Billabong Case Study

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Introduction
Billabong International Limited (BBG) produces surf wear, sports apparel and accessories for the surf, skate and snowboard markets (Macquarie, 2012). The firm recorded an 18.4% decrease in

net

profit

to

A$119.1

million

in

2011

(Billabong Shareholder Review 2010/2011). After intense acquisition efforts, which saw Billabong buying over 11 brands (Appendix A), the company was forced to undergo a major restructuring, closing 150 stores and cutting 400 jobs worldwide (AAP, Feb 2012). The report will be analyzing the Billabong brand, specifically its surf wear in Australia, to identify the underlying crucial issues that must be addressed. Current opportunities and threats that Billabong can leverage on will be prioritized, then weighed against the firm’s internal strengths and weaknesses in order to increase sales. Solutions in line with Billabong’s mission of striving to set new benchmarks through youthful lifestyle brands and experiences will be explored.

Situation Analysis & Problem Identification
To identify the key issues and opportunities that Billabong is facing, an analysis was conducted on the following five areas. Appendix B shows the consolidated list of issues Billabong faces.

1. Customers (Appendix C)

The Customer Experience Cycle was used to identify key opportunities such as improving the Purchase context through greater interactivity with customers. Another opportunity was to promote an eco-friendly way to dispose of used products while

gaining rewards.

2. Competitors and Context (Appendix D, E & F)

A PEST analysis of the Australian market reveals a demographic shift to the under -15s market (Euromonitor 2012), which was an opportunity for Billabong to target. Using Porter’s Five Forces (Appendix E), a Positioning Map and Competitor Threat Analysis (Appendix F) to analyse the boardsport industry confirmed that competition from a few big surf brands was high and that all had a strong brand following and highlighted the need to differentiate its products from them.

3. Company (Appendix G)
The Balanced Scorecard was used to measure Billabong’s performance. They had high brand awareness of 86% in Australia but a lower conversion rate of 46% (Billabong 2012), which presents an opportunity to target those already aware of Billabong.

4. Collaborators (Appendix H)
Billabong has yet to explore the opportunity to “unsource”, allowing for customer collaborations in designing boardshorts. Another area to explore could be coopetition with surf brands to tackle problems which affect the surf wear industr y.

Through an opportunity and threat matrix, the consolidated lists of issues were prioritized.

Opportunity Matrix

Threat Matrix

Those with the highest probability of success and attractiveness in the Opportunity Matrix and those with highest probability of occurrence and seriousness in the Threat Matrix were taken into consideration as key issues. Those chosen were the most pressing issues that Billabong would be able to address with a good chance of success.

Key Issues/Opportunities

Key Objectives

Undifferentiated surf wear products

To produce a new product line that is

among competitors

not available by other surf wear brands
by 2013.

Low conversion rate despite high brand

To increase conversion rate to 52% and

awareness

brand loyalty by 7% by 2014.

Surf wear is declining in popularity as a

To revive the popularity of surf wear as

form of casual apparel due to increasing

casual wear and increase sales by 10%

availability of cheaper alternatives

from the 34% of Active Lifestyle
consumers.

Australians are increasingly

To create an environmentally friendly

environmentally conscious

product range by end of 2012.

Shifting demographics to under 15s

Create activities for consumers under
15s to garner 50% brand awareness by
2014.

Solution Scenarios & Implications
Solutions to the...
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