Uggs
International Business Strategy
November 2010
The not so UGGly Truth
A Case Study of UGG Australia
CONTENT
I - UGG Australia’s success pillars 4
1 - Evidence of their success: their financial position 4
2 - The marketing strategy: the four P’s 4
3 - International Business Strategy 5 3.1 Incremental internationalization 5 3.2 Psychic Distance 6
II - Dual Strategy towards brand sustainability 7
1 - Market Penetration 7
2 - Product Development 8
III - Conclusion 9
IV - Bibliography 9
V - Appendices 9
Since its acquisition by Deckers in 1995, UGG Holdings Inc. has grown from a local Australian brand favoured by surfers to a global luxury brand name. This growth has been spurred by one product in particular; the UGG boot. These boots came into fashion and saw their sales rise from US$ 37 million in 2003 to US$ 567 million in 2009[1] (Annual Report, 2009). Despite marketing products that are subject to fast changing trends and fashion, UGG Australia has shown stable growth over the last decade. Nevertheless, the ever-changing nature of the fashion market has proven problematic for other shoe brands, such as Crocs. In 2009, these trendy colourful slippers fell out of fashion and the company lost US$ 185.1 million dollars. (Mui, 2009) At first glimpse, it seems that UGG Australia has circumvented these fashion market pitfalls with their product, however, the question remains then, what it is that sets UGG Australia apart from other luxury fashion brands.
This paper aims to answer to the question whether UGG Australia[2] has succeeded in turning a ‘passing fad’ into an established brand. This paper consists of two parts; The first part of the paper analyzes the foundation of UGG Australia’s brand image: the marketing strategy and the international business strategy. The second part of this report will analyze the optimal strategy for UGG Australia to ensure brand sustainability.
I - UGG Australia’s Pillars for Success
November 2010
The not so UGGly Truth
A Case Study of UGG Australia
CONTENT
I - UGG Australia’s success pillars 4
1 - Evidence of their success: their financial position 4
2 - The marketing strategy: the four P’s 4
3 - International Business Strategy 5 3.1 Incremental internationalization 5 3.2 Psychic Distance 6
II - Dual Strategy towards brand sustainability 7
1 - Market Penetration 7
2 - Product Development 8
III - Conclusion 9
IV - Bibliography 9
V - Appendices 9
Since its acquisition by Deckers in 1995, UGG Holdings Inc. has grown from a local Australian brand favoured by surfers to a global luxury brand name. This growth has been spurred by one product in particular; the UGG boot. These boots came into fashion and saw their sales rise from US$ 37 million in 2003 to US$ 567 million in 2009[1] (Annual Report, 2009). Despite marketing products that are subject to fast changing trends and fashion, UGG Australia has shown stable growth over the last decade. Nevertheless, the ever-changing nature of the fashion market has proven problematic for other shoe brands, such as Crocs. In 2009, these trendy colourful slippers fell out of fashion and the company lost US$ 185.1 million dollars. (Mui, 2009) At first glimpse, it seems that UGG Australia has circumvented these fashion market pitfalls with their product, however, the question remains then, what it is that sets UGG Australia apart from other luxury fashion brands.
This paper aims to answer to the question whether UGG Australia[2] has succeeded in turning a ‘passing fad’ into an established brand. This paper consists of two parts; The first part of the paper analyzes the foundation of UGG Australia’s brand image: the marketing strategy and the international business strategy. The second part of this report will analyze the optimal strategy for UGG Australia to ensure brand sustainability.
I - UGG Australia’s Pillars for Success