What is Cima’s current situation?
After the renovation of Cima mountaineering, Inc. in 1990, they started with $ 13 million revenues, with profit margin of 4.01%. The next 3 years witnessed a continuous increase in sales and revenues. Their profit margin increased to reach 4.97% by year 1992. They reached an all time high sales and revenues in 1995 of $20 million; however their profit margin decreased to 4.27%. Cima mountaineering, Inc. has been growing steadily & the sales by a significant percentage to reach 8.4% increase in sales in 1994, from the previous year and by 7.2% in 1995. Sales in hiking boots segment are growing and it’s even dominating over the mountaineering segment to reach 85% from their total sales. They are only targeting 2 segments which are Mountaineering and Hiking and are not dominating in either segment. Their market share in the whole hiking boots – all the 6 segments – is 3.33% in 1995. In the mountaineering segment they only have 2.33% of the market. In hiking segment is 3.63% of the market. Cima delivers high customer value through their manufactured boots. The customers perceive the boots as durable and comfortable. Cima is an active innovator and always develops new constructive techniques to its products, which add more customers’ benefits and boost the added value in Cima’s manufactured boots. After the transition, the company’s name was changed to “Cima Mountaineering Inc.” to position the brand as a more specialized boots manufacturer. Cima boots positions its self as for the rugged outdoor enthusiast. This segment includes advance hikers who use the boots on challenging trails and extended backpacking trips, as well as rugged mountaineers who climb in rugged terrain. The company used corporate branding as “Cima” was embossed on the leather on the side of the boots, to enhance customer recognition. Cima boots is also positioned as the best available for the intended purpose. Cima is successfully marketing its brand in the Western States, by focusing on quality, innovation and the continuous product developments. Cima Mountaineering is an organization in a state of “dying slowly”. Cima doesn’t have a clear strategic management; managers had never seriously thought about segmentation of the market. On the other hand Cima has strong operational management; the company adopted a cost/efficiency leadership strategy, it implemented CAD system to shorten development. Also Cima achieved significant cost savings by the new approaches. What are the problems facing Cima?
Although Cima has a competitive edge –high quality, exceptional performance and durability -over the other domestic boots manufacturers, it is encountering a great competition from domestic rivals. Cima is losing retailers and market share to potential competitors like Merell and Vasque. These competitors are introducing boots’ styles to the market more than that Cima is producing, especially to the Serious Hikers segment. This shortage in line depth probably is giving the competitors dominance over more market share. Another threat which Cima must deal with is that domestic shoes manufacturers entered the market due to the attractiveness of the hiking boot market. Currently Nike, Reebok and Timberland are targeting other segments in the market which benefit from less specialized boots. But they are considering stretching to more advanced hikers segments. Foreign boots manufacturers such as Asolo, Raichle and Hi Tech are now exporting to the United States. Depending on performance and their reputation from overseas, these companies are marketing their products to Mountaineers, Serious Hikers and Weekenders. Cima is only selling in the Western States and Canada. Distribution of Cima boots is limited to only 10 states in the United States. Obviously Cima made a mistake by narrowing its distribution channels, as it sells only to retailers specialized in mountaineering, backpacking and hiking equipments. Cima recently rejected the...
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