May 19, 2010
FROM: Roosevelt Speight
TO: Board of Directors of Mercury Shoes
RE: KEY ISSUES OF MERCURY SHOES
INTRODUCTION AND BACKGROUND OF MERCURY SHOES
Patricia and John O’Brien, a sister and brother founded Mercury Shoes in 1974 at the University of Colorado; initially they produced normal running shoes. But then in 1980s, they started manufacturing high quality running shoes for athletes. Mercury Shoes has concentrated is design, market and sell on three main brands known as Boost, TrailStep, and Sweatless Apparel. In Mercury International Ltd, approximately 4,800 employees are working worldwide with operation in 170 countries. Mercury has dominated athletic footwear and apparel industry with fourth position all over the world. Overall, Mercury is one of the major incorporations in sports related industry with the great rivals such as Nike, Reebok, Adidas, Puma, etc.
OBJECTIVE OF MERCURY SHOES
The main objective of Mercury Shoes is to be on number one position all over the world within the next four years. And, in order to meet this objective the growth rate of Mercury Shoes is expected to be 10% to 15% per annum in terms of revenue, sales, profit margin atleast for next four years. (Mercury International Ltd., www.mercuryshoes.com)
KEY ISSUES WITH MERCURY SHOES
Though, Mercury International Ltd. is having a great market share in the athletic wear industry, it is facing a number of key issues in maintaining its market share and meeting these objectives in reality. The key issues are as follows:
Changing youth fashion – This is the prime issue faced by Mercury Shoes in keeping updated as per the market demand and fashion of youth athletes. New trends and new products with new brands are always demanded by youths and therefore, sometimes it becomes very difficult to stick customers to same brand. Even though, the company is going through market research and development, the results are not always fruitful. There are various competitors existing in the market who have greater influence on consumers than Mercury Shoes. To overcome the problem of changing fashion, Mercury Shoes will have to conduct proper market surveys, should take the opinions of its loyal customers about their tastes, likes and dislikes and accordingly should make changes in the production, should recruit talented and innovative designers, should adopt proper marketing skills to promote products, etc. all these measures help in meeting the issue of changing fashion and can maintain the market share and customer’s demand by implementing these options. Market Forces – Mercury Shoes sell its products through high end retail shops, special athletic sports stores, and department stores. But, while dealing with end consumers through these links, there are other market forces which highly influence the purchasing power of customers. These market forces are government policies; interest rates, inflation, consumer sentiments, unemployment rate, etc. can adversely affect the income of consumers and as a result purchasing desire. To overcome the problem of external factors, Mercury Shoes should make its customers available fair discounts, new marketing schemes such as buy two get one free and many more, seasonal sales, after sales service, warranty periods, etc. offers force customers to purchase its favorite brand’s products and company also becomes successful in retaining customers during worst economic period. Competition – The competitors of Mercury Shoes are very strong and they have captured the entire sports industry. The competitors include Nike, Adidas, Converse, Puma, etc. The stock prices of competitors have increased by more than 20% while the stock prices of Mercury shoes decreased from $29.45 in last quarter of 2008 to $42.36 in 1st quarter of...