Flip-flops and Beach Shoes Market Essay

Brand analysis

Table of contents :

1. Brand history

Created by the São Paulo Alpargatas Company, Havaianas is a worldwide popular Brazilian flip-flop brand. The sandals are successful all over the world with its wide choice of colours and styles, in addition to its comfortable and casual rubber design. Havaianas is today the global leader in the beach shoes market.

The first pair of Havaianas is created in 1962. These were inspired on the style of the Japanese Zori, a sandal using rice straw soles and fabric straps. Within a year of launch, the cheap and simple sandals reached up sales of more than a thousand pairs a day by customers in every socio-economic category. At the time, Alpargatas was not paying attention to customer perceptions and did not invest in the brand.

Partly because of the difficult economy prevailing in Brazil during the 1980’s, the company did not need a strategy as it was selling nearly 100 millions pairs of sandals each year and controlled 90 per cent of the domestic market. Until 1990, the brand was perceived as being for the working class, worn by construction workers and maids.

However, the local economy started to improve in the early 90’s; Brazilians had more money to spend and started to turn away from the “cheap” Havaianas slippers. Unfortunately for the brand, the consequence of this development led to the entry of new competitors and the Havaianas sales dropped by 35% in 1993. This consequent loss forced Alpargatas to change its marketing strategy radically. It was clear that the brand could no longer survive as just a commodity.

The company reinforced the brand by investing heavily in promotional campaigns and by introducing new colours, displays and packaging. In 1994, Havaianas became really successful with the upper and middle-class. The brand was associated to an irreverent and relaxed attitude by customers, and by 1996 Havaianas became an anchored national brand.

Two years later, during the World Cup in 1998, they introduced a special edition flip-flop pairs with the Brazilian flag that became their logo and trademark. From 65 million pairs in 1993, sales rose up to 105 millions pairs in 1999. By 2000, the brand became a hit through celebrities and models endorsement and begun to target the international market. The popularity of Havaianas was spreading abroad.

It was first distributed in the Latin America neighbourhood to reach progressively the US and Europe. In 2007 and 2008 the company launched the Havaianas brand in New York and Paris. The Brand now sells its products in about 82 countries. Latin America is still the most valuable market while the rest of revenues mostly come from Europe and the US.

What makes the brand so successful is that the company has taken great attention to keep Havaianas’s identity in line with what consumers love about Brazil: vibrant colours, fun, youthfulness… It is now the global leader in the beach shoes market. The positive brand image has enabled the company to transform the flip-flop into a real fashion accessory. Eight Brazilians under ten have already bought a Havaianas product and an estimated 160 millions flops are sold every year.

The brand remains strong today and is now targeting emerging markets such as India. It also keeps in line with consumer’s expectations by always introducing exclusive editions and by making valuable partnerships.

Strengths
Weaknesses
Market Leader
Global Expansion – 60 countries
Brand Image – Awareness
Economies of Scale
Wide product range
Environmental friendly – 90% recycled rubber
Good quality
Competitive price – $16
Wide target market
Communication campaigns – Street Marketing
Strategic partnership

Informal
More expensive than other competitors
One concept store– Brazil
Counterfeiting – Imitations
Suppliers Dependency
Seasonality
Lack of international adaptation
Opportunities
Threats
People are more and more sensitive to the trends and fashion products. Women expenses in shoes are twice bigger than men expenses.
Free barrier trade in Europe.
Eastern Europe is one of the biggest opportunities for apparel retailers in 2012 (+12%). Hight street meets high fashion: more and more collaboration (H&M/Lanvain, Gap/Valentino, Converse/ Comme des garcons etc..). Making shopping has become an enjoyable experience, trend of bespoke and personalisation. International crisis context; people spend on useful goods more than on pleasure goods. So footwear and apparel expenses have been penalised. Aigle group, rubber shoes specialist, has opened 30 point of sales in Asia and knows a good expansion. Crocs has expanded to children apparel and has increased its turnover to more than $1 billion. Flip Flop faces a lot of product of substitution such as sneakers which are part of a very huge market with important competitors: Nike, Addidas etc.. 2. SWOT analysis

3. Customer profile

The main target of Havaianas is young and active people. The exact segmentation group are the 15 to 25 years old. The brand symbolises an ambitious and dynamic youth. Even though the main consumers are women, the brand does not want to use gender segmentation in the targeting. As the target is quite young, they have small revenue.

Havainas is mainly focused on urban and warm cities or at least one warm season. Precisely, the focus is on the middle to high segment of the coastal area of ??Ecuador, as their design is the most suitable for the type of weather. The Havaianas main target market is in the city of Guayaquil, Salinas and Montanita Punta Blanca.

However, the Havaianas brand is recognized worldwide, has opened market in Quito, Ambato and Sangolquí.

It is important to mention that the middle to high segment of the market is looking for fashion, quality and special status that differentiates them from others when purchasing the product. This is precisely what gives Havaianas, because it is a world-renowned brand. If we compare a vehicle with sandals, we could say that Havainas is a BMW. And everyone wants to feel the comfort and luxury of a BMW.

4. Recomendations

In order to optimize the stategy and the revenues of Havaianas different recommendations must be taken into account :

An increased positioning and trendiness based on high fashion collaboration (which has already been done in the past but can be increased – ex : Missiu, Matthew Williamson ) Less colorful product to increase cutomer perception and target a wider segment of customers (older, higher, richer) = higher positioning

Less diversification (concentrate on shoes instead of losing brand image with clothes, bags,etc…)

More differentiation : do personalization of shoes and bespoke kit. In the idea of the Nike concept: “customize and buy” available on their website and in shops.

5. References

http://www.ctc.fr/salons/statistiques/sessi_approche_sectorielle_chaussure_1999.pdf

http://www.ctc.fr/salons/statistiques/sessi_approche_sectorielle_chaussure_1999.pdf

http://us.havaianas.com/events.html

http://ec.europa.eu/enterprise/sectors/footwear/external-dimension/index_fr.htm

http://www.vogue.co.uk/news/2012/08/29/matthew-williamson-havaianas-collaboration

http://www.imd.org/research/challenges/TC062-09.cfm

6. Appendix

Customer profile: