Technology, is facing crucial decisions for the company's 2015 marketing program. With limited resources, he must determine which of the seven market segments should receive the majority of Boa's promotion budget. Additionally, Graubins contemplates a shift in promotional strategy, considering whether to target consumers directly or increase promotion through retailers and influencers. Boa, known for its reel and wire closure systems, collaborates with over 150 premium brands worldwide, primarily in footwear categories. Graubins explores the potential benefits of building consumer awareness, inspired by successful "ingredient brands" like Gore-Tex and Intel. Despite successful consumer awareness in select Asian markets, he grapples with the cost and risk of replicating this effort in the United States, weighing the option against continuing efforts at the brand partner and trade level. As Graubins prepares for the meeting, he evaluates Boa's brand evolution, reviews market research, and considers the opinions of key executives, recognizing the tension between aggressively promoting to consumers and pursuing emerging opportunities in other product markets. The Birth of Boa: A Brief History: Entrepreneur Gary Hammerslag, after selling a successful medical device company, founded Boa Technology in 1998 in Steamboat Springs, Colorado. Recognizing the inadequacies of traditional shoelaces for tightening snowboard boots and hockey skates, Hammerslag developed the innovative Boa Lacing System, utilizing steel wire, eyelets, and a small reel to evenly tighten the wire. By 2001, Boa closures were featured on Vans and K2 snowboard boots, expanding to cycling shoes in 2004 and golf shoes a year later. Boa evolved into a global brand with sales across Asia, Europe, and the United States. In 2011, the company expanded beyond footwear into markets like medical equipment and helmets, leading to a name change to Boa Closure System. The video demonstrates the system's current functionality, highlighting its enduring effectiveness developed almost two decades ago. Boa Technology: Boa Technology, originating in a one-room office in Steamboat Springs, Colorado, has evolved into a global enterprise with 120 employees across offices in Denver, Colorado, Japan, Hong Kong, China, and Austria. Specializing in closure systems for outdoor and athletic footwear, Boa benefits from an engaged workforce of users and has demonstrated flexibility and innovation, capitalizing on new opportunities. Despite financial and human resource strains associated with rapid growth, Boa's leadership team, including President and CEO Mark Soderberg and CFO Merle McCreery, brings expertise from sports and technology markets. Challenges include strategic resource allocation amid numerous opportunities and potential competition in markets like medical devices and safety/utility footwear. Boa's manufacturing involves outsourcing reel production to a Chinese firm, ensuring adherence to rigid specifications, and maintaining a Hong Kong warehouse to facilitate direct shipping to partner factories. The cost-effective approach prioritizes finding suitable components from Boa's existing product line, with added costs ranging from $1-$10, passed on to brand partners and end users. Competition and Competitive Advantage:

Boa Technology faces competition in various product categories where shoelaces, buckles, or Velcro® are commonly used for closures. While the company's reel system has gained popularity, it encounters challenges from copycat competitors despite holding patents. Boa's focus on partnering only with premium brands has introduced new competition, and the case of ATOP Closure Systems in South Korea is highlighted, where Boa initially refused collaboration, leading brands to turn to ATOP. Boa's competitive advantages lie in the unique features of the Boa Closure System, offering a precise and comfortable fit, micro-adjustability, speed, one-handed operation, powerful closure, durability, and ease of cleaning. However, the main disadvantage is the higher cost compared to traditional closure systems. Boa distinguishes itself through strong relationships with brand partners, higher quality, and a lifetime warranty, selling at a premium of 10-40% over competitors like ATOP, Freelock, and JogDial. Boa’s “Seven Summits” Boa Technology's "Seven Summits" represent its seven target markets, constituting 90% of its sales, each with varying market potential and Boa's different positions. The snow sports segment, Boa's first market, involves skiing and snowboarding, with a focus on convenience, quick release, and micro-adjustability. Cycling, a well-established category for Boa, offers a relatively high market share with benefits in on-the-fly adjustments. Golf, though limited in U.S. penetration, sees substantial success in Asia, especially in the Japanese market. The trail and outdoor market, including hiking boots and low-top shoes, presents growth opportunities, while the utility and safety shoe market, particularly in Europe, holds significant potential due to safety benefits. Athletic shoes, specifically running shoes, remain an untapped market for Boa, and the medical devices category, with a focus on braces, offers substantial opportunities, albeit with caution due to uncertainties around healthcare policies. Each market segment has its distinct challenges and growth prospects, requiring tailored strategies from Boa Technology. Selling an Ingredient: Boa Technology operates as an "ingredient" supplier, providing its closure system to other product manufacturers, primarily focusing on premium brands. The supply chain involves Chinese manufacturer Ryder, Boa's warehouse in Hong Kong, brand partner factories, premium brands like FootJoy and Adidas, retail channels, and ultimately, consumers. Boa's primary strategy centers on building and maintaining relationships with over 100 premium brand partners, collaborating closely on design, manufacturing, and marketing. While initial exclusive arrangements were once granted, Boa now relies on its own efforts to build brand equity due to partners' shifting priorities. Boa also explores Business-to-Influencer (B2I) strategies, targeting retailers through initiatives like "Taste of Boa" to influence influencers at trade shows and enhance consumer education at the point of purchase. The potential Business-to-Consumer (B2C) strategy involves directly investing in consumer branding to accelerate growth, control messaging, and fend off potential competitors. However, concerns about potential alienation of brand partners and the challenge of cost-effectively building awareness across various categories present strategic considerations for Boa. Graubins contemplates the most effective approach, reflecting on past successes in Asian markets and evaluating the potential impact of consumer-directed promotion in the larger U.S. market.

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