Managerial Marketing - Cima Mountaineering
Steven Farney
Managerial Marketing
Spring 2003
Cima Mountaineering
Define Problem
Sales and profits had grown steadily for Cima Mountaineering, Inc. and by most measures the company was successful. However, growth was beginning to slow as a result of foreign competition and a changing market. Margaret Simon, Cima Mountaineering President, observed that the market had shifted to a more casual, stylish hiking boot that appealed to hikers interested in a boot for a variety of uses. She favored a strategy of diversifying the company by marketing a new line of boots for the less experienced, weekend hiker. Anthony Simon, Executive Vice President of Cima Mountaineering, also recognized that the market had changed, but he supported expanding the existing lines of boots for mountaineering and hikers. The company had been successful with these boots, and Anthony had some ideas about how to extend the lines and expand distribution. "This is a better way to go," he thought "I'm concerned about the risk in Margaret's recommendation. If we move to a more casual boot, then we have to resolve a new set of marketing and competitive issues and finance a new line. I'm not sure we can do it."
The leadership of Cima Mountaineering were at an impasse. On one hand they could move with the market. On the other hand they could expand on what they have now. These are just a few of the questions they had:
* What direction should Cima Mountaineering proceed with for the future of the company?
* Can Cima finance a new line of hiking boot for the Weekend Hiker?
* Can Cima afford to stand by ad the Weekend Hiker segment is taken up by foreign competition?
* Can Cima afford to stay pat in a market that is not showing signs of potential growth?
To further analyze the company the following SWOT analysis is provided:
Selected Internal Factors
Strengths
Weaknesses
Selected External Factors
Opportunities
Threats
Management
Current management is seasoned in the industry and has successfully resurrected the company from near death.
Cima would be entering into a new market with a Weekend Hiker boot.
Consumer/Social
Weekend Hiker is the market segment that is showing signs of high growth in the industry.
Competitors already recognize this and have either already entered the market or are planning on entering into it.
Offerings
Currently offer hiking boots for serious hikers.
Have not tapped the Weekend hiker market which is showing sighs of strong growth.
Competition
Though competition is growing in the Weekend Hiker segment, there is still plenty of room for Cima.
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Cima would be entering into a new market with a Weekend Hiker boot.
Consumer/Social
Weekend Hiker is the market segment that is showing signs of high growth in the industry.
Competitors already recognize this and have either already entered the market or are planning on entering into it.
Offerings
Currently offer hiking boots for serious hikers.
Have not tapped the Weekend hiker market which is showing sighs of strong growth.
Competition
Though competition is growing in the Weekend Hiker segment, there is still plenty of room for Cima.
Cima would be a bit late entering into the game for the Weekend Hiker segment.
Marketing
Loyal following of those who do purchase Cima hiking boots.
Not a very big brand name.
Industry/market structure
Weekend Hiker is one of the highest growing market segments in the hiking boot industry.
Competitors also recognize this. Also, the segments that Cima are already in are showing signs of either slowing or slow growth.
Finance
As far as a company goes, Cima is in fine financial shape showing a 7.25 growth in 1995.
Market entry may be difficult since there are limitted resources for Cima to pull from.
SWOT analysis for Cima Mountaineering, Inc.
State Alternative Courses of Action and Evaluate
Option 1: Follow the strategic plan of company president Margaret Simon and add a new line of hiking boot aimed at the Weekend Hiker, or casual hiker.
Pros
. Weekend Hiker is a market segment that is projected as having high growth according to the report prepared by Harris Fleming, Vice President of Marketing for Cima Mountaineering. It is also estimated to have a 25% market share in the industry.
2. The market is changing and consumers are demanding a new type of shoe that is comfortable and versatile.
3. Cima Mountaineering is not offering a low cost hiking boot of any kind right now in the market. By doing so you might be tapping a market segment that is unknown to the Cima name building brand loyalty.
4. If the new line fails, Cima Mountaineering seems financially stable enough to cut its losses and move on.
5. By adding this new line to the Cima family of hiking boot, the company may regain retail outlets that have stopped carrying the high costing hard-core hiker boots.
Cons
. Financially, startup and development would be expensive. Development is projected to cost $350,000 and capital expenditures for equipment are projected at $150,000.
2. Market penetration might be difficult since there are a large number of big competitors who are already established in it.
3. By entering into this new line, Cima Mountaineering would be leaving it's core competencies. This might backfire and cause the new line to fail.
Option 2: Follow the strategic plan of company executive vice president Anthony Simon and expand the current Glacier and Summit lines of hiking boots produced by Cima Mountaineering.
Pros
. By expanding on existing product lines instead of creating new ones, Cima Mountaineering stays within its core competencies.
2. There are hardly any development or capital cost associated with expanding the two product lines.
3. You provide more variety for your current customers.
4. Since the hiking boots for Mountaineers and Serious Hikers cost more, you would be bringing in more revenue then a low costing boot.
Cons
. You miss out on 25% of the estimate market (Weekend Hikers) by not expanding the product line.
2. You continue to make a boot for market segments (Mountaineers and Serious Hikers) that are showing slow to moderate growth. This would not bode well for the future of the company ad will eventually lead to declining growth.
3. You do not address the issue of loosing retail distributors due to the increasing market.
Option 3: Do not take any action in regards to product offerings. Instead, focus on distribution such as catalogue distribution to increase sales.
Pros
. This option seems to be the least costly of the three since no new line is made or no existing line is expanded.
2. You get to investigate distribution avenues that you may have overlooked in the past. This could expose Cima Mountaineering to portion of the market that was unfamiliar with the company.
3. By exploring new avenues of distribution, Cima Mountaineering would be in the process reinforcing it's name brand recognition and could increase sales this way.
Cons
. This course of action does not address the issue of loosing retail distributors due to the demand of the market.
2. If catalogue sales are looked into, it may be detrimental for Cima Mountaineering in the future. Anthony pointed out that many catalogue companies such as L. L. Bean eventually require a boot manufacturer to make their brand a private brand to the catalogue.
3. Cima Mountaineering would be neglecting a projected 25% of the market (Weekend Hiker) if they did not offer a product that the segment would embrace.
Recommended Course Of Action
It is our recommendation that Cima Mountaineering, Inc pursue Option 1: Follow the strategic plan of company president Margaret Simon and add a new line of hiking boot aimed at the Weekend Hiker, or casual hiker. Weekend Hiker is a market segment that is projected as having high growth according to the report prepared by Harris Fleming, Vice President of Marketing for Cima Mountaineering. It is also estimated to have a 25% market share in the industry. The market is changing and consumers are demanding a new type of shoe that is comfortable and versatile. Cima Mountaineering is not offering a low cost hiking boot of any kind right now in the market. By doing so you might be tapping a market segment that is unknown to the Cima name building brand loyalty. If the new line fails, Cima Mountaineering seems financially stable enough to cut its losses and move on. By adding this new line to the Cima family of hiking boot, the company may regain retail outlets that have stopped carrying the high costing hard-core hiker boots.
As Margaret points our in her projections, if Cima were to add the Weekend hiker line they would have projected sales in 2001-2002 of 41,010 boots. Anthony's plan would have projected sales in 2001-2002 of 30,566. Even though Margaret's plan has additional capital required for startup, her plan is sounder in the long run for the company.
Marketing Mix for Option 1:
Product: Two boots in men and women sizes. The boots (WX 550 and WX 450) will have the following features:
WX 550 (men)
WX 450 (women)
Leather and nylon uppers
X
X
Molded rubber outsole
X
X
Cushioned midsole
X
X
Padded collar and tongue
X
X
Durable hardware and laces
X
X
Waterproof inner lining
X
Price: WX 550: $89.00
WX 450: $69.00
Promotion: There are a variety of promotional options to consider:
* Independent sales representatives
* Magazine Advertising
* Co-op Advertising
* Point-of-Sale display materials
* Product brochures
* Trade shows
Placement (Distribution): Cima Mountaineering should continue to use it's current distribution model. This includes distributing the hiking boots to Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Washington, Wyoming, and western Canada. However, instead of just limiting the new brand to the typical outlets (retailers who specialize in selling mountaineering, backpacking, and hacking equipment) Cima Mountaineering should investigate distributing the new Weekend Hiker boots to retailers who currently carry these types of boots.
Fallback Plan
In the event this course of action does not work for Cima Mountaineering, Inc., it would be recommended that Option 2: Follow the strategic plan of company executive vice president Anthony Simon and expand the current Glacier and Summit lines of hiking boots produced by Cima Mountaineering. By expanding on existing product lines instead of creating new ones, Cima Mountaineering stays within its core competencies. There are hardly any development or capital cost associated with expanding the two product lines. You provide more variety for your current customers. Finally, since the hiking boots for Mountaineers and Serious Hikers cost more, you would be bringing in more revenue then a low costing boot.
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S. Farney
