INTRODUCTION TO MARKETING (MKT333)

Converse Case Study

Converse dominated the basketball court for more than 40 years. The first U.S. Olympic basketball team wore them, Dr. J made them famous in the NBA. Punk rocker Joey Ramone made them standard issue for cult musicians. Today, a broad range of consumers, from the nerdiest of high school students to A-list celebrities, claim them as their own. What are they? Converse All Starts - more specifically, the famous Chuck Taylor All Stars known throughout the world as Cons, Connies, Convics, Verses, Chuckers, Chuckies, Chucks, to name a few.

The "cool quotient" of the iconic Converse brand is unquestionable. How has the brand maintained its status decade after decade? The answer is: by doing nothing. This may seem an oversimplification but the folks who run Converse brand understand that in order to provide a meaningful customer experience, you have to just stand back and leave customers alone!

Converse was founded in 1908 and introduced the canvas high-top sneaker in 1917. From the 1930s through the 1960s the Converse All Stars were the shoes to wear, even though they only came in the basic black and white until 1969. At that time, about 80% of all basketball players wore Converse.

The sneaker market began to explode in the 1970s and 1980s. Athletic shoes became more specialized, more high-tech, and more expensive. As Nike, Adidas, and Reebok took over the market Converse experienced a financial roller coaster ride and declared bankruptcy in 2001 as it market share dropped to a dismal 2% of all athletic shoes.

However, something interesting happened in the marketplace. Emerging artists, designers, and musicians began wearing Chucks because of their affordability, simplicity, and classic look. Young people caught on an adopted them as an expression of individuality. In fact, Converse's shrinking market share and miniscule ad budget made its shoes a favorite of the anti-establishment, anti-corporate crowd who were tired of trendy fashions. Perhaps the most intriguing aspect of consumers adopting Converse as a counter-culture icon is that Converse never promoted the brand as anything other than a basketball shoe.

In 2003, Nike came to the rescue by acquiring Converse and making it part of the Nike corporate family. Although Nike has infused cash and provided opportunity for product development, it has allowed Converse management to implement its own strategy. Although Converse sales have increased, the market share has shown very little growth.

In certain respects, the Converse brand seems to be more popular today than ever. In fact, in spite of low market share, Converse is the most popular sneaker brand on Facebook. With more than 19 million fans - almost four times as many as market leader Nike - Converse brings in an average of 20,000 likes each day. All this popularity comes from a brand that grabs less than 3 percent of the total athletic shoe market.

When Geoff Cottrill, Converse's chief marketing officer, was asked what Converse should do with this popularity on social meda, he replied, "nothing." By that Conttrill meant that the brand should do nothing to mess up their valuable customer-brand relationship. Today, Converse spends 90% of its marketing budget on emerging digital media rather than traditional media. As the various social media outlets have emerged, Converse has developed a "good party guest" approach to managing customer relationship. They listen more than they talk. They follow the philosophy of "letting go." Converse sees its role as one of making great products that its customers want to wear. It participates in consumer discussions rather than dictates.

Having millions of "advocates" can be a powerful marketing force. Converse is very strategic about its "stand back" approach. The brand sponsors planned communications such as posts about product, content, and questions of the day.

In addition, Converse has joined forces with the (RED) Global Fund which raises money to fight AIDS, tuberculosis, and malaria. In the past five years, Converse has sent $160 million to the (RED) fund.

In another strategic move, Converse built a music studio in New York called Converse Rubber Tracks. Although Converse is not really trying to get into the must business, this effort keeps a strong brand association with music. Converse offers emerging artists free recording time in exchange for doing free future promotions for the brand.

Converse now walks a fine line: How many limited editions and upscale designs can the brand produce without losing its image as a non-marketing marketer? How popular can a brand become without losing the core customers who love it because it isn't popular? For Converse, where authenticity is the most important attribute, the customer experience needs to be driven by the customer.

Questions:

1. How would you define the needs, wants, and demands of the Converse customer?

2. Please describe Converse's "stand-back" approach. Is it appropriate? Effective?

3. What is the benefit of Converse's participation in the (RED) Global Fund? Does it "fit" with the target market?

4. What role has music played in the current image of Converse products?

5. Do you think Converse can maintain its authentic brand image and grow the brand? Why or why not?