Converse Marketing Plan0

Executive Summary: The Converse Corporate Mission is rooted in the idea of understanding the past, living the present and creating

the future:

“Everyone has a history-an account of the things they’ve done in the time they’ve been around. We think of ours as

a bunch of cool stories that have led us to where we are and will show us where we’ll go. We’ve also been around

long enough to learn it’s not about how old you are but how good you are, and that the best stories are the ones

that you just keep adding to and adding to – all the while marveling at the creative, disruptive, optimistic,

courageous ways things evolve from being what they were, to what they will become.”

Today, a wholly owned subsidiary of NIKE Inc., we still strive to be as visionary in our creations as Marquis Mills Converse

was when he decided to trust his gut and venture beyond what was known. We encourage independent individuals

everywhere to do the same through the things we make and the reasons why. Our product assortment includes men’s

and women’s clothing, accessories, eight primary collections of shoes, and six specialty shoe categories.

This plan focuses on domestic and international growth through the footwear product lines for fiscal year 2012

(June 1, 2011 through May 31, 2012) and for 2015. Converse plans to grow the US Market Share from 3% to 3.5% and

Global Market Share from 1.5% to 1.8% over the next year. The key elements for US Market Growth will focus on

growing the four (4) major target markets; teenagers, artists, basketball players and skateboarders. Considerable effort

will be placed on growing the U.S. basketball and skateboarding segments to 10% and 25% respectively and globally to

3% each by 2015, through promotional events around the globe. We will also increase domestic and global awareness

of the Converse brands using our newly opened Rubber Tracks recording studio.

The key elements for global growth will be achieved through our “Direct-to-Consumer” digital marketing

initiatives and future plans for international Converse retail stores. Focus will be on China, Brazil, India, and Russia.

Based on the size of our market and our defined market area, our global sales forecast for footwear in 2012 is $1.04

billion and $728 million for the U.S. A footwear marketing budget of $88 million has been projected (Appendix A) for

fiscal year 2012, which accounts for 10% of last year’s revenues. The social media budget accounts for 90% of the total

plan and will be leading the charge into the future.

Situation Analysis:

Strengths:

Customer Loyalty: Converse has been able to build a loyal customer base through offering footwear that is both unique and highly functional.

Management: Geoff Cottrill was announced as the new Chief Marketing Officer (CFO) on November 7, 2007. Mr. Cottrill comes from a long history with Procter & Gamble, Coca-Cola and Starbucks. Cotrill plans to hire a new position (Customer Experience (VP).

Target Market: Converse has a diverse market of consumers including children, fashion designers and athletes.

Financial Position: Converse has a strong financial position since it was purchased by Nike in 2003; it is the top performing subsidiary of NIKE.

Product Portfolio: We have a diverse portfolio including premium lifestyle men’s and women’s footwear and apparel.

Price: Converse footwear has always been an affordable shoe that is priced competitively.

Durability: Athletic shoes are built with quality materials to provide required support for the sport they are designed for.

Wide Geographic coverage and Strong Distribution Channels: Converse offers a diverse portfolio of products that are sold in over 130 countries

Retailer Relationships: Has built strong relationships with domestic retailers (e.g. J.C. Penny and Foot Locker) and is expanding these quality relationships globally

Weaknesses:

Manufacturing Changes: In 2003 the soles for older model shoes like the “All Star” were modified from their original design: no longer 100% rubber base, stitching was changed and the tongue was changed from a two-ply to a single ply of canvas.

Manufacturing Location: In 2003 NIKE moved the entire “All Star” production operation to Asia for cheap labor which forced them to remove the “Made in USA” stamp.

Weak Product Innovation: Low product innovation since they have a price point to hit. Opportunities:

Increased Awareness: With our new Rubber Tracks Recording Studio, Basketball Courts and Skateparks, we will grow our domestic market share for various market segments

International Growth: Ability to grow international business in emerging markets. As of right now there are no converse stores internationally which leaves opportunity for growth on converse stores and outlets; NIKE can help with initial distribution.

Social Media: There is a completely open floor in the area of Social Media and we can position ourselves to capitalize on this market (domestically and internationally).

Threats:

Technology: In the athletic shoe market there are rapid changes in technology and we do not have the R&D department that we once had

Consumer Demand: There are constant changes in consumer preferences due to changes and new innovations; so we have to stay diligent.

Variable Costs: Increases in transportation, labor and materials (e.g. rubber) costs.

Competition: Intense competition in both the United Stated and Internationally in footwear industry.

Competitors: Strong competition for market share from Adidas, K-Swiss and Vans.

Counterfeiters: Foreign manufacturers earn a lot of money by producing fake Converse footwear products,

Company Description:

Converse originated in 1908 as the Converse Rubber Company in Malden, Massachusetts and produced the

world’s first basketball sneaker in 1917, the Converse All Star. As an endorsement, Chuck Taylor, the famous basketball

pioneer, began promoting the sneaker that was later labeled the “Chuck Taylor All Star”. Converse continued to seek

endorsements through individual sports stars and globally recognized associations such as the Olympic Games and

National Basketball Association (NBA). This has helped them become one of the most recognized athletic shoe brands

known around the world today, sold in more than 130 countries. Converse Inc. was purchased by Nike in 2003 and is

run as a wholly owned subsidiary. The collaboration between Nike and Converse is proving to be extraordinary for both

firms. Converse offers strong brand equity and uniqueness, while Nike can provide the technology and knowhow useful

in keeping Converse front and center for both function and fashion. As of 2011, there have been more than 750 million

pairs of the Chuck Taylor All Star sneakers sold, but other lines such as the Jack Purcell brand, One Star brand, various

basketball and skateboarding shoes are also very popular and help maintain diversity within the company. Converse

recently added to its more than 50 factory stores in the U.S. when it launched three (3) Converse retail stores in Boston,

New York and North Andover, MA (location of headquarters). These stores help provide a personal touch to a brand

that has helped put people in touch with themselves for many years. While Converse continues to sell its footwear

through many third party retailers around the globe, we are shifting gears to a more direct-to-consumer approach both

domestically and globally.

Although the “Chuck Taylor” shoe no longer qualifies as a basketball sneaker safe for the court, many individuals

have used this iconic brand to help express themselves. Today, many of the Converse brands are fully customizable

(including Chuck Taylor, One Star and Jack Purcell), but we also highlight certain popular graphics for our customers,

such as those associated with classic rock bands (e.g. Pink Floyd) and Dr. Seuss. Converse still designs and makes

basketball sneakers and skateboarding shoes for athletes. Converse has recently been involved with promotional

strategies that support all of these lines, including hosting youth basketball events, opening a public skateboarding park

and debuting a music recording studio in Brooklyn, NY.

Marketing Objectives:

Target Market Objectives:

Market Share –

Grow Global Market Share from 1.5% to 1.8% by the end of 2012, and 2.5% by 2015.

Grow US Market Share from 3% to 3.5% by end of 2012, and 5% by 2015.

Segments (4 distinct) –

Increase each of the four (4) major segments: (“Artists”, “Skateboarders”, “Basketball Players” and “Teenagers” at the same rate and strive to achieve a 100% increase in sales in each segment in the Global Market by 2015.

Grow skateboarding footwear U.S. market share from 18.5% to 19.5% by the end of 2012 and 25% by 2015..

Grow basketball footwear U.S. market share from 5% to 7% by the end of 2012 and 10% by 2015

Grow the “Artist” (e.g. musicians and fashion designers) U.S. market share from 5% to 6% by the end of 2012 and 8% by 2015.

Grow the “Teenager” (male and female) U.S. market share from 2% to 3% by the end of 2012 and 5% by 2015.

Channels (5 distinct) –

Increase Converse retail store sales by 50% for 2012.

Increase Factory Store (51 locations) sales by 15% for 2012.

Increase Website (direct to consumer) sales by 20% for 2012 .

Increase Converse Footwear sales globally in Third Party Retailers by 3% for 2012.

Increase Converse Footwear sales in Salvation Multi-Brand Stores (Combination of Hurley, Converse and Nike products (3 locations) by 50% for 2012.

Satisfaction –

Obtain customer satisfaction of at least 95%. Retain 85% of the customers in 2012 as repeat customers in 2013.

Promotional Objectives:

Brand Awareness –

Utilize social networking to increase consumer awareness: o Increase Twitter followers by 15% for yearend 2012. (Currently 18,590 followers) o Increase “Converse” and “Converse All Star” fan base on Facebook each by 10% for 2012 (Currently

almost 40 million fans) o Introduce ten (10) new videos on YouTube per quarter

Host skateboarding and basketball events to drive brand awareness

Traffic Building –

Use “Rubber Tracks” recording studio to increase awareness of Converse and Salvation Multi brand stores

Increase Converse retail stores and Salvation multi-brand stores store traffic by 50% by 2012

Achieve a conversion rate of 50% for all retail stores

Achieve a conversion rate of 25% for salvation multi-brand stores

Achieve 80% conversion rate for online sales for products placed in the shopping cart

Achieve a 5% conversion rate for every customer that navigates through the “Shop” menu on the Converse website

Channel/Distribution Objectives:

Continue current distribution in all existing channels

Convert to direct distribution in China by year end 2012

10% increase in distribution to emerging markets; China, Brazil, India and Russia by yearend 2012

Sell 100% of last season’s footwear inventory at factory locations and online

Distribution of last season’s shoe line will be shipped to factory stores in the second week of each fiscal quarter. 60% of last season’s inventory will be shipped to factory stores with the remaining 40% to be sold via the website.

Launch a website to China in March 2012 to start the transformation to direct to consumer market strategy

Pricing/Inventory Objectives:

Maintain current price points for each footwear product line and have a contingency plan to reflect increase in cost of goods, raw materials (rubber and cotton), labor, and transportation

Target Markets:

Converse offers eight (8) major shoe collections (see “Pricing Strategy” Section of this plan) and a variety of

specialty low-production footwear lines, including “Classic Chucks”, Marimekko designs, Dr. Seuss designs, and Converse

Americana. The footwear products have always been marketable to a diverse consumer base because of the unique

colors and classic design, but the “Design Your Own” shoe concept, introduced a few years ago, takes us to a whole new

level of marketability. Converse speaks to the “individual”, however we seek major growth from four (4) key segments:

artists (e.g. musicians and fashion designers), skateboarders, basketball players, and teenagers. Appendix H identifies

the distribution of our market segments by revenue.

1) Artists - The Artists segment is looking for a comfortable shoe that represents their uniqueness and artistic sense.

This segment has really three (3) sub-segments, musicians, painters and fashion designers. Looking back in history

many unique bands and artistic individuals wore Converse sneakers (mainly “Chuck Taylor All Stars” or “Chuck’s”),

including Loverboy, Quiet Riot, Might Bosstones, Dead Boys, Voidoids, Curt Cobain, Sid Vicious and John Lennon.

Converse can capitalize on this and market their product with images of icons wearing their gear. In past years, we

have distributed special lines for specific bands, like Pink Floyd, The Who, and AC/DC. This has proven very

successful, but this year we tried something different and created Dr. Seuss painted sneakers. These specialty

shoes promote individuality and it encourages painters to use the Chuck Taylor canvas as their own. In 2000, we

hired John Varvartos, an award winning men’s designer, to launch his product line. He represents an entire

lifestyle and has the line “Converse by John Varvatos”. This segment contributes to 15% of Converse footwear

sales and we project U.S. market share growth from 5% to 6% by the end of 2012 and to 8% by 2015. Globally, this

segment accounts for 20% of Converse footwear sales and we project market growth from 2% to 3% by 2015.

2) Skateboarders - The Skateboarding segment is looking for a functional, light weight, comfortable shoe that fits

snug and breaths easily. Converse has invested a lot in this segment in recent years and will continue to

manufacture their skateboarding line of shoes and market to this segment. This segment contributes 20% of

Converse footwear sales and we project U.S. market share growth from 18.5% to 19.5% by the end of 2012 and to

25% by 2015. Globally, this segment accounts for 15% of Converse footwear sales and we project market growth

of 2% to 3% 2015.

3) Basketball Players - The Basketball Player segment is looking for a durable, comfortable shoe that is reasonably

priced and functional and easy to break in. This segment contributes 25% of Converse footwear sales and we

project U.S. market share growth from 5% to 7% by the end of 2012 and to 10% by 2015. Globally, this segment

accounts for 15% of Converse footwear sales and we project market growth of 2% to 3% by 2015.

4) Teenager - The teenager segment is looking for a fun, fashionable shoe that can be worn with a variety of outfits

and are customizable and affordable. To meet the needs of this segment Converse will need to continue

customize your own shoe along with their classics of Chuck Taylor All Star and One-star. This segment contributes

35% of Converse footwear sales and we project U.S. market share growth from 2% to 3% by the end of 2012 and to

5% by 2015. Globally, this segment accounts for 25% of Converse footwear sales and we project market growth of

3% to 4% by 2015.

5) Other - The “Other” segment constitutes the remainder of our consumer base which is too broad a segment to

define more clearly. Our “Other” consumers are looking for a comfortable, durable, light-weight and affordable

shoe that can be worn with a variety of outfits. To meet the needs of the rest of the market, Converse will need to

continue to offer their classics shoe options; Chuck Taylor All Star, Jack Pucell’s, and One-Star at an affordable price

point. This “Other” segment contributes 10% of Converse footwear sales and we project U.S. market share growth

from 2% to 3% by the end of 2012 and 5% by 2015. Globally, this segment accounts for 25% of Converse footwear

sales and we project market growth of 3% to 4% by 2015.

Promotion Strategy: Converse Inc. will continue to utilize four (4) major forms of promotion, including advertising, sales promotion,

public relations and personal selling, for the 2012 fiscal year. The Chief Marketing Officer (CMO), Geoff Cottrill, is well

equipped to manage the skilled team of employees and ensure the maximum ROI from this year’s marketing budget.

Appendix A highlights the marketing budget for 2012 and compares it to the money spent on promotional activities in

2011. The budget for footwear marketing this year is 10% of 80% (Footwear share of Converse) of the total revenue for

fiscal year 2011 ($88 million). Overall, the advertising budget comprises 94% of the total marketing budget, with the

major highlight for this year being a 30 percent (in U.S. Dollars) increase on spending for social media. We have decided

to cut conventional television and billboard advertisements all-together this year, but we are keeping some cash for

magazine ads and other types of advertisements, including banners linked to mass transportation and those in sporting

arenas. Signage linked to mass transportation like subway signs and bus bench signs will attempt to maintain the core

Converse followers and reach out to those consumers in the music, artistic and athletic segments, while the other

avenues will be more focused on specific segments (both skateboarding and basketball). We will run one new

advertisement every quarter in both Sports Illustrated and Thrasher Magazines.

The social media budget, consisting of $79.2 million, is set aside to maximize market penetration within the

younger segments. We will “naturally” grow our Facebook fan-base, increase our Twitter followers by fifteen (15)

percent, support the Converse Blog (www.converseblog.com), introduce at least ten (10) new spots on YouTube each

quarter and revamp our digital media distribution channel. Converse actively maintains two (2) independent Facebook

pages, “Converse” and “Converse All Star”, each having close to twenty (20) million fans. In order to grow these pages

http://www.converseblog.com/

by ten percent each over this next year, Converse must continually post interesting conversation pieces and keep up to

date with hot topics throughout the target marketing segments we are seeking. Converse has always prided itself on

carrying products that speak to individuals and personal style. It is the company’s commitment to this philosophy that

will enable it to continue to grow in the social media channel. We bring conversation to the table and let the consumers

do the talking. Approximately twenty (20) percent of this budget will be set aside to react spontaneously to viral topics

that spread rapidly over the internet. Unique contests and targeted ads are imperative for keeping the interest of

existing customers between purchases. It is our belief, that by keeping our current customers intrigued by our product,

they will help double the Converse sales revenue by 2015.

Twitter will remain the most important medium used to distribute information about the company quickly and

also serve as a question-and-response channel for interviews with Converse event participants and star athletes.

YouTube is used to both launch new products through advertisements (e.g. Kenny Anderson’s “L.A. to Vegas” short film)

and capture any real-time experiences Converse has with its “genuine” fans. It is through this relatively new advertising

channel that we feel we can reach the majority of our consumers. All of Converse’s promotional offers and public

relations activities will be covered with this new media and distributed in real time to our fans. This will require a great

amount of teamwork and effort from our marketing team, but properly managed, it expresses Converse with the

uniqueness that its labels have always promoted.

One other major enhancement to Converse digital media will be an overhaul of the Converse website

(www.converse.com). In an effort to make the company website easier to navigate and less stressful for our consumers,

we will spend nearly ten (10) percent of our budget de-cluttering our website. By September of 2011, all visitors to our

website will be able to clearly separate the direct marketing features from the product distribution channel features. In

order to help accomplish this task, we are close to hiring a new Customer Experience Vice President, who among other

things, will ensure we meet our target online conversion rates (80% for products placed in shopping cart and 5% for

customers show specific interest in Converse products). We have already contracted the firm to complete this project

for us and the development schedule begins 1 July 2011. We anticipate a 20% increase in revenue through our website

for 2012. Once the U.S. website is fully operational, we anticipate an international website launch to China in March of

2012. This will kick off our Direct-to-Consumer initiative for emerging markets (China, Brazil, Russia and India), planned

for next several years.

The remaining six percent of our budget this year will be spent on public relations, sales promotions, and

personal selling. The direct marketing that is fostered by both our social media and public relations strategies enables us

to cut back on personal selling tactics that were once necessary. We have budget set aside for maintaining our third

party retail relationships globally, but we will not be pursuing any new retailers or any headlines for major sporting

events like in years past. With our new retail locations, our Customer Experience VP will ensure that all of our sales staff

is fully engaged in the Converse mission and understands what our consumers want. We will also be investing plenty of

time and money into our own Converse sponsored events to help increase market penetration in our target markets.

Our Open Gym sessions in Atlanta, Boston, Chicago, Philadelphia and Miami over the past few years have been great

successes and we plan on holding one this year in New York. Children, ages 10-18, come together for a day of basketball

http://www.converse.com/

on Converse, both financially and physically. More than 500 pairs of basketball sneakers are distributed to the players at

each event. Additionally, after experiencing the great success of our Piedmont Park basketball court opening in Atlanta,

we will be opening two (2) new playgrounds in Miami and Harlem, NY by May of 2012. These public events will help us

achieve the 10% U.S. market penetration that we are shooting for by 2015 (an increase by nearly five percent).

In addition to these basketball related public relations events, we have been planning for even greater

investments in the skateboarding community around the world. Following our own footsteps from last year, we will co-

host another “Texas Style Death Match” in Austin Texas in April of 2012 along with Thrasher Magazine as well as another

“Asia Crown” in May (Location still unknown) where we will give away more than $5000 in prizes. These events and the

publicity from the new skatepark that we opened this past April in Huntington Beach, CA will raise awareness of the

Converse skateboarding line of sneakers and will help us achieve 25 percent market penetration in the U.S. by 2015

(growth of nearly seven percent). We also have plans to open another skatepark in Austin, Texas by 2013.

A large portion of last year’s marketing budget was allocated to the opening of “Rubber Tracks”, a music studio

in Brooklyn, NY. Our CMO, Geoff Cottrill, has a long history using music and other arts to reach consumers, however he

ensures the public that Converse is not in the music publishing business. “Rubber Tracks” and promotions associated

with it will be used to try and give back to the community of artists that has stood by our side for many years. All

recordings are free and the artist owns the rights to the music. In order to increase awareness of our efforts, we will

hold promotional music contests all over the world. Between August and November of this year, we will be holding an

“Original Band U.S.A” contest sponsored by “Rubber Tracks” in venues near our three (3) Converse retail locations and

three (3) Salvation Multi-brand stores. These promotional activities will also help increase foot traffic in these new

stores. In a related effort, we will be co-hosting an “Original Band” contest with one of the major third party retailers in

India, Planet Sports, in January/February to help grow our global brand awareness and seek new musical talent. There

are plans to host another one in Europe towards the beginning of 2012, depending on how well this India event was

received.

While the winner of each event will receive an offer from “Rubber Tracks” to record an album (up to 40 minutes

of digitally mastered recordings), all performers will receive several 50% off coupons for our online store; they will have

the opportunity to try on their favorite pair of Converse branded footwear while at the event and then order it online at

a later date. Additionally, all attendees will receive a 20% off coupon towards Converse footwear at the local store used

during in the promotion (third party, Converse or Salvation). We believe this will play a fundamental role in increasing

awareness of our stores over the next year and will help us gain 50% more foot traffic. Based on extensive market

research, we believe that a 50% conversion rate for our Converse retail stores and a 25% conversion rate for our multi-

brand Salvation stores are very realistic.

The other major public relations investment at Converse is our (PRODUCT) RED Collection (made from African

mudcloth), which donates 5%-15% of the net wholesale price of these shoes to the “The Global Fund” to help fight AIDS,

Tuberculosis and Malaria. We have been a part of this “RED” team since 2006 and are very happy to still be promoting it

today.

Pricing Strategy:

Converse’s pricing strategy is cost based. Price points are determined based on the cost of production,

distribution, and markup. The markup defines the profit that each pair of shoes generates for Converse. Converse

footwear prices currently range from $25 - $200 per pair, which provided an average profit margin of 45.6% for 2011.

We anticipate the same profit margin for 2012 ($728 million in sales and $331 million in revenue) while maintaining the

current price range. Anticipating some global economic issues, we are working hard to provide our consumers with an

affordable product. Appendix B contains a Sales Forecast for all Converse Footwear products and Appendix C contains

the Break-Even Analysis for each of the eight (8) primary collections both in the U.S. market and globally. Each product

generates individual profits and is monitored closely. Our PRODUCT (RED) footwear line is unique in that we donate 5-

15% of the net wholesale price for each pair sold to “The Global Fund”. This fund provides services in support of fighting

AIDS, Tuberculosis and Malaria. Converse is priced competitively as compared to Vans ($45-$65), K-Swiss ($55-$135)

and Adidas ($40-$190). Appendix G details the price points for the Converse footwear product lines.

Distribution Strategy: Distribution to all five current channels will continue as they did in fiscal year 2011. Direct domestic distribution

will be used for products in the Converse retail stores, factory stores, Salvation multi-brand stores, and the website.

Distribution through third party retailers will follow the existing channels; manufacturer, wholesaler, retailer and then to

the consumer. Converse will use a limited number of outlets in a geographic area to sell the product. Converse will

maintain their partnerships with existing retailers with focus on major retailers J.C. Penney, Footlocker, Kohl’s, Sears,

Macy’s, and Dick’s Sporting Goods.

Converse will focus their international distribution strategy for fiscal year 2012 on emerging markets; China,

Brazil, India, and Russia. Converse is projected to have a 10% global distribution increase by year end 2012. Currently

Converse does not operate an international website, but after recreating the U.S. site for the first few months of this

fiscal year, the web design team will begin to move out on an international site for the above listed countries. It will first

launch in China in March 2012. With Converse able to sell the product directly to the consumer and eliminate the use of

wholesalers and retailers, the price savings can be passed on to the consumer and all products will remain price

competitive in this highly competitive market. The move to direct distribution in China will also help address the issue of

counterfeiting. Converse will continue to stay strong and take action against counterfeit products. Additionally, NIKE

has recently opened a 120,000 square meter China Logistics Center (CLC), which is going to help Converse and other

Subsidiaries distribute products more easily within China and other Asian markets.

The international launch will next come to Brazil in the beginning of fiscal year 2013. Currently Converse has

only one distributor in Brazil, Coopershoes, which operates retail locations and a website. The company is in the early

stages of broadening distribution in Brazil and feels that with the upcoming 2014 World Cup and 2016 Olympics, Brazil

harnesses a tremendous opportunity for growth. Early planning stages will focus distribution strategies around direct to

consumer distribution. This will take place by launching Converse’s website and opening a multi-brand retail location

close to one of the major sports stadiums in Rio de Jeneiro. This retail location will sell Converse, Nike and Umbro

products. Considerable research has been completed to determine that the Direct-to-Consumer strategy works well in

the global market. Converse has been working closely with NIKE partners in India to grow from using one distributor

(Winter Sports) and one major retailer (Planet Sports) to establish multiple partnerships that will encourage

competition. This same strategy is being used in Russia, in hopes to try and expand from only using Amersport, a

Russian-owned wholesaler.

Distribution of last season’s shoe line will be shipped to factory stores in the second week of each fiscal quarter.

60% of last season’s inventory will be shipped to factory stores with the remaining 40% to be sold via the website.

Implementation Plan: With 80 percent of Converse’s revenue stream generated by footwear sales, it is imperative that we implement

this Fiscal Year 2012 Footwear Marketing Plan successfully. The domestic and international marketing teams at

Converse all report into CMO, Geoff Cottrill, who with the help of other top executives at Converse and Nike, is keeping

our company on track to double revenue by 2015, exceeding $2 billion. Our existing marketing team consists of Mr.

Cottrill, two Senior Vice Presidents (one for Retail Sales and one for promotional activities), two (2) Vice Presidents (one

for the US market and one for the global team), two (2) business development managers, two (2) marketing managers,

four (4) market analysts, three (3) social media specialists (one for YouTube, one for Facebook, Twitter and the Converse

Blog, and one for our website), a marketing coordinator for each of the major promotions identified in the plan, and 30

assistants (all of whom have experience in promotional activities). New this year, we will be hiring a Customer

Experience Vice President, who will report directly into our CMO. The main concerns for this new position are ensuring

that the marketing team understands the Converse Mission and is successful in reaching out to our customers both

through retail and through digital media. This person will work closely with many managers, including those in charge of

the new web design, other digital media, street promotions and retail sales staff. This will help Converse express a

consistent message. A schedule, detailing the high-level tasks ahead of us for the next year is attached as Appendix D of

this plan. It provides a timeline highlighting the major milestones expressed in the “Promotion” section of this plan. The

events we have outlined are critical to the success of this plan, so we have some slack built into the schedule to ensure

that we have time to recover from unforeseen issues without impacting our scheduled events for the year. Based on

past performance, we are confident that our team can accomplish these tasks on schedule without issue. Managing our

external support teams, including the web design team and venue management companies, will be critical to this effort.

In addition to tracking progress leading up to each major milestone event; managers, market analysts, and

digital media experts will track appropriate market data after each event to help determine the return on investment

(See Appendix F). Additionally, the continuous strategies that link to the digital media objectives and foot traffic

objectives will be regularly monitored to help maintain steady growth. Appendix E identifies each objective, its end

date, the progress measurement approach and the duration of the incremental measurement cycle. The incremental

measurement cycle enables Converse to react to situations that were not predicted. Slower than anticipated growth in

any category will result in a reassessment of the objectives and critical analysis to determine where the weaknesses are.

Issues will be categorized as either internal or external and every situation will be analyzed thoroughly prior to taking

action. An example of a possible uncontrollable external situation is if costs rise for raw materials, transportation or a

dramatic labor rate change. By monitoring the Cost of Goods Sold on a weekly basis, the company has an opportunity to

make a sound decision based on current information.

Appendix A - Marketing Budget Plan

The following data is based on a marketing budget of 10% of sales for the previous Fiscal Year

Marketing Tool 2011 - % of budget Total Spend ($) 2012 - % of budget Total Spend ($)

Social Media 70% $55,048,000 90.0% $79,200,000

TV 2% $1,572,800 0.0% $0

Billboard 1% $786,400 0.0% $0

Magazines 1% $786,400 0.5% $440,000

Other (e.g. subway signs) 3% $2,359,200 3.0% $2,640,000

TOTAL - Advertising (Includes Direct Marketing) 77% $60,552,800 93.5% $82,280,000

Sales Promotion 7% $5,504,800 2.5% $2,200,000

Public Relations 15% $11,796,000 2.0% $1,760,000

Personal Selling 1% $786,400 2.0% $1,760,000

TOTAL Budget 100% $78,640,000 100% $88,000,000

Appendix B – Sales Forecast (Footwear) for Fiscal Year 2012

U.S Sales Forecast

Total # of people in target markets 269,629,630

Annual # of purchases per person 1.25

Total Potential Market 337,037,037

Total Potential Market 337,037,037

% of Total Market Coverage 90%

Total Available Market 303,333,333


Expected Market Share 3.0%

Sales Forecast (in units) 9,100,000


Price (average $80) 80

Sales Forecast $ 728,000,000.00

Global Sales Forecast

Total # of people in target markets 3,616,762,302

Annual # of purchases per person 0.75

Total Potential Market 2,712,571,727

Total Potential Market 2,712,571,727

% of Total Market Coverage 30%



Expected Market Share 1.8%



Price (average $80) 71

Sales Forecast $ 1,040,000,000.00

Appendix C - Break-Even Analysis (Footwear) for Fiscal Year 2012

Break-Even Analysis U.S.

Product Line Sales

Percentage Units Sold

(Units) Sales Revenue

($) Average Selling

Price ($) Fixed Costs By

Line Variable Costs

By Line BEP (Units) BEP ($)

Chuck Taylor All Star 17% 1,904,000 $123,760,000 $67.50 $21,734,500.00 $45,630,210.00 499,247 $ 33,699,179.84

Jack Purcell 14% 1,568,000 $101,920,000 $72.50 $17,899,000.00 $37,577,820.00 368,789 $ 26,737,188.34

One Star 8% 896,000 $58,240,000 $70.00 $10,228,000.00 $21,473,040.00 222,181 $ 15,552,665.21

Basketball 25% 2,800,000 $182,000,000 $60.00 $31,962,500.00 $67,103,250.00 886,996 $ 53,219,751.88

Skateboarding 20% 2,240,000 $145,600,000 $52.50 $25,570,000.00 $53,682,600.00 896,107 $ 47,045,593.22

Converse by John Varvatos 4% 448,000 $29,120,000 $147.50 $5,114,000.00 $10,736,520.00 41,397 $ 6,106,105.36

Converse (PRODUCT) RED 5% 560,000 $36,400,000 $57.50 $6,392,500.00 $13,420,650.00 190,624 $ 10,960,895.88

Sports Authentics 7% 784,000 $50,960,000 $50.00 $8,949,500.00 $18,788,910.00 343,755 $ 17,187,734.71

TOTAL 100% 11,200,000 $728,000,000 Not Applicable $127,850,000 $268,413,000 3,449,096 $ 210,509,114.44

Break-Even Analysis Global

Product Line Sales

Percentage Units Sold

(Units) Sales Revenue

($) Average Selling

Price ($) Fixed Costs By

Line Variable Costs

By Line BEP

(Units) BEP ($)

Chuck Taylor All Star 22% 2,860,000 $228,800,000 $67.50 $68,310,000.00 $56,075,800.00 1,426,302 $ 96,275,397.12

Jack Purcell 19% 2,470,000 $197,600,000 $72.50 $58,995,000.00 $48,429,100.00 1,115,363 $ 80,863,843.60

One Star 10% 1,300,000 $104,000,000 $70.00 $31,050,000.00 $25,489,000.00 616,156 $ 43,130,924.58

Basketball 15% 1,950,000 $156,000,000 $60.00 $46,575,000.00 $38,233,500.00 1,153,044 $ 69,182,647.45

Skateboarding 15% 1,950,000 $156,000,000 $52.50 $46,575,000.00 $38,233,500.00 1,415,951 $ 74,337,451.18

Converse by John Varvatos 12% 1,560,000 $124,800,000 $147.50 $37,260,000.00 $30,586,800.00 291,337 $ 42,972,224.39

Converse (PRODUCT) RED 2% 260,000 $20,800,000 $57.50 $6,210,000.00 $5,097,800.00 163,882 $ 9,423,225.27

Sports Authentics 5% 650,000 $52,000,000 $50.00 $15,525,000.00 $12,744,500.00 510,807 $ 25,540,355.85

TOTAL 100% 13,000,000 $1,040,000,000 Not Applicable $310,500,000 $254,890,000 6,692,844 $ 441,726,069.44

Appendix D – Converse Marketing Plan Schedule of Major Milestones

Appendix E – Marketing Objectives and Measurement

Category Goal Year

Objective Measurement Approach Incremental

Measurement Cycle

Market Share 2012

Grow total market share from 1.5% to 1.8% by end of 2012

Gather global market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2012

Quarterly

Market Share 2015

Grow total market share from 1.5% to 2.5% by end of 2015

Gather global market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2015

Yearly

Market Share 2012

Grow U.S. market share from 3% to 3.5% by end of 2012

Gather U.S. market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2012

Quarterly

Market Share 2015

Grow U.S. market share from 3% to 5% by end of 2015

Gather U.S. market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2015

Yearly

Segments 2015

Increase global sales within each segment by 100% for 2015

Compare yearend 2011 revenues to yearend 2015 revenues for each category of footwear

Quarterly

Segments 2012

Grow Skateboarding footwear U.S. market share from 18.5% to 19.5% by 2012

Gather U.S. market data for skateboarding footwear for yearend 2012 and compare with Converse skateboarding revenues

Monthly

Segments 2015

Grow Skateboarding footwear U.S. market share from 18.5% to 25% by 2015

Gather U.S. market data for skateboarding footwear for yearend 2015 and compare with Converse skateboarding revenues

Yearly

Segments 2012

Grow basketball footwear U.S. market share from 5% to 7% by 2012

Gather U.S. market data for basketball footwear for yearend 2012 and compare with Converse basketball revenues

Monthly

Segments 2015

Grow basketball footwear U.S. market share from 5% to 10% by 2015

Gather U.S. market data for basketball footwear for yearend 2015 and compare with Converse basketball revenues

Yearly

Category Goal Year


Measurement Cycle

Segments 2012

Grow "Artist" U.S. market share from 5% to 6% by 2012

Gather U.S. market data for artists footwear for yearend 2012 and compare with Converse revenues generated by artists

Monthly

Segments 2015

Grow "Artist" U.S. market share from 5% to 8% by 2015

Gather U.S. market data for artists footwear for yearend 2015 and compare with Converse revenues generated by artists

Yearly

Segments 2012

Grow "Teenager" U.S. market share from 2% to 3% by 2012

Gather U.S. market data for Teenagers footwear for yearend 2012 and compare with Converse revenues generated by teenagers

Monthly

Segments 2015

Grow "Teenager" U.S. market share from 2% to 5% by 2015

Gather U.S. market data for Teenagers footwear for yearend 2015 and compare with Converse revenues generated by teenagers

Yearly

Channels 2012

Increase Converse Retail Store sales by 50% for 2012

Monitor sales figures for each of 3 stores Daily

Channels 2012

Increase Factory Store sales by 15% for 2012

Monitor sales figures for each of 51 Factory Stores

Daily

Channels 2012

Increase Website sales by 20% for 2012

Monitor sales figures for Website Daily

Channels

2012

Increase Third Party Retailer sales globally by 3% for 2012

Monitor sales figures (via UPC scanning) for all third party stores Daily

Channels

2012

Increase Salvation Multi-brand Retail store sales by 50% for 2012

Monitor sales figures for each of 3 stores

Daily

Satisfaction

2012

Obtain customer satisfaction of at least 95%

Send out survey cards in every box of sneakers and send e-mail to people who provide e-mail information upon purchase

Bi-Weekly

Satisfaction

2013

Retain 85% of the customers in 2012 as repeat customers in 2013

Track online and store traffic through Credit card transactions

Yearly

Social Networking 2012

Increase Twitter followers by 15% for yearend 2012

Track "Follower" growth Daily

Social Networking

2012

Increase “Converse” and “Converse All Star” fan base on Facebook each by 10% for 2012

Track Facebook Fans

Daily

Category Goal Year


Measurement Cycle

Social Networking 2012

Introduce ten (10) new videos on YouTube per quarter

Advertisement development team will know how they are doing Weekly

Promotional

2012

Host annual skateboarding and basketball events to drive brand awareness

The success of these events will be measured individually using local market data. It will be necessary to ask customers "what event initiated their purchase today"

Monthly

Traffic Building

2012

Use “Rubber Tracks” recording studio to increase awareness of Converse and Salvation Multi brand stores

Ask customers in retail locations how they heard about the store

Monthly

Traffic Building

2012

Increase Converse retail stores and Salvation multi-brand stores store traffic by 50% by 2012

Count the number of customers who walk into each of the retail stores Monthly

Traffic Building 2012

Achieve a conversion rate of 50% for all retail stores

Divide number of transactions by total foot traffic count for all retail stores

Daily

Traffic Building

2012

Achieve a conversion rate of 25% for salvation multi-brand stores

Divide number of Converse transactions by total foot traffic count divided by Converse footwear's percentage of Nike sales for all 3 retail stores

Daily

Traffic Building

2012

Achieve 80% conversion rate for online sales for products placed in the shopping cart

Use HTML scripting to count how many people actually make a purchase after putting something in their shopping cart

Daily

Traffic Building

2012

Achieve a 5% conversion rate for every customer that navigates through the “Shop” menu on the Converse website

Use HTML scripting to count how many people actually make a purchase after choosing to search the "store" part of the website

Daily

Channel/Distribution 2012

Continue current distribution figures in all existing channels

Compare distribution paperwork with last year for each individual channel

Monthly

Channel/Distribution 2012

By year end 2012, convert to direct distribution in China

Monitor relation with China after Chinese Website is rolled out Daily

Category Goal Year


Measurement Cycle

Channel / Distribution

2012

10% increase in distribution to emerging markets; Central and Eastern Europe, China, and Brazil

Monitor emerging market distribution channels

Weekly


2012

Sell 100% of last season’s footwear inventory at factory locations and online

Keep accurate inventory throughout the year at the manufacturing plants and compare to total units sold at the end of the year

Monthly


2012

Continue distribution of 60% of last season’s shoes to factory stores on a quarterly basis; remaining 40% will be sold online

Keep accurate inventory throughout each quarter at the manufacturing plants and at the end, distribute 60% shoes unsold to factory stores

Quarterly

Pricing / Inventory

2012

Maintain current price points for each footwear product line and have a contingency plan to reflect increase in cost of goods, raw materials (rubber and cotton), labor, and transportation

Review sales figures and production costs with Operations VP and determine if costs are rising, falling, or staying the same. If costs are rising, re-evaluate price points and determine if a price adjustment is necessary for next quarter.

Weekly

Appendix F – Action Success Measurement

Marketing Action Success Criteria Measurement

Approach Incremental

Measurement Cycle

New Website 20% Increase in revenue Compare revenues from 2011 to 2012

Daily

Mass Transportation Advertising

Generates more revenue over the course of Fiscal year 2012 than the campaign cost at the beginning

Targeted market research in local area to determine if their ads are noticeable and if they have encouraged people to purchase Converse footwear

Yearly (end)

Sports Arena Advertising



Yearly (end)

Magazine Advertising



Yearly (end)

Open Gym - NY Establishes "neighbor" relationship with local basketball community; Generates sales for 2012 that are at least equal to the cost of the event

Ask customers if they've heard of Open Gym, if they've played there, if they knew it was run by Converse Track digital media hits and track online store traffic for those who view the footage - streamed daily

Daily (Post-Event)



Measurement Cycle

Harlem Basketball Court Dedication

Establishes "neighbor" relationship with local basketball community; Generates sales for 2012 of at least 50% of dedication cost

Ask customers if they've heard of the park, if they've played there, if they knew it was run by Converse Track digital media hits and track online store traffic for those who view the footage - streamed daily

Daily (Post-Event)

Miami Basketball Court Dedication

Establishes "neighbor" relationship with local basketball community; Generates sales for 2012 of at least 50% of dedication cost

Ask customers if they've heard of the park, if they've played there, if they knew it was run by Converse Track digital media hits and track online store traffic for those who view the footage - streamed daily

Daily (Post-Event)

Texas Style Death Match

Establishes "neighbor" relationship with local skateboarding community Generates sales for 2012 that are at least equal to the cost of the event

Track digital media hits and track online store traffic for those who view the footage Daily (Post-Event)

Asia Crown Increase awareness of Converse in Asia; Monitor online and third party sales in local area to see an increase

Track digital media hits and track online store traffic for those who view the footage

Daily (Post-Event)



Measurement Cycle

Austin Skatepark Dedication

Establishes "neighbor" relationship with local skateboarding community; Generates sales for 2012 of at least 25% of dedication cost

Ask customers if they've heard of the park, if they've skated there, if they knew it was run by Converse Monitor kids who skate there (cameras are installed) and monitor what they wear Track digital media hits and track online store traffic for those who view the footage, which is updated daily

Daily (Post-Event)

Original Band U.S.A

Provide individual an opportunity of a lifetime; Increase awareness of Converse and Salvation Stores


Daily (During event) Weekly (After Event)

Original Band (India)

Provide individual an opportunity of a lifetime; Increase awareness of Coverse footwear brands


Daily (During event) Weekly (After Event)

Appendix G – Converse Footwear Pricing

Shoe Product Line Selling Price Last Season’s Inventory

Chuck Taylor All Star $25.00 - $110.00 $9.99 - $24.99

Jack Purcell $35.00 - $110.00 $19.99 - $39.99

One Star $60.00 - $80.00 $24.99 - $49.99

Basketball $50.00 - $70.00 $24.99 - $49.99

Skateboarding $30.00 - $75.00 $24.99 - $49.99

Converse by John Varvatos $95.00 - $200.00 $24.99 - $76.99

Converse (PRODUCT) RED $45.00 - $70.00 $39.99

Sports Authentics $30.00 - $69.99 $19.99 - $61.99

*NOTE: Includes shoes for all ages, both male and females, we well as specialty shoes (e.g. Design your Own, Dr. Seuss, and Converse Americana).

Appendix H – Converse Footwear Revenue Distribution by Segment

Artists 15%

Basketball Players

25%

Skateboarders 20% Other

5%

Teenagers 35%

Converse Footwear U.S. Revenue Distribution by Segment

Artists 20%

Basketball Players

15%

Skateboarders 15%

Other 25%

Teenagers 25%

Converse Footwear Global Revenue Distribution by Segment

Documents

Converse Marketing Plan0