Growth Analysis for ECCO Brand Footwear in Europe in 2016
Word Count: 14,800
Paulo Fernando Da Rocha Teixeira
(@00505891)
UoS-DIS – (UoS) Dissertation (Proposal)
Salford Business School
Robert Kennedy College
May 31, 2018
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ACKNOWLEDGEMENT
I would like to acknowledge the efforts of lecturers’ in the department of Business in
University of Salford. The efforts of my supervisor Dr. Perry Haan, previous tutors and members
of staff in the department of business for their guidance towards the conduct of this project. I
would like to acknowledge the role played by my classmates for their moral support and towards
this project. I must express my very profound gratitude to my wife Luísa and to my daughter
Beatriz for providing me with unfailing support and continuous encouragement through the
process of researching and writing this dissertation. This accomplishment would not have been
possible without them. Finally, to ECCO Footwear Company for their support advanced towards
the research project. Thank you!
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ABSTRACT
ECCO is a company which was established in 1963 in Denmark. It manufactures
footwear and has revenue estimated to be 1.3 billion Euros as at 2015. The company also has its
subsidiaries across the world. The research, therefore, sought to analyze the growth of the
company in the year 2016. The comparison was made on the sales between the years 2015 and
2016. Explorative research design together with various forms of data collection was used that
included interviews and analysis of the secondary materials. Interviews and secondary analysis
provided the main form of data collection. A total of 62 interviews were made out of which 38 of
the interviews agreed to have used the products of ECCO footwear brand. The conclusion from
the research, therefore, is that increased sales in have led to an improved brand awareness of the
ECCO footwear brands.
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Contents
ACKNOWLEDGEMENT .............................................................................................................. 2
ABSTRACT .................................................................................................................................... 3
List of Figures ................................................................................................................................. 6
CHAPTER ONE: INTRODUCTION ............................................................................................. 7
1.1
Background of Information .............................................................................................. 7
1.2
Problem Statement ........................................................................................................... 9
1.3
Objectives ....................................................................................................................... 10
1.3.1General Objectives ........................................................................................................ 10
1.3.2 Specific Objectives ....................................................................................................... 10
1.4 Research Questions ............................................................................................................. 10
1.5 Hypothesis ........................................................................................................................... 10
1.6 Justification ......................................................................................................................... 10
1.7 Significance of the Study .................................................................................................... 11
1.8 Limitations of the Study ...................................................................................................... 12
1.9 Operational Terms ............................................................................................................... 12
CHAPTER TWO: LITERATURE REVIEW ............................................................................... 14
2.0 Introduction ......................................................................................................................... 14
2.1 Demand for footwear products ............................................................................................ 14
2.2 Business project Planning ................................................................................................... 16
2.3 ECCO brand Footwear ........................................................................................................ 18
2.3.1 Management of ECCO footwear .................................................................................. 18
2.3.2 History of ECCO brand ................................................................................................ 19
2.3.3 Shoe Designs ................................................................................................................ 21
2.4 Comparative studies ............................................................................................................ 24
2.4.1 Adidas Company .......................................................................................................... 25
2.4.2 PUMA company ........................................................................................................... 26
2.5 Theoretical Framework ....................................................................................................... 28
2.5.1 Theory on Multinational Enterprises ............................................................................ 28
2.5.2 Theory of International production............................................................................... 29
2.5. 3 Theory of Evolution..................................................................................................... 29
2.5.4 Theory of Production .................................................................................................... 30
2.6 Conceptual Framework ....................................................................................................... 34
2.7 Validity and Reliability ....................................................................................................... 36
2.8 Ethical Issues ....................................................................................................................... 37
CHAPTER THREE: METHODOLOGY ..................................................................................... 38
3.0 Introduction ......................................................................................................................... 38
3.1 Research Design .................................................................................................................. 39
3.2 Sources of Data ................................................................................................................... 39
3.3 Data collection Methods...................................................................................................... 40
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3.4 Sampling Techniques .......................................................................................................... 41
3.5 Data Collection Procedures ................................................................................................. 41
CHAPTER FOUR: RESEARCH FINDINGS .............................................................................. 42
4.1 Objectives ............................................................................................................................ 42
4.2 Examination of sales of Footwear ....................................................................................... 43
4.3 Consumer Behavior and Marketing strategies of ECCO .................................................... 46
4.4 Customer Satisfaction ......................................................................................................... 48
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION ............................................. 49
5.1 Conclusion........................................................................................................................... 49
5.2 Recommendations ............................................................................................................... 51
References ..................................................................................................................................... 54
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List of Figures
Figure 2: Functions in ECCO footwear brand.
Figure 3: Table on the growth of ECCO Company in 2015.
Figure 4: Table on the growth of ECCO in 2015 and 2016.
Figure 5: Bar graph on respondents using the ECCO footwear products.
Figure 6: Pie-chart on the ages.
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CHAPTER ONE: INTRODUCTION
1.1 Background of Information
ECCO is world’s leading leather shoe company. It was started in 1963 by Karl Toosbuy as a
simple shoe-maker. Toosbuy founded the company as a family owned shoe manufacturer in
Denmark. Toosbuy. Under the slogan “a perfect fit-a simple idea,” and the quest for quality and
usability, the company has been able to pave through the challenges of the world’s economy
(Hansen et al.2006, p. 16). From the year 2012, ECCO has been on the rising trend in annual
profit recorded over the years except during the year ending December 2016 when it showed a
decrease in profit. Their unique philosophy has motivated the profits realized during the periods,
“the shoe must follow the foot” (ECCO, 2016, p. 3). The leather products by the company
include Ecco Casual, Ecco Formal, Ecco Outdoor, Ecco Kids, and Ecco Golf (ECCO, 2016, p.
17). By owning every stage of leather processing, the company has successfully integrated the
best environmental, health and safety procedures. The major centers of operations are Germany,
Japan, and United States. This proposal shall analyze the company growth for the period around
2015 and 2016 in comparison with the applied marketing strategy (Grant, 2016, p. 57).
A summary of the company’s product, promotion and distribution strategies forms the
background of understanding the applied marketing strategy. ECCO 2020’s product strategy has
strengthened the brand (Uggla, 2016, p. 26). A specialized team focuses on the products, which
feature product attributes of quality, styling, and packaging, to retain the existing consumers and
attract new ones. This has been achieved through the invention of a new product development
structure.
ECCO’s market research has guided product promotion. Outdoor displays along streets of
Riga market, Berlin, Lisbon, Budapest, and many others, have been useful (Woods, 2007, p. 19).
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Online and offline systems, as well as far reaching e-commerce, have helped in making the
ECCO footwear products a household name. New products are introduced using a productlaunching occasion. Product-launching has been a culture at ECCO Company (Grant, 2016, p.
57).
ECCO Company has centralized operations in Denmark but sells in 88 countries globally.
With the help of market segmentation (Table 1), products are stocked at singled out markets with
higher demands. More retail shops are opened in cities with higher potentials.
SEGMENTATION
DISCUSSION
Demographic Segmentation
Age
One of the most sold ECCO footwear products is Ecco Kids. The sales
were made effective from 2015 through the creation of ECCO’s Kids
Business Unit. Comfortable leather shoes have been designed for the
ageing.
Gender
ECCO targets women with tastes in formal and casual fashions, and
men with interests in color and style
Occupation
Office workers find ECCO Formal an ideal product. Both men and
women are found in this segment.
Psychographic Segmentation
Lifestyle
Quality high-heeled shape shock absorbent shoes were introduced in
the market due to the rising demands of the formal lifestyle. Ecco
Outdoor addressed the needs of outdoor wear.
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Socioeconomic Status
The emphasis on quality has made the people with a feeling of
belonging to the higher socioeconomic class to freely identify with
the ECCO brands.
Athleisure
A specialized market exists for products with a sporty look and feel
but can be used for everyday life. Ecco Golf remains relevant for golf
sporting.
Geographic Segmentation
Geography
Over 88 countries form operation centers for ECCO. More market
centers and some retailers in a center are to be created guided by
ECCO market research.
Table 1: Market Segmentation for ECCO Footwear Company
1.2
Problem Statement
ECCO is a multinational company that has built its brand around the world. The company
has been making profits. The present revenue base of the company is estimated to stand at 1.3
billion Euros in 2015. The company has been in existence since 1963 (Grant, 2016, p. 57). The
employee base of ECCO footwear is estimated to be 190,000 employees. However, the company
has faced various issues in the process of its development. ECCO products are spread in 88
countries in the world (Marcelo et al. 2016, p. 702). This project, therefore, seeks to analyze the
growth of ECCO footwear since its inception. The question that the research seeks to answer is
that: what are the factors that make the company increase revenue base and increase in
production given by the brand name?
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1.3 Objectives
The objectives formed the foundation of the research project and created the trajectory for the
entire project. Data collection techniques also followed the objectives and the hypothesis was
also set on the basis of the objectives of the research.
1.3.1General Objectives
To examine the relationship between the increase in sales of the company and brand awareness
of ECCO brand.
1.3.2 Specific Objectives
1. To assess the brand awareness of ECCO company.
2. To assess the growth of market share of ECCO company.
1.4 Research Questions
1. How does increase in sales impact the brand awareness of ECCO company products?
2. What is the response of customers to ECCO shoe products?
3. What is the growth of market share by ECCO Company?
1.5 Hypothesis
1. There are is a positive correlation between the sales and brand awareness of ECCO products.
2. Customers show positive response to the ECCO products.
3. There is an increased market share with increased brand awareness.
1.6 Justification
The external environment is one factor outside the operation of the business. In the study
consumers remain an essential part of the process yet they are the external players of the
production. They are, therefore, unaffected by the internal environment as they have freedom of
choice. The external players are, therefore, an independent variable in the study. No company
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can control its variation (Marcelo et al. 2016, p. 702). Company’s strengths and available chance
can manage the impact of the external environment. External environment is essential to the
growth and development of a brand just like the internal environment. The internal factors of the
business can be controlled the external environment must be adapted to by the business for the
business function to remain complete (Dunning, 2014, p. 689).
Marketing is one of the functions that exhibit both internal control and external
adaptations by the business. Close monitoring of marketing strategy is one of the useful steps.
The monitoring could include the use of consumer’s feedback report as well as evaluation of the
output of the strategy as proposed by this investigation. The outcome of such investigation shall
be useful in shaping the future growth of the company. The results of the research also provide a
good recommendation for the improvement of the revenues that are generated by the company
(Gambetti & Graffigna, 2015, p. 45).
1.7 Significance of the Study
The result of the research is important to investors as well as the prospective investors on
understanding the dynamics of the footwear industry. The footwear industry is one industry that
faces the economic bumps, and this can be challenging to business owners when making
investment decisions for the business. The findings of the project are an important aspect of
understanding the principles guiding the entire industry. Computing management team for the
footwear businesses will also be enabling following the results of the study. The study is also
important in developing market plans for businesses that will enable market penetrations and the
review of the plans that have been in use by the company. Analysis of financial statements will
also provide an understanding of the efficiency and profitability ratios by the company.
Understanding of the ratios is essential for the operation of the business. The contents of the
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research will also help in customizing the best operational plan for the business. An
understanding of the industry will also be based on the project findings.
The significance of the study can be summarized as either the significance that is
associated with the growth and the significance related to the operations of the company. In
analyzing the growth of ECCO brand, the results enable understanding of the system and
promotion of the operations of the business. The results are also significant in understanding the
expansion of the business. Increasing the collection points of the company and improved
technology in the production of shoes also ensures important in the creation of utility so far as
the footwear products are concerned. Understanding the growth of the company and the sales in
various places is essential in promoting the operations of the business.
1.8 Limitations of the Study
The study was limited to the sales of the company, the operations of the company and the
company’s techniques in the industry. Various personnel was interviewed as well as the
customers of the ECCO footwear product. The study focused on the ECCO footwear brands and
the expansion of the brand. The focus was also on the financial statements and standings of the
company, and this was also based on the ratios of the company during the periods of 2015 and
2016 financial years. The limitation was also regarding resources applied to conduct the study as
well as the time available for the research. Limited time reduced the scope of the research. Time,
resource, and scope are connected in research in that limited time require more resources and
reduced scope.
1.9 Operational Terms
Basic needs: Essential human wants.
Brand: Identity of a product.
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Demand: The willingness and ability to buy a commodity.
Elastic Demand: High responsive to demand to change in the price of a product.
Exponential: High change.
Footwear: Related to shoes and other shoe accessories.
Market: A Defined environment where selling and buying occurs.
Production: Creation of utility.
Returns: Profits obtained from a selling.
Supply: Willingness and ability of sellers to bring a product to market.
Theory: An explanation of an event or idea which has not been scientifically proven.
Utility: A unit of measuring satisfaction derived from using a commodity.
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CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
This chapter analyzed various works published in the footwear industry in Europe,
growth, and development of multinational companies and the marketing plans for the companies.
The chapter also provided means of analysis of the performance of multinational companies.
This chapter, therefore, gives a theoretical perspective and framework of the research; it also
gives the conceptual framework of the study. This chapter has also provided the philosophical
foundation of the research and given the measures of validity and reliability of this research.
2.1 Demand for footwear products
Footwear products are part of the clothing and accessories. Clothing is a basic human
want. Humans cannot survive without clothing (Marcelo et al. 2016, p. 702). Basic human wants
like shelter, clothing, and food are essential for the survival of human beings. Just like other
products they have the similar demand curve and supply curves. However, the demand and
supply of basic human wants are highly responsive to changes a case that provides high elastic
demand and supply to the demand and supply. A slight change in the prices of the commodities
is affected by high changes in the demand and supply. The governments provide most of the
basic human wants in most jurisdictions with the aim of controlling the unscrupulous
exploitation from some businesses. However, some of the wants are left in the hands of the
public to be determined by the forces of demand and supply (Walton and French, 2016. P. 452).
Demand for footwear products is affected by several factors that include age, gender,
occupation, lifestyle, socioeconomic status, geography, and leisure needs. These factors are
collectively referred to as customer’s needs and styles. Age is one factor that determines the
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category and size. Age also defines the needs for the footwear that includes the needs of kids or
the sports of the kids. Gender defines the need for footwear by males and females while
occupation determines whether the need is for the workers or sports personalities. Geography
involves the environmental conditions and the area where the footwear is to be used in. Analysis
of the footwear based on these factors is very important in understanding the businesses of
footwear manufacture (Marcelo et al. 2016, p. 702). The technology of production is also an
essential factor for the demand and supply of the footwear products. The fashion and culture also
necessitate the demand for footwear products.
The theory of demand and supply states that when all the factors are held constant an
increase in the price of a commodity will lead to a decrease in quantity demanded. Demand is the
willingness and ability of buyers to buy. The demand law presupposes that the price of the
products will guide a rational buyer. The law further says that when the price of a commodity
increases a rational seller will be willing to supply more to the market to get revenues from the
sales. The supply and demand, therefore, defines the price of the commodities. Just like the other
commodities the footwear products also follow the law of demand and supply. The footwear
products also get their prices based on the law of demand and supply.
The demand and supply of footwear products follow needs and demand for the products.
Across the world, the demand developed will create the need for the supply due to the gap
developed by the need and willingness of consumers to buy the products (Walton and French,
2016. P. 452). Different parts of the world have different needs for the footwear products. They
have different pushing factors underneath the demand developed. Most of the multinational
companies distribute their products through their subsidiaries in different parts of the world.
Their subsidiaries are the link points for their products. Demand and supply curves are important
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in the determination of the price of the commodities. The curve is also affected by the elasticity
of demand and the elasticity of supply. The elasticity refers to the responsiveness that the curves
show the changes in the price. There can be elastic and inelastic. The elastic supply shows how
the changes are made and the inelasticity shows the inability of the changes that occur due to
changes in the price of the commodities (Ulutas. and Islier, 2015, p. 55).
2.2 Business project Planning
A business must consider various aspects to succeed in the industry. The most important
considerations for setting up a business include social acceptability of the business, the economic
viability of the business, and physical possibility of the venture. Social acceptability is achieved
when the people fully acknowledge the business and perceives its benefits. Business activities
which are less likely to cause harm economically, politically and environmentally are considered
in the plan. Footwear business least causes the local community accepts the social problems as a
business which is likely to give more returns and provide good social acceptability for the
communities and people.
Economic viability is perceived in terms of the returns on the capital that the business can
obtain. Return on the capital is the profits that a business gets after all the transactions and is
calculated before the capital that is invested in the project. The economic viability results to the
investment decisions to be made on the business. It gives the entrepreneurial ideas and leads to
the practice of entrepreneurial factors (Ulutas. and Islier, 2015, p. 55). Physical possibility entails
the prospects of the project being conducted to the end. The project of Footwear Company being
taken through the project building process from the process of conducting feasibilities to the
initial stages of implementation up to monitoring of the implementation of strategies. Physical
possibilities of a project are connected with other aspects of the business project that includes the
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financial aspects, resource aspects and the time aspects of the projects in the end (Moffett, 2017,
np).
A business project planning is an activity that involves several processes which include
initial stages of the project that involves the identification of the gap. The second stage includes
strategic planning into achieving various objectives of the business. The other stages include
resource mobilization stages, and implementation and the monitoring of the implementation by
checking through the achievements that the projects make and those which the company faces in
the end. A decision to invest in a business is guided by the returns on the capital and the ease of
doing business in a given area (Schamp, 2016, p. 158). However, the planning also takes into
considerations the management which is considered to be post-planning operations.
Footwear companies also follow the typical project planning schemes that involves
specific steps and stages. The first stage is known as initial stages. In the initial stage of
development of a business there is feasibility of the business which is conducted to know how
feasible the business is and to give the profitability that is expected from the business. Finding of
the resources then follows the feasibility. What follows is development of prototype of the
business and a model is then designed for the business. A plan to implement the business is then
made and the full implementation then follows. Monitoring of the plan then follows and
evaluation of the project with the objective of making changes where necessary is also done in
the end. Evaluation is based on the steps that are followed in the course of the project. During
evaluation of the projects the strengths, weaknesses, any opportunity, and threats of the projects
are analyzed but the project is directed to conform to the model and the prototype which had
been developed in the course of planning (Schamp, 2016, p. 162). Management commissions the
projects and decommissions the projects depending on the objectives of the project. Project
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planning assembles team of various professionals in an interim capacity with the objective of
meeting both the short-term and long-term objectives with the aim of leading to sustainability of
the project. Business activities are at times handled in a project-like manner.
2.3 ECCO brand Footwear
19,000.The Company operates across the world with most of its subsidiaries being found
in 90 countries across the world (Timmins, 2017, 56). The brand has witnessed exponential
growth of operations since its inception. The company’s success is based on various factors that
include the economic environments, the personnel, and the management of the company.
2.3.1 Management of ECCO footwear
The company is managed by board of directors. The board of management has the
chairman and other board members. The membership of the board also has the chief executive
officer of the company. The board of management is responsible for making critical decisions
that involves the operations of the business. The chief executive officer of the company also acts
as the president of the company (Timmins, 2017, 60). The president of the company is
responsible for implementing the decisions of made by the management board. ECCO brand also
have vice-presidents who are responsible for implementing the decision of the board in various
departments. The vice-presidents oversee various specific departments and are responsible for
the management at the specific departments. There are departments responsible for operations,
human resource, and financial management within the company (Stokic and Correia, 2015, p.
11). There is also an existing sales and marketing department equivalent in the company. The
management structure is that with several departments reporting to a single management. At the
apex of the management is the board of management consisting experienced board members who
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have been in management on other companies. Other members of the board have also been
public administrators. This provides a pool of experience for the management.
2.3.2 History of ECCO brand
ECCO footwear brand was established in 1963 and founded by Karl Toosbuy as a family
business. The company then focused in the manufacture of shoes and accessories. By 1982, the
company reached a milestone production of one million pair of shoes. The sales then reached one
million pair of shoes annually. The company then begun expanding its operations and then
established the collection points in other parts of the world including Portugal, and Japan. The
company has since established 14,000 collection points across the world (Stokic and Correia,
2015, p. 12). However, in 1998 the company faced many problems connected quantity of shoes
produced. The problems arose from the method of production known as hydrolysis in which the
soles of the shoes got destroyed after two years.
In the year 2000 ECCO brand moved forth to own the method of production by
developing its tanneries in various parts of the country. This followed the 1998 flagship of the
ECCO brand in London, United Kingdom. In 2016 the company faced a legal issue that was
fronted by the Adidas Company. Adidas is a footwear brand which has been in operation for a
long period (Stokic and Correia, 2015, p. 11). The company has made various strides in so far as
improving operational technology is concerned. The modern hydrolysis technique is used
together with the introduction of modern tanneries. The marketing plan for the company is also
comparable with the integrative marketing plans that take into account all essential factors that
include the integrated modern technologies. Today, the company uses the modern approach to
marketing and selling its brand of products across the world. ECCO footwear products have
become a worldwide footwear brand and can be related to by several individuals. The products
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of ECCO Footwear Company have penetrated the rest parts of the world. The products of ECCO
company have spread across the world courtesy of the collection points that have been developed
by the company in various points across the world.2015 presented a departure from the normal
on the revenue generated by the by the brand, the revenues by the company shot up
exponentially and this can be shown in the financial statements of the company for the period of
2015 and 2016.
ECCO Company remains a world leading leather dealer in the world and continues to
grow owing to the market availability across the world. The founder of the company was Karl
Toosbuy who came up with the idea in the year 1963. The venture then started as a simple shoe
maker in Denmark (Stokic and Correia, 2015, p. 10). The Company was then founded a family
business where the family owned the shoe manufacturer in Denmark. The company has used
different slogans but the slogan that was used during the time was that of “a perfect fit-a simple
idea,” the company began an aggressive campaign in increasing the quality of the products and
promoting the usability of the products. The company has been able to pave through the
challenges of the world’s economy.
From the year 2012, ECCO has been on the rising trend in the annual profit record except
for 2016, their unique philosophy has motivated this- “the shoe must follow the foot.” The
leather products by the company include Ecco Casual, Ecco Formal, Ecco Outdoor, Ecco Kids,
and Ecco Golf. By owning every stage of leather processing, the company has successfully
integrated best environmental, health and safety procedures. The major centers of operations are
Germany, Japan, and United States. This project analyzed the company growth for the period
around 2015 and 2016 in comparison with the applied marketing strategy.
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ECCO Company has its own tanneries in various places across the world. The products
of the company are scientifically produced with hydrolysis process conducted in the manufacture
of the footwear. The shoes are popular across the world and are then distributed across the world
through the subsidiaries across the world (Bacon et al. 2017, p. 843). The company products are
popular across the world and this leads to the profitability of some of its products. The shoes are
also produced by the modern technology in the world where technology is an embraced method
for production. The management of the company as well as the production systems provides
important assets for the company’s operations. The brand of the products is also an advantage to
the company in which it is associated with the company. The shoes are sold in 90 countries
across the world and thus giving the company’s products a wider market exposure. The market
penetration abilities are enhanced as the company is able to penetrate the Asian markets,
European markets, Canadian markets and the American Markets (Truelsen & Kasprzak, 2016, p.
463).
2.3.3 Shoe Designs
Customer needs have led to different shoe designs. Technologies have also contributed to
different shoe designs. Footwear industry has, therefore, been guided by consumer tastes and
preferences (Tzenos, 2017, p. 69). When shoes are categorized on the basis of technology of
manufacture they can be either packed sneakers, 3-D shoes manufacture technologies, as well as,
artistically designed footwear (Manz et al. 2015, p. 98). The group is referred to as technology
shoes. The Technology in other sense refers to shoes which are made following the most recent
manufacturing styles in the industry. The technology used in manufacture of shoes are
captivating to the consumers and the technologies also show tendencies of durability which is
unmatched. Durability and the visual impression to the end users are considered to be a mark of
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quality of the shoes. Technology packed sneakers is one of the technologies that is applied today
in the production of shoes. The 3-D printing of shoes is a case where the shoes have labeling
which are depicted in a 3-dimensional fashion and not the conventional 2-dimensional labeling
in the shoes. A sneaker on the other hand refers to a fashion-designed footwear that fits
according to the current shoe styles. However, these types of shoes costs much in comparison to
other forms of shoes.
Hiking boots are the second design of footwear shoes in the market today and also
includes the hiking boots and gumboots. These footwears designed professionally for use in
special occasions. Hiking boots are used by Sportspeople during the hiking occasions, and the
farmers use different forms gumboots during the farming seasons. Different jobs define the
application of this types of shoes. Engineers can also use the boots that are specifically made to
suit their needs. The shoes are put on during working by the professionals to ensure safety of the
workers from the harm that may occur.
Gender is the fact of being either a male or a female human being. Footwear are
classified based on gender, the possibility of considering a man or a woman. These are the
gender specific shoe designs. Gender based designs play out in cases where there is footwear
that are specifically designed for the male gender and those other shoes which are specifically
designed for the female gender. The shoes targets either males in the market or females in the
market forming market segmentation in terms of male categorization and female categorization.
Demand for the footwear products are then developed on the basis of the desire developed and
ability to purchase the shoes.
The user requirement is the traits of the shoe products which become appealing
customers shoe products, as well as, the demand for the shoes (Sterzing et al. 2015, 81). Other
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factors that define requirements include age, geographical realities for the use of the shoes,
profession considerations of the users, and the culture of different individuals. User requirements
contributes to the style, as well as, the touch that are linked to the shoes. The features of the
shoes are modeled according to these special factors. In footwear industry, the most common
factors that define the type and form of footwear includes age and the professions of prospective
users.
Age is the number years that individuals have lived in their lives. Age shows whether the
customers are children, adolescents, or adults (Paiva et al. 2015, p. 801). Age will contribute to
style, as well as, the size of the shoes. Different groups of people have attrition to different
styles. The fashion for adolescents is different from the fashion of young adults and the senior
adults as well. Age also gives the style that is to be applied in manufacture of the shoes,
therefore, playing a cruciall role in defining the body and underfoot of the shoes. The style of the
shoes also influences the shoe-materials that are used in making the footwear.
The age gives fashion and style of the users. Young people like shoes which are trendy
fashion while the older members of the society are conservatives in nature, therefore, are in most
cases not guided by the trendy considerations (Paiva et al. 2015, p. 802). Young people have the
touch for the latest feel of a commodity including the aspects of latest styles. Older people look
at the considerations that consider the basic human wants and ensuring that the basic human
wants are met as required. To the older group of people, they are tied to the objectives of meeting
the basic human wants and performing the functions related to the meeting the same needs. Age,
therefore, defines the style required in the technical design.
Age also defines the size of the shoes in terms of design. Size defines the fit of the
footwear on the individuals. Young people have small feet, and this gives the size which is small
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and can fit into the feet of young people. Shoe size gives the design of shoes, and this has a way
of making the end product admirable and creating the demand. School children have specific
shoe size which is required by them (Paiva et al. 2015, p. 805). The size of shoe for high school
students is different from the college students which is also different from the size of mature
adults. However, there are also adults who are frail and have their sizes. Shoes are defined on the
basis of the size of the shoes. Size and age are related to the design of the shoes and are
important in creating the demand for the footwear products. Footwear companies emphasize the
size of the shoes, and this is important in designing the shoes for the markets.
The profession is one of factors that define the characteristics of the shoes and hence
making the user requirements in developing the shoes in the end. Profession in its definition is
the job that individuals are engaged in. Some professions require specified attires, and that
includes the specific footwear products. Engineering is one of the professions which are known
for using specific shoes. However, there are other professions with specific footwear
requirements that are due to the risks which are associated with the professions. Athletes and
other sporting activities are also important in the design of the shoes and other footwear
materials (Sterzing et al. 2015, 82). Athletes require sporting shoes, and this is considered under
athleisure requirements of the footwear. The shoes give a design for athletes in the footwear
owing to the nature of the shoes required by the athletes and the athleisure requirements.
2.4 Comparative studies
There are world known footwear companies that provides comparative cases for the
study. Adidas and PUMA are two known footwear firms that have been in existence for a long
period of time. Adidas and PUMA companies produce different types of shoes according to the
needs of the consumers. They then generate different levels of revenue based on the sales that
24
they make. These companies, however, are not distinguished by the revenues that they generate
but are known by the brand that they have developed in the footwear industries. Adidas and
PUMA shoes have been in the market for a long period of time. Comparative studies are done
based on the renowned footwear brands across the world. Comparative studies is part of the
initial benchmark for the company in order to come up with the best practices in the industry and
follow the world’s best footwear practices. Puma and Adidas are sister companies with a
connected history. In fact, the two companies emanated from a single business which was started
by brothers as a family business. The history of the industries shows that the two companies
were as a result of the split of the original company due to the personal differences between the
brothers. Puma and Adidas have, therefore, followed different trajectories towards their
2.4.1 Adidas Company
The company was established on the 18th of August 1949 by an entrepreneur known as
Adolf Dassler hence the name Adidas. The firm has been growing over the years and increasing
in revenue over the years. Adidas is one multinational company with operations in all the
countries of the world but has its headquarters in Herzogenaurach, Germany. The company
specializes in designing and making shoes and clothing. It has been manufacturing various sports
wears and foot wears for sports for various sports clubs across the world. The company is
managed by a board of management led by a chairman and the current chair of the board is
known as Igor Landau while the chief executive officer who is also the president of the company
is known as Kasper Rorsted.
Adidas company products have grown to have a worldwide appeal. The products are
accepted in all parts of the world. Today the company generates estimated revenue of 19.291
billion euros with an operating income of 1.5 billion euros. The net income of Adidas company
25
is estimated to stand at 0.72 billion euros. According to official reports, Adidas has an employee
base of 53,731 employees who are charged with performing different duties on the company
(Sterzing et al. 2015, 100). Initially, the company was known as Dassler brothers shoe factory,
but the name changed when the brothers split and separated to start their own different shoe
manufacturing companies. The second firm is known as PUMA which was formed by Rudolf.
That was the beginning of the rivalry between the two companies.
Adidas has been manufacturing tailor made footwear and sportswear for specific sports
and football clubs. It has also ventured in the manufacture of balls for various sports. World cup
and Olympic tournaments are some of the tournaments that Adidas has sponsored. Adidas has
also sponsored various football clubs like Bayern Munich football club and Borussia Dortmund
club in Germany. Across the world, Adidas has also been involved in the manufacture of shoes
that are of high quality and different designs. However, Adidas products are easily identified
with the sports. Adidas has also adopted marketing plan that identifies with the sports. The
marketing plan is, however, known to be integrated into modern marketing plan. The growth of
Adidas has been monumental in the footwear industry. Adidas provides a unique brand of
footwear. Adidas is one of the most respected footwear brands in the world today courtesy of its
marketing plans and the corporate social activities that the company has been engaged in. The
Company has also been generating revenue to the governments and employing people in their
respective regions.
2.4.2 PUMA Company
PUMA Company came into effect after the split of Adidas. Rudolf Drassler, Adolf
brother, came up with PUMA shoe factory after parting ways with his brother in the initial
investment known as the Adidas Company. Many issues led to the fall of first partnership which
26
can be summarized to be as a result of lack of trust between the brothers in the initial business.
PUMA is also a brand that is well known with the products applied across the world. PUMA was
70 years old having begun operations and sales in 1948. The company also has its headquarters
at Herzogenaurach, Germany.
The revenue generated by the company is 3.627 billion Euros with the operating income
of 127.6 billion euros. The profits generated by the company are also estimated to be 62.4
million euros. The company, however, has been registered as a public company since 1986 and it
is listed with the Frankfurt stock exchange (Jaegler, 2015, np). The company has employed a
number estimated to be more than 10,000 employees and has its subsidiaries in 120 countries
across the world (Jaegler, 2015, np). PUMA multinational company has had various
sponsorships across the world. The products of the brands are for motorsports, running athletics,
and training and fitness. PUMA Company currently sponsors football clubs like arsenal and
Borussia Dortmund and the national teams of Cameroon, Ivory Coast, Switzerland and Italy
national teams. PUMA has been involved in sponsorships for a long period. The sportspeople are
also known to do the wears of PUMA Company with many footballers including Cesc Fabregas,
Yaya Toure, and Marco Reus among other players. PUMA Company has also formed a
competitive footwear brand across the world. The company has also had sponsorship in track and
field events, and most common sponsorships in this field include the sponsorships advanced to
Barbados Athletic Association, Jamaican teams and Cuban associations.
The company has over the ages maintained the best practices in employment. In
employment, the company is considered to be one of the most transparent in the footwear
industry. From the year 2000 onwards the company began auditing its suppliers annually and
publish the audit results. In the year 2005, the company begun making public the list of
27
suppliers. PUMA has also been making efforts toward showing respect to the workers’ rights.
The PUMA Company has also received the much coveted ethical clothing Australia
accreditation. The environment has also been one of the concerns of the company. The company
has established internal sustainability products in which its products follow the plan by the
company. The company has also ensured that the suppliers also adhere to the internal
mechanisms plotted by the company.
The marketing of the PUMA Company has also evolved with time. Today, the company
strategizes on use of professional players and celebrities like Serena Williams and Rihanna.
There has also been the use of technologies in the productions of various forms of footwear.
PUMA has also partnered with suppliers of various footwear. The company is also participating
in corporate social events across the world.
2.5 Theoretical Framework
2.5.1 Theory on Multinational Enterprises
The theory was postulated by Stephen Hymer. In this theory the multinational enterprises
are considered to be better institutions in the process of developments and promotion of the
businesses across the borders. The process is important in determination of the price of the
commodities in places where they occur. Hymer analyzed the process and the effects of foreign
investments (Allen et al. 2015, p.2025). He analyzed the differences that results in the difference
in the interest rates and as such influenced the price levels. The objective of international firms in
the foreign investment according to Hymer is to keep the market and suppress competition and
improves technology. The multinational firms remain an important in understanding the theory
and distribution of the commodities. Hymer explained the points of division of labor, the
technologies involved, and the aspects of technology and their effect on the production. In
28
analyzing the growth of the company’s growth special attention is given to the Hymen’s theories
as they form the basic foundation for the multinational investments (Kotler et al. 1998, p. 145).
2.5.2 Theory of International production
International production involves production and distribution of different products across
different borders. The theory was postulated by Taylor. In the bid to understand the controls of
international production the theory forms the foundation for distribution of various products
across different countries in different regions (Buckley & Clegg, 2016, p.12). The economics of
production and distribution is discussed in the theory even as it explains the basic tenets behind
the production of the commodities. The economics behind the production involves the
competition, inflation between different borders and the foreign exchange. The pattern and the
value added activities are also discussed in the theory (Dunning, 2014, p.8). The theory is a
philosophical foundation in understanding the economics of international investment.
2.5. 3 Theory of Evolution
Evolution in its simplest term refers to a change from a primitive nature to a complex and
advanced form. Evolution presupposes that change is constant and things keep changing from the
simplest form to a more complex forms of the same things. According to the theory the
technology for production of footwear products keep changing according to the needs and the
technologies that are used in the production (Schumpeter, 2015, p.29). The major focus is the
fusion of athletic-related materials in the manufacture of the footwear shoes, and the
technologies of production. The focus on the waterproof technologies used in the production of
footwear materials. In the theory change in production technology.
The evolution is witnessed, and the start can be traced back to 40,000 years ago. During
this period the humans started putting on shoes. The technology of using shoelaces was invented
29
in 1790. The laces were tied in the buttocks of the individuals. The beginning of using rubbers
was noted in 1844, and the technology is accredited with Charles Goodyear in a process known
as Vulcanization. The technologies for the production of shoes changed up to a point where there
was the introduction of 3 dimensional printed soles; a technology that was advanced by Nike in
2013. The 3-D printing on the shoes marked the beginning of the customized footwear products.
The Evolution is in line with the world’s changing technologies that are witnessed across
the world. Every step of human advancement is accompanied by a change in the technology
hence the evolution. In the simplest form evolution is that process that accompanies the changes
in human lives (Pavez & Kendall, 2015, p. 98). Human lives are prone to changes, and the
changes require to be effected, and the techniques in the manufacturing of the footwear products
remain important in aligning the modern needs with the modern footwear (Kavaliov, 2015, p.43).
The evolution theory is supported by the evidence that exists in the changes in technologies
during different timelines in history. History of shoe manufacture is full of various timelines
which have important points which provide the development roadmaps for the industry.
2.5.4 Theory of Production
Production is the creation of utility. The utility is a unit of measurement of satisfaction
derived from using a product. According to the theory, production is taken to be a factor of land,
entrepreneurship, labor, and capital (Fuss & McFadden, 2014, p. 156). The four factors form the
basis of creating satisfaction from the goods and services used by the customers. The factors are
connected and linked together. The theory of production is important and central to
understanding the distribution of commodities and things that go around production. Production
in theory is the conversion of the inputs into one major refined output. The conversion of raw
materials to a refined product with the aid of other factors constitutes the process of production.
30
The theory is important in determining how much a firm is willing to put into the raw
materials and how many employees need to be employed. The amount of land and the level of
entrepreneurship are also taken into consideration by the companies. However, the market also
plays an important role in the determination of what is to be produced. The most important thing
in the theory of production is the mobility and immobility nature of the factors of production.
The land is technically immobile physically; however, it is taken to be mobile occupationally.
Land, therefore, has a peculiar supply. Land as a factor of production has a very high demand
and a fixed supply, and this causes an inelastic demand. The reward of land is rent (Schuh et al.
2015, p.11).
Capital, on the other hand, is rewarded by interest and is mobile both geographically and
occupationally. Capital, therefore, has an elastic demand and supply. Changes in the capital have
a greater effect on the production of commodities. Entrepreneurship is rewarded profits.
Entrepreneurs are known to be risk-takers. They take an initiative that brings about the
production process. Labor is the human resource and is rewarded by wages and salaries owing to
the job that they do. Labor is essential in achieving the objectives of production. Labor can be
both skilled and semi-skilled labor. Skilled labor is a trained labor that comes about due to
knowledge and expertise that is obtained over time. Labor is important since they are the people
who work around in bringing change in the company. Labor is mobile both geographically and
occupationally. Labor, therefore, provides an essential part of the production in the production
matrix.
The land has its specific characteristics. It is finite in supply, but land can be put on
different use. Land can be put under agricultural use, commercial use, residential or even light
and heavy industrial use. The use of land makes it occupationally high in mobility. Just like other
31
factors of production land provides an essential part of the production. In the theory of
production, the factors of production can be adjusted accordingly for the profits to be realized.
Adjustments are based on what is needed by the company to create utility. Labor can be
increased when or decreased depending on the circumstances. Entrepreneurs are known to source
for finance from different sources to realize the objectives. Entrepreneurs are known to bring
together the factors of production for the utility to be created. Capital can be the technology or
the machines that are applied in the process of production.
When there is human capital, the systems revert to labor. Technology and method used in
production are essential in the production. Production is, therefore, an integrated process that
makes use of the factors of production including land, entrepreneurs, human resource, and
capital. The integrated approach to factors of productions helps in the maximization of the
outputs and the conversion of the inputs into consumable output is then enhanced by the entire
process. In conclusion, the theory of production also focuses on the maximization of outputs
from the limited output and also makes use of the available raw materials as well as the limited
factors of production.
What follows production is the distribution of goods that are produced. Distribution
refers to the channel that is developed from the producer to the final consumer of the product.
Several channels may be developed in the process of ensuring that the good reaches the market.
The channel starts with the producer who takes the good to the first distributor who may either
be an importer or wholesaler. The second distributor is the retailer, and the final place in the
distribution channel is the consumer of the products. The distribution channel remains one of the
most important channels so far as dissemination of the products is concerned. Distributors play
an essential role in the distribution in that they finance the whole process, they give advice to the
32
other traders on the goods, and they also break the bulk and may also collect the bulk in the
process. The definition of the channel of distribution between the producers to the consumer of
the product is an important aspect of the trade. The roles played by the middle traders in the
process of promoting the trade are one that promotes distribution of the goods.
Intermediaries are important in advising the consumers and producers of the goods on the
importance of the goods (Jaegler, 2015, np). They promote the goods while advising the
producers on the need for improvement on the goods. Retailer advice on the price of the products
while promoting the commodities. The other middlemen are also important in breaking the bulk
of the product thus selling the product in a small amount that is required by the consumers. Bulk
breaking is one of the functions that ensure that the goods are sold in small quantities and sold in
parts. Intermediaries, therefore, play an important part in the distribution of the goods and
finding the best advice to the other business people.
Profit maximization is based on the theory of production .An optimum point is the point
at which business is utilizing all the factors of production and regaining maximum returns based
on the factors of production. At this point the business is yet to reach the point of diminishing
returns. At this point production of the company can still be increased by manipulating factors of
productions. Productions can be increased by increasing labor, capital, entrepreneurship, and
land as factors of production. When labor is improved at this point the productions can be
increased and returns improved in the process. At the point of diminishing returns the company
has exhausted all the avenues which are available for improving productions. Returns can,
therefore, not be obtained by manipulating the factors of production like land, labor,
entrepreneurship, and capital. At the point of diminishing returns the company starts making
losses and the profits are significantly reduced. The point follows the stagnant returns point.
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2.6 Conceptual Framework
The conceptual framework focuses on the dependent and the independent variables in the
course of the research. Dependent variables are those variables that rely on other variables while
independent variables are those variables that act as a standalone in the course of research. From
the objectives of the research the variables can be constructed. The research had three specific
objectives and a major objective. The major objective was to establish the sales and growth
relationship in ECCO footwear brand in 2016.The other specific objectives included examining
the sales of ECCO footwear brand in the years 2015 and 2016 and to correlate the consumer
behaviors and sales and marketing strategies employed by ECCO footwear brand in the years
2015 and 2016 (Jaegler, 2014, np).The final objective of the research is to determine the level of
consumer satisfaction from the products of ECCO footwear brand.
From the first specific objective, the independent variable is sales. Sales, in this case,
refer to the quantity that is disposed by the company over a specific period, preferably one year.
The sales in the first objective are given regarding the pairs of shoes that are disposed and the
regarding money, the amount that is obtained in the sales. The dependent variable from the first
specific objective is the growth. Growth refers to the positive change in the revenues and
operations of the company. Growth as a factor dependent on other factors will be examined.
Based on hypothesis developed the objective will be proven as right, positive, or wrong,
negative.
The second specific objective of the research involved examination of the sales of the
ECCO Company during 2015 and 2016. The independent variable in this objective is the sales
which have been analyzed in the form of quantity and the terms of money from the sales.
Monetary quantification is based on the records of the sales in both the company’s records and
34
the records of the consumables of the company by the customer .Conceptually sales provide an
important quantification parameter on the research. The second objective of the research is a
central part of the research that forms the foundation of the project. The sales also provide the
basis for the correlation in the project. This remains one of the most important aspects of the
project that gives the foundation for the other objectives.
The third specific objective was to establish customer satisfaction from the marketing of
ECCO products. The independent variable arising from the objective is the marketing plan of the
company while the dependent variable is the customer satisfaction. The consumer satisfaction
can be rated on a scale from one to five based on their perception of the products. The perception
is developed from the marketing strategies that are employed by the business. Specificity and
tactical plans are important in developing the best perception of the products of the company and
endearing the products to the prospective customers. The objective forms the basis for
understanding the customer and business relations.
Management
of ECCO
Footwear
brand
Marketing
Plans
developed
Expansion
of the
company
Budgetary
Allocations
to marketing
Human
resource
Figure 2
35
The figure shows the expected cyclic relationships in the research. Management is a
factor of budgetary allocation and the objectives of the company. The company performs well
under determined circumstances and under the proper human resource mechanisms. In the cyclic
system, the human resource is also seen as a major player in the success and growth of the
company. The efforts employed by the labor are one which is used to understand the efforts of
both skilled and unskilled labor in the end. The cyclic relationships will be the foundation for
understanding the growth of the company. The connection between the factors of production in
the footwear company.
The research can, therefore, be concluded to have two main types of variables, dependent
variable, and independent variable. The nature of variable affects the data collection technique
and the data analysis method. The project has a defined procedure for conducting the data
collection and the analysis of the data to give the much required information from the data. The
variables were analyzed based on the parameters that have been defined for research. Different
parameters are based on the method of data collection, analysis, and presentation techniques that
are to be applied in the process.
2.7 Validity and Reliability
The reliability of the research refers to the extent to which the results of a project is
regarded as stable, and shows the level of consistence after the presentation of the results. The
reliability of the results ensures that when the research is conducted several times by different
researchers, the results that will be obtained will be consistent and mirror the results obtained by
the project. Various techniques have been used to ensure that reliability of the research is
achieved. Some of the techniques include the retests and pretests. Retests and pretests were done
by administering similar test twice to the in data collection. Different times are used and
36
correlation is taken for the first time and the second time collection. This is essential in ensuring
that the results are consistent and reliable.
Internal consistency reliability has also been used in the research where an average interitem correlation has been used to show consistency. The inter-item correlation works by making
the items to pass through the similar construct. The same method has been applied in the
research project. The use of internal consistency reliable ensures that there is internal consistency
in the research and it also ensures that the rater can be relied upon. When independent
researchers apply the same methods of data collection and the same analysis procedures they will
come to the same conclusions based on the similar findings. The findings will be consistent with
the findings of the project. Consistency remains an important aspect of the research project.
Validity refers to how best and acceptable the variables measured are in accordance with
the procedures of collection applied. The validity measures that were employed in the project
include criterion –related validity and formative validity. Sampling validity also ensures that the
general objective of validity is achieved. Sampling validity measures a wider range of activities.
The broader scope of the study is analyzed, and this gives the construct of validity related to
sampling. The three forms of validity have been applied in the course of the research. In ensuring
that the validity measures are achieved the project will be both achievable and acceptable by all
the stakeholders.
2.8 Ethical Issues
Ethics refers to doing what is acceptable in the society and following the rules that
society does not view as wrong. For research to be acceptable, it must adhere to an expected
code of conduct. The society has a way of defining its conduct and expectations based on the
code of conduct. In the study ethical issues were considered and various activities were done to
37
ensure that the ethics in the research were adhered to. The ethical considerations followed a
procedure of conducting research and each of the steps of the research. At the beginning includes
the formulation of the proposal, a collection of data and presentation of data.
Measures that ensure that there is reliability was the first measure that had to ensure that
ethics of the research is maintained. Collection of data also followed the ethics in that identity of
key interviewees was hidden. Hiding the identity of the interviewees protect the interviewees
from the backlash that they may face due to confidentiality issues. Hiding the identity of the
employees enhances the integrity of the data collected. Before collection of data, the permission
was sought from the relevant authorities on the need for holding the focused group discussions
and the need for conducting interviews. Consent on the use of financial statements and the
balance sheet. The best practice in research is to seek consent and allow the collection of data
while hiding the important identity of the source of information which give sensitive
information. Following the measures that enhance ethics gives the research a sense of
acceptability.
CHAPTER THREE: METHODOLOGY
3.0 Introduction
The chapter focuses on the research design used in the course of the research. The details
of which includes sampling technique, method of data collection applied in the course of the
research, and the types of data in the research. The methodology provides understanding of the
systematic method used in data collection. The data collection methods defines the entire
research and provides an important aspect if the study.
38
3.1 Research Design
Explorative research design was used in the course of the research. This research design
focused on the problem since the problem has not properly been studied. The design was settled
on in order to establish the major priorities for the company and improve the exploratory design
for the company .The research design used the secondary research techniques that includes
analysis of secondary materials like the analysis of manufacturing statements, statement of
income and the balance sheet of ECCO footwear brand. Qualitative aspects like the structured
interviews and the observational checklists have also been used. The exploratory research design
used data from various sources that include the qualitative sources. Explorative research design
is one which is known to be formative form in nature. The explorative research design formed
the basis for data collection, sampling techniques, data analysis, and presentation. Explorative
research design also defined the sources of data that were used in the research. Explorative
research formed the foundation for research.
3.2 Sources of Data
There were two sources of data in the research which can broadly be classified into
primary sources of data and the secondary sources of data. Primary source of data are the data
that was obtained first hand from the employees and the consumers of the products. Secondary
data are those data that was obtained from the articles and other secondary materials that are in
existence like the financial reports and financial magazines. Secondary materials also used to
compliment the primary sources of data. The financial statements form the basis of secondary
analysis. Analysis of the financial statements is important in showing the growth of company
based on the financial ratios. The source of data determined the data collection techniques used
in the research.
39
Primary sources of data were the people whom the researcher interacted with on
individual basis through such methods as conducting structured interviews, delivering
questionnaires, and making critical observations using the checklists which had been developed
for the purposes of collecting the data. Secondary data sources were the sources of data which
were obtained from the second hand. They had been collected from first party and analyzed. The
secondary source of data had also been recommended and criticized in their equal measures.
They are the financial reports of the company over the financial periods presented. The journals
and articles also provided important secondary materials.
3.3 Data collection Methods
Primary data were collected by qualitative data collection techniques like structured
interviews and focused group discussions with various groups of people. Observational
checklists were also used in collection of data (Palinkas et al. 2015, p. 540). In order to support
the other forms of observational data the pictures will be taken with the intention of supporting
the data. Primary data are foundational to understanding the entire research project. The primary
data are important in proving the hypothesis developed for the project. Secondary data has been
analyzed by literature review. The review focused on the data from sales, financial statements,
and financial reviews. The ratios from the financial statements are important in making decisions
on the growth and improvement of the company. Primary data collection method for the project
is mostly qualitative data collection approach that utilizes the aspects of interview, observation
and focused group discussions ,however, secondary analysis is also employed in the data
collection techniques.
40
3.4 Sampling Techniques
A total of 62 interviews were made following no definite formula. This was a random
sampling technique. A random of 62 interviews was made which was later reduced to 38
interviews based on the use of the footwear brands. Treatments of 38 interviewees were done and
retest was also done to ensure that the research achieved the validity and reliability measures that
have been essential. The various data collection method used also defined the techniques applied.
Interviews and secondary data analysis formed the central basis of the research. Secondary
materials were the financial statements and the journals that provided the research data.
3.5 Data Collection Procedures
This defines the process that was used to collect data from the field. The procedures also
ensured that the ethics are followed (Palinkas et al. 2015, p. 542). The definition of each
procedure is important in revealing the process used in the project. Revealing the process
exposes the project to scrutiny. Scrutiny of the project provides the ethical means of acceptability
of the project. The first process of acquiring data is seeking permission from the authorities.
When permission is sought, the main objective of the research is outlined. A letter is then written
that seeks to ask for permission from the authorities. The second stage involves seeking consent
from the people involved (Dumbach, 2014, 85). Terms of reference are then communicated, and
this is based on the acceptance of the terms of reference.
The consent is sought based on the agreement. Agreements are made based on the terms
of reference spelt. The terms of reference also ensure that the confidentiality is maintained and
the integrity of the process is enhanced.
41
Sampling is then done based on appropriate sampling technique and population of the
samples. Data was then collected using qualitative data collection methods like interviews,
focused group discussions and review of secondary materials (Ikpeze, 2015, p. 29). The data was
then analyzed using different statistical approaches like finding the mean correlation and the
modal points of the data. After analysis the information has been presented in tabular forms,
conclusions drawn and recommendations made based on the conclusions of the research. The
procedure was then repeated in the same area in a measure known as retests to find the
consistency of the findings.
CHAPTER FOUR: RESEARCH FINDINGS
4.1 Objectives
The research was based on one general objective and three specific objectives. The
general Objective of the research was to establish the sales-growth relationship of ECCO Brand
footwear in Europe in 2016 while the specific objectives of the research included examination of
the sales between 2015 and 2016 at ECCO Industry, correlation consumer behavior and the sales
and marketing strategy of ECCO industry, and finding out the customer satisfaction from the
products of ECCO footwear brand. Each of the objectives had specific data needs and data
42
treatments. The data needs then provided different means of analysis of the data. The data
collection techniques are also influenced by the objectives of the research.
4.2 Examination of sales of Footwear
This was the first specific objective of the research. Sales of the company was quantified
in number and currency from the period of 2015 and the duration of 2016.The sales in terms of
money value is also of importance in the analysis of growth of the holdings. The collection of
data for this objective was based on the review of secondary materials including articles and
journals. Financial reports of the company also provided important data for the determination of
growth of ECCO footwear brand. ECCO footwear operates in more than 99 countries across the
world. The first batch of sales analysis is the sales of 2015.
2015 is one of the years in the life of ECCO footwear that has been considered the
successful years of all the time given the profits achieved during this year. In 2015 the net sales
was approximated to stand at 1.3 billion euros while the returns before taxation was estimated to
have stood at 183 million euros. The most important highlights in the year 2015 were increase in
net revenue from 2014 by an approximated percentage of 7.4% .Outside European markets the
growth of sales is estimated to have risen by 50% from previous sales thereby giving the revenue
a 50% increase in the revenue. During the same period of time the profit ratio rose to 14.6%.A
total of 174 new shops were opened by ECCO footwear brand and thus the investment of the
company increased by 18% to an estimated 52 million Euros. The equity of the company rose to
592 million euros with a solvency ratio of 61.1%.
In a million Euros
Percentage increase
Net Sales
1300
7.4%
Profit before tax
183
4%
43
Investments
52
18%
Equity
597
61.1%
Figure 3
The figure presents the increase from previous year, 2014, with no decrease on all the
financials from the company. The increase shows the growth of the company in revenue
generation as well as the expansion of the company. The increase in equity and in the
investments of the company presents a scenario in which the company has increased
profitability, therefore, making it a valuable investment owing to the equity and profits that were
obtained in the year 2015.The table represents increase from the same investment in the previous
year as recorded in the financial statements of the company. There are also expansions in the
market given by the number of international outlets outside Europe that have also increased over
the same period of time. There is an increase in terms of money and the quantity of sales in the
year 2015.
2016 presented another operational year for ECCO footwear brand with various aspects recorded
for 2016 financial year.
The implication for 2017, however, was a steady income just like the 2015 financial
growth witnessed in the company. The profits declined in 2016 which was mostly caused by
fluctuating currency in the foreign exchange markets. Additionally 100 stores were opened by
the company over the same period. Compared to 2014 and previous years the company sales and
revenue can be considered to have shown significant improvements.2016 sales were estimated to
stand at 1.2 billion euros. This is considered to be a difference of 1 million euros which is
attributed to the fluctuation in currency rate during the same period brought about by different
political and economic issues in Europe during the same period.
44
Profits of ECCO Footwear Company during the 2016 financial year fell to a point below
the profits received in 2015 but remained higher than the 2014 profits. ECCO footwear brand has
shown tremendous growth over the period from 2014 to 2016 with 2016 financial remaining flat
as the 2015 financial reports. 1.2 billion euros of revenue obtained in 2016 is seen as equivalent
to the 1.3 billion euros in revenue obtained in the previous year, but the variance has been
brought by fluctuations that were witnessed in the money markets in 2016. The profits of the
company are taken to be on the rise for ECCO footwear brand. The multinational can be said to
be growing based on the financial reports.
The hypothesis developed for this objective was that there was no growth in sales of the
company. This is a null hypothesis that the project needed to prove as either right or wrong. A
positive approval of the null hypothesis means that the hypothesis was right in that there is no
growth in the sale of the company while negative implies that there is growth over the same
period. The hypothesis is, therefore, wrong based on the findings from the research and analysis.
The findings of the research disapprove the second hypothesis. The analyzed financial
information indicates the growth in sales of the company.
2015(Million Euros)
2016
Revenue
1300
1200
Profits
183
180
Investments
52
52
Equity
597
600
Figure 4
45
4.3 Consumer Behavior and Marketing strategies of ECCO
The second specific objective involved the collection of data using interviews. The
interviews were conducted following the questions sett and pretest did earlier. The feelings of the
consumers of the products were captured in the interviews. A total of 60 interviews were made
based on the parameters. The 60 interviewees were random with the some who regularly use the
wears of ECCO company brand. Out of the 60 people randomly interviewed 38 interviewees had
the knowledge of the products and 32 out of the 38 had been using the products of ECCO
brand.18 people had the knowledge but have not tried the company’s products. However, they
have the knowledge of other products of different brands other than the ECCO company
products.
70.00%
60.00%
50.00%
40.00%
Series1
30.00%
20.00%
10.00%
0.00%
Use of products
Not using products
Do not know
Figure 5
The 38 respondents who have been using the products of the company have been using
them for different periods of time. 15 of the respondents have been using the products for more
than ten years.13 of the respondents have been using the products for 8-10 years while 10 of the
46
respondents have been using the footwear products of ECCO company for a period of fewer than
10 years.
Percentage
>10 years
8-10 years
<8 years
Figure 6
The brand is popular with all age groups and different people. According to the interview
results various factors influence the use and choice of the product. Majority of those who use the
products are those who cite the quality of the products as the main reason for the use of the
products of the company. Most of the young people who use the products use it out of the
association with the products sportspeople and various celebrity personalities used in the
marketing of the product. The marketing strategy of the company influences the choice of
products among the young people and first time users of the products of the company.
The older generations who use the products of the company use them out of attachment
to the products. The young generation uses the products out of association with the marketing.
Conclusively, marketing affects the first time users of the products compared to the seasoned
users of the products who are attached to the products. Marketing is one important aspect of the
company which is essential to pulling consumers to the products of the company. The company
47
in an important effort to promote its revenue must focus on the marketing plans of the company
which must be incorporated in the company’s general plan.
The main hypothesis developed for the second objective was a null hypothesis that there
is no relationship between the customer behavior and the marketing plans. The hypothesis has
also been proved wrong.In the first case, there is a relationship between marketing plan between
the company’s products and the young users of the products. The hypothesis is, therefore, not by
the findings and remains an intelligent guess on the results of the research project. The second
objective was, therefore, met and this was based on the data collection techniques and analysis of
the data collected from the interviewees.
4.4 Customer Satisfaction
Customer satisfaction refers to the level to which consumers are satisfied by the goods
offered by the company.82% of the customers interviewed were satisfied with the footwear
products of the company.18% of those interviewed agreed that some improvements should be
made on the brand’s footwear. The improvements according to the consumers are on the brand’s
quality and the improvement involving distributions and price adjustments. The hypothesis
which was developed for the specific objective was that the customers of the products are not
satisfied by the products of the company. Based on the result of the objectives the null
hypothesis can, therefore, be rejected. The hypothesis of the study is an intelligent guess on the
results from the data collection and analysis. Based on the specific objectives the sales and
growth of the company can be said to be a positive relationship. The positivity is in the form that
when the sales of the company improve the growth of the company is also guaranteed. The
improvement of the sales improves the revenue of the company.
48
Customer satisfaction occurs when the consumers of a given product feel that there is a
value for the money that has been spent on the product. Getting the product at a required price
that meets the required quality is one of the essences of satisfaction. The longevity of the product
according to the consumer also forms a second parameter for the satisfaction of the customers.
Customers of the products were, therefore, satisfied based on the parameters. Majority of the
consumers talked of the longevity of the products and the quality of the products while some of
the customers also talked about the price affordability of the products. However, customers had a
different perception on the satisfaction by the products of ECCO footwear brands. What the
customers perceive makes the brand creation to succeed in the process developing a strong brand
for the products of ECCO footwear companies.
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION
5.1 Conclusion
The conclusions of the research are based on the results of the research. The results are
classified based on the objectives of the project. There is a growth in sales of the company. The
growth of the company is measured in terms of revenue increase, profits, and the increase in a
number of footwear sold as witnessed by the subsidiaries opened in Europe and outside
Europe.2015 and 2016 are the years which saw an increase in the sales of the company. Both
2015 and 2016 shows growth in operations of the business and expansion of the business. This
satisfies the first objective.
In conclusion, there is a sales and growth relationship. The relationship is positive in that
growth in sales leads to the growth of the company. Increased sales lead to growth in the
revenues of the company. Expansion of the company has been witnessed in the front where the
floor area has increased, a number of employees also increased, and increase in number of
49
collection points for the products of the company. The ECCO footwear brand is one of the
brands that show the fast growth in the manner that is noticed in the observable parameters such
as the increased number of employees and the expansion of the activities of the business across
the world.
Majority of the users of the footwear brand products use the products out of attachment
and due to the marketing plan that is employed by the company. Age is of the essence in
consideration of the marketing system employed by the company. Young people use the goods
because of the celebrity product promotion that is used by the company while the older users use
the footwear products because of the attachment that they have developed on the products over
time. The conclusion from the second objective was due to the effect of mixed strategies that
have been used in the marketing of the brand. Age remains an important factor in the choice of
the type of products used for the products of the company.
Majority of the customers are satisfied by using the products of the company. Satisfaction
is due to the quality of the shoes offered by the brand. However, the consumers wanted
improvements made on the products of the company. The improvement in the quality of the
products remains one of the most important aspects that will lead to increased sales hence
improved growth of the products of the company. Satisfaction is according to the ranking that is
advanced to the company. When consumers are satisfied, then the growth of the company is
guaranteed. The products, therefore, needs a few adjustments to reach the meaningful use and
full utilization of the products.
In conclusion, the consumers of ECCO footwear products were satisfied by the nature of
services that the company has given them over the year. The level of satisfaction can be seen
across the ages and different social status. ECCO footwear customers are important in building
50
the brand of ECCO. However, the customers also have recommendations on the products and
how the products should be improved to meet the tastes and preferences of the customers. Tastes
and preferences are the most important factors that define the choices which are made by the
customers on the products. ECCO brand can develop when the company integrates the aspects of
customer ideas in their design of the footwear products. The financial systems of the company
indicate the growth in finance of the company and the enhancement of the investment.
5.2 Recommendations
The project recommends a further study on the market factors of production about the
company’s industrial production. The project should focus on the most important factors of
production that are necessary towards the achievement of the objectives of the company. Study
on the impacts of the various channel of distribution is also an essential area of research that
reveals the flow of products to the consumers. The flow of goods always follow a definite
channel, and for the ECCO footwear brand, the flow is an important aspect in determining the
speed and the quality of services that is advanced to the customers of the products.
ECCO footwear is an important company with several subsidiaries; analysis of individual
subsidiaries in different parts of the world plays an important role in understanding the
international chain in the multinational company development. ECCO is one multinational
company that has developed its status over time. An improvement in the management structure
and the marketing strategies that will deviate from the conventional informative product
promotion to the modern celebrity product promotion where various celebrities promote a
product for the company. This has the appeal of the younger generation of users of the products.
The change in the marketing strategy of a company is one step that ensures that there is a change
in sales of the company. Changes in the sales of a company may result in positive growth in the
51
company which is associated with the expansion of operations, increased number of employees,
and increased floor area of the company.
The recommendations are based on the findings of the research and thus improving the
quality of goods and services of the company. The footwear brand should also engage in the
corporate social events with the objective of taking advantage to market the products of the
company and enhance the footwear brand. In conclusion, the company should integrate other
activities in its activity with the objective of promoting the revenue collected to ensure that there
is an achieved sustainability of the products. Research should, therefore, be conducted on the
sustainability of the business under the current technological changes.
The research also recommends a study into the modern production technologies that
focus on the quality while at the same time reducing the cost of operations. However, the
company has its tanneries research into the most reliable technique of production will ensure that
the production gives the best products in the market. A benchmark with other footwear
manufacturing companies which have made a mark in the industry is also a recommendation.
Benchmarking provides a route for the best practices in the industry. Puma and Adidas are some
of the companies that have made marks in the footwear manufacturing industry. Best industry
practices should be emulated for the realization of the advantages and the inherent profits that are
from the business.
In conclusion, applications around ECCO brand development are a factor of their
customer relations and public relations management. The company should come up with a
system that periodically conducts research and promotes innovation into the best production
practices in footwear industry development. Brand development is a conscious effort of the
management geared towards satisfying the customers while at the same time endearing to get
52
new customers for the company. Corporate social activities that have been conducted by other
companies like PUMA and Adidas are also part of the efforts of developing a brand that should
be emulated by ECCO footwear brand. Also ECCO footwear brand should periodically
benchmark with other players in the footwear industry with the objective of getting best practices
in the footwear brand promotion.
53
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Appendix 1
Letter of Consent
Name……………………..
Address………………….
University………………..
Dear sir/madam
RE: Request for Permission to collect data
56
I am a student at Salford business school conducting a research project titled assessment
of growth of ECCO footwear brand. Part of the procedures of the research is to collect data. The
letter, therefore, requests for you availing of information under the following limiting conditions.
1. Neither your identity nor your name shall be published in the report.
2. The report shall maintain highest degree of privacy and confidentiality.
3. Neither part nor whole of the information shall be used for legal dealings.
4. You provide the information without coercion or bribery or under duress.
Based on the limiting conditions you are hereby requested to take part in the survey.
Thanks in advance.
Appendix 2
Interview Questions
1. How old are you?
2. Have you ever heard of ECCO footwear brand?
3. Apart from ECCO products, which other footwear brand company do you know?
4. How did you learn of ECCO wear products?
5. How long have you been using the footwear products?
6. What are the advantages that you have been getting from using the products?
7. In a grade of 1 to 5, one being the lowest grade and five being the best grade, how do you
grade the EECCO footwear products?
8. Are there improvements that you would like to be made on the products of ECCO
Company?
9. What are your recommendations on the product of the ECCO Company?
57
10. What is the most visible part of the products from ECCO footwear brand?
Appendix 3
Observational Checklists
Parameter
2014
2015
Sales
Profits
Investments
Employees
Floor Area
Number of subsidiaries
Equity
58
2016