2002, Professor Jerome M. Katrichis
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Sports Authority Example
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B. Marketing Mix/Program Alternatives
1. Product Mix Alternatives
Sports Authority’s product mix consists of sporting equipment, footwear and apparel, with over 51% of sales from the equipment segment. The company has two options regarding the mix of products that they offer. The first option is to continue with their strong focus on sports equipment while the second option is to expand sales of their soft lines, which include footwear and apparel.
a) Existing Product Mix
One alternative is to maintain the existing product mix, focusing on sporting equipment. Athletic apparel and footwear will remain smaller percentages of the overall product sales and well below industry averages. If this mix is maintained, no changes to the marketing mix or program objectives will be required.
b) Increase Soft Lines
Sports Authority’s sales of apparel and footwear are below industry standards, therefore, an alternative strategy for the company’s product mix can be to increase focus on the sales of these products. In order to promote sales of apparel and footwear, the company would need to increase the depth of their product offerings to include a greater selection of products for customers to choose.
In order to maximize market share, Sports Authority can consider penetration pricing for the footwear and apparel segments. This would entail setting a price lower than competitors in order to “buy” market share. Because the company is looking to abandon their cost leadership strategy, this price penetration tactic will only be a short-term alternative for the footwear and apparel divisions.
The personal selling strategy for the company would also be affected by this change in product mix. Additional sales personnel would need to be hired in order to help customers with footwear sales. Additional square footage would need to be allocated to these soft line goods not only for selling space, but also for fitting room accommodations.
Also affected would be the advertising strategy of the company. The theme of advertisements would be geared toward this new mix and promoting the image that Sports Authority is not just a store for the purchase of equipment but for all sporting goods needs. Media that would be utilized would include heavy television and radio advertisements in order to extend the reach of the company’s message.
Sales promotions would also be geared towards the soft lines, with discounts and sales focusing on apparel and footwear rather than on equipment. Because the margins for soft line products are considerably higher than for equipment, the company would be able to set prices at a level for favorable profitability, but at the same time increase the volume of units sold.
In 2000 the company has taken initiatives to sell directly to schools and recreational programs through promotional / contractual relationships, and will continue to expand these initiatives in the future. This type of promotional strategy would be very effective for the sales of soft line products especially clothing and should be continued.