Western Union in 2008: Send Me the Money

MARKETING
PRESENTED BY
CCM HOCKEY:
THE RE-LAUNCH OF THE U+ PRO SKATE
Disclaimer: This case was prepared by Dr. Christopher Ross, Professor of Business at the John Molson School of
Business in December 2009.
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CCM Hockey: The Re-launch of the U+ Pro Skate
Professor Christopher A. Ross, John Molson School of Business, Concordia University wrote this case. It is
designed to be used solely as a vehicle for class discussion. It is not designed to illustrate either correct or
incorrect handling of a commercial or administrative situation. Some of the information may have been
disguised but essential relationships have been maintained. ©2009
It was November 2009 and Ross McCracken, Senior Brand Manager and Katherine Bosina, Assistant
Brand Manager of CCM Hockey were contemplating the re-launch of the next generation of the U+ Pro
skates, scheduled to hit the stores in the Fall of 2010. This re-launch was of particular importance to
CCM because in the last two years, there had been a number of missteps with the introduction of the U+
Pro skates: the future of the CCM brand was heavily dependent on the success of this re-launch. In
addition, in the past few years the industry had experienced relatively flat sales and there had been a
number of mergers and acquisitions among companies in the industry. With an industry that was
relatively mature, hockey equipment companies were continually looking for ways to out maneuver and
steal market share from the competition. For both Ross and Katherine, the successful re-launch of the
U+ Pro skate was an extremely important objective. They were therefore wondering what strategy they
should adopt in order to ensure a successful re-launch execution.
HOCKEY IN CANADA1
How the game of hockey began is debatable. Some historians claimed that hockey grew out of the
game of lacrosse that was played by the Micmac Indians of Nova Scotia while others traced the roots of
hockey to the Irish game of hurley that was played year round using a ball and stick. Regardless of how
the game originated, there is little debate that Canada is the cradle and home of hockey. The game was
played as early as 1850 by British soldiers stationed in Halifax and Kingston, but McGill University
students of 1857 are usually credited with playing the first game of hockey that had a set of formal rules
establishing the number of players on each team as nine.
The game quickly became popular and by the 1890’s it was being played in Toronto, Ottawa, Montreal
and other Canadian cities. Numerous clubs were subsequently established. Teams from Yale and John
Hopkins universities in the US also started playing the game. By the beginning of the 20th century,
hockey had turned professional and professional teams were allowed to compete for the Stanley Cup,
named after Lord Stanley of Preston, Governor General of Canada at the end of the 19th century.
Hockey is engrained in the psyche of Canadians and it is seen by many as their game – a national
activity.
THE GLOBAL HOCKEY EQUIPMENT INDUSTRY
Hockey equipment can be categorized into five sectors: Goalie, Head/Face, Protective, Sticks and Skates.
Industry insiders referred to the last four categories as “Head-to-Toe” so a company that offered
1
http://www.sportskowhow.com/hockey/history/hockey-history.shtml. Retrieved 19 Nov. 2009
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equipment in all five categories would be referred to as a “Goalie and Head-to-Toe” brand. Other
companies would be referred to as “Head-to-Toe” if they manufactured everything except goalie
equipment. Goalie equipment was distinctive because of the need for special protection.
In 2006 the global hockey equipment industry was worth US$603.07 Million and in 2007 it was worth
US$642.3 million, but in 2008 sales were down to US$620 million. In 2009, however, it was estimated
that sales would be relatively stable at US$615M (Exhibit 1). Exhibit 2 provides the breakdown of 2007
global sales by category.
While hockey was popular in a number of countries, the market was concentrated in Canada, the US,
and in Europe, with the major playing countries being the Czech Republic, Finland, Russia and Sweden.
Annual sales of equipment were distributed in roughly equal proportions among Canada, the US and
Europe.
Most industry observers agreed that the market for hockey equipment was showing signs of maturity.
In the past few years, for example, many of the smaller equipment manufacturers had failed or were
bought out by larger competitors. The hockey skate market was now made up of the following key
players: Reebok-CCM Hockey, Bauer Hockey, Easton, and Graf.
In Canada, it was also recently noted that soccer had overtaken hockey as the most popular game
among the youth. There were many explanations for this trend but one popular explanation was cost:
relative to soccer, hockey was expensive to play. Many of the hockey players belonged to households in
the mid to high income brackets. In the US, for example, there were relatively few rinks so the cost of
ice was expensive and because of distance, a lot of travelling was involved. A family could sometimes
pay as much as $15,000 to $20,000 for a player in Bantam or Midget (AA or AAA) in the US. Families in
Ontario paid similar sums. And the percentage of players going Pro was less than .1%. To enjoy the
game was relatively cheap but organized games were expensive.
CONSUMERS
Among manufacturers of hockey equipment, winning the loyalty of the 12years to 18years age group
was considered critical for success. In insider circles, this age group was referred to as The Boss. The
Boss, for whom hockey was a passion, enjoyed the physical nature of the game and aspired to talent
such as speed, agility and finesse. Looking good to recruiters, schools and school mates was important
for this group of players. Their imagination was captured by the talent of players such as Ovechkin
(Exhibit 3) and Crosby.
There were three distinct consumer segments in the hockey equipment market worldwide. The first,
making up 49% of consumers, was the Personal Expression and Performance Group. Members of this
segment were concerned about image, product and personal performance, and brand reputation. Price
was not a barrier to this segment and members responded well to NHL endorsements. They also sought
recommendations from coaches, online forums and sales staff before purchasing. They were
emotionally driven and looked for leading edge technology that helped them stand out from the crowd.
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The second segment consisted of Smart Performers (45%). These consumers were rational decision
makers who weighed the options among value and product performance criteria. They wanted
equipment so that they could outperform competition while staying within a budget; they wanted high
quality products with good value and did not care much about NHL endorsements or the need for
personal expression. The third segment was the price conscious consumers (6%) for whom price was
paramount, but they also wanted durability and value. Exhibit 4 shows some additional characteristics
of these segments.
CHANNELS
Hockey equipment was sold through Pro Shops, Independent Retailers, Independent Retailers who were
members of a buying group, Mass Merchandisers and General Sporting Goods stores. The Pro Shops
were located in arenas and tended to focus on items such as hockey tapes, laces and sticks, the kind of
items that players needed in a hurry. They also provided skate sharpening services. Independent
retailers were typically family owned stores that may have been in the family for at least a generation
and often longer. These stores maintained a good reputation, serviced their market well and often
partnered up with grassroots initiatives in their community. They tended to focus on high-end
equipment. They prospered because of the service they provided and their knowledge of the sport.
Buying Groups composed of retailers that paid a membership fee to belong, was another channel. The
advantage for these retailers was that because of size, the buying group had more leverage with
vendors and could therefore negotiate more aggressive pricing and special make-ups (SMUs2). Buying
groups in Canada included Source for Sports, Play it Again Sports and Sports Excellence. Another
channel included chains such as Canadian Tire and Wal-Mart. These chains were mass merchandisers
that had sporting goods departments. They tended to specialize in mid-end to low-end sporting
equipment. Finally, General Sporting Goods stores were chains that focused on all types of sporting
goods. These chains included the Forzani Group which operated under a number of different banners
such as Sports Experts, Hockey Experts, Atmosphere, National Sports and Sports Chek (or Check?).
This categorization of distribution channels also applied to the US, although the US market was heavily
weighted towards the independent retailer. There were some buying groups but they were not
nationwide as in Canada. For example, The Hockey Group in the US was made up of a number of large
regional independent retailers spread across the US. In fact, there was no sporting goods retailer in the
US that was nationwide and that posed a major challenge for distribution of hockey equipment in that
country. This fragmentation of hockey outlets was partly explained by the fact that hockey was not a
very big game in the US; there was not a lot of presence in many states. Finally, there were some
internet sales of hockey equipment by hockeymonkey.com and hockeygiant.com.
In Europe, the countries of Finland and Sweden were somewhat like Canada: there were independents
and some large chains. In other countries, companies used distributors and sales representatives. In
general, retail outlets operated on a margin of approximately 30%.
2
Special make-ups or SMUs were negotiated modifications made to products that were subsequently sold only in stores that
were members of the buying group. The group, for example, sometimes negotiated for a special color facing, some added foam
in the protective gear, or a different color tongue in the skate. These products had special numbers and names.
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CCM
While the beginning of hockey is debatable, there is little debate about the roots of CCM. In September
1899, Canada Cycle and Motor Company Limited opened its doors for business in Weston, Ontario,
Canada. Prior to that year, the American market for bicycles had become saturated and overly
competitive. As a result, American manufacturers looked to the north, but five major Canadian bicycle
manufacturers decided to take action and joined forces to combat the American venture and formed
the Canada Cycle and Motor Company Ltd. (CCM).
By 1905 the market for bicycles in Canada had begun to decline with market saturation and seasonality
playing key roles. The sport of ice hockey was growing rapidly and CCM decided to enter the
marketplace with the launch of the CCM automobile skate. Within 30 years, CCM dominated the hockey
skate market with over 90% of all players wearing CCM Skates, with the remaining 10% of the market
shared among seven other manufacturers.
Over the years, CCM had introduced a number of innovative technological features into the world of
hockey. One of the most famous was the Tackaberry boot. In 1905, Joe Hall, a future Hall of Famer,
approached his neighbor, a shoemaker from Brandon, Monitoba and asked for help to improve his
skates. Mr. Tackaberry got to work and came up with a custom leather boot featuring a reinforced toe
and heel. Little did he know that he had produced the first pair of legendary Tacks Skates. CCM
acquired the Tackaberry name after his death in 1937 and made it the most recognized skate name in
the world. Subsequent innovations included the Heel Wedge, Instapump skates, Vakutacks, Fit System
Machine, Vector Skates and the U+ Pro Skates.
With time CCM acquired other hockey equipment manufacturers such as Koho and Jofa and it became
known as The Hockey Company. In addition to CCM which was well known for its skates, Koho was well
known for sticks and Jofa was well known for helmets. It also had smaller brands such as Canadien,
Titan and Heaton. In June 2003, the company went public and in April 2004 was acquired by Reebok
International which was itself acquired by the Adidas Group in 2006. In 2007, The Hockey Company
changed its name to Reebok-CCM Hockey Inc. and operated as a subsidiary of Reebok International3. Its
Montreal headquarters included a research and design center, a laboratory and on ice field testing
program, product management and development, professional custom services, the worldwide
distribution centre, customer service and marketing4. In the hockey market Reebok and CCM competed
against each other.
CCM positioned its brand with the tag line, “Performance Within.” Its communication focused on
unique talent, physique, skill set and potential. The marketing strategy was product driven with equal
emphasis on mass media, grass roots activity, the Web, social networks, retail and exposure by
professional players. Campaign themes revolved around concepts such as “Unlock your performance,”
“Your feet just got faster,” “Evolve every time you hit the ice,” and “Built to be part of you.” The
3
4
http://www. referenceforbusiness.com/history/St-th/The –Hockey-Company.html. Retrieved 28 Nov. 2009
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privecapId=321060. Retrieved 19 Nov. 2009
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company had partnerships with the NHL, the AHL, CHL and other major leagues. It also partnered with
the Montreal Canadians Youth Program.
Its media strategy included traditional print in hockey publications and TV in certain markets only.
Grassroots activity included partnership with the Skinner Hockey School. On the Web, the company
used YouTube, Facebook, some banner advertising and a company site.
CCM used independent sales agents who were commissioned-based to sell their products to the
different distribution channels. The agents had territories and key accounts. The industry was changing
and as a consequence CCM had a Key Accounts manager in house who was paid a salary. In total, there
were 25 agents in Canada and the US. In Finland and Sweden, there were also sales agents but in the
rest of Europe CCM sold through distributors. Finally, the company had a Pro sales force that serviced
all the team business: NHL and CHL players.
The industry was very conservative according to Ross, the brand manager. Many of the independent
stores did not use computers and as a result, many were not familiar with the Web, Facebook and
Twitter. One agent in the US who was very involved with community organizations was very successful
in spite of being unfamiliar with Facebook. Exhibit 5 shows CCM’s sales by channel of distribution.
In January, 2009 there was an internal reorganization within the Reebok-CCM division. Ross McCracken
was appointed Senior Brand Manager and Katherine Bosina was appointed Assistant Brand Manager.
Ross held a B.Comm and Diploma in Sports Administration from Concordia University and had been with
CCM since 1997. He had held various positions including marketing coordinator, assistant brand
manager and most recently Director of Marketing, Licensed Apparel, before being appointed to his
current position. Katherine Bosina had graduated from McGill University and had started at CCM in
2000 as an Administrative Assistant. She had experience in Public Relations before being appointed to
her current position.
COMPETITORS
The global hockey equipment market was extremely competitive. Manufacturers competed on
innovation, quality, brand and the use of endorsees who were often well known hockey players from
various teams and leagues. Manufacturers were constantly searching for next big “breakthrough”
especially in skates and sticks. There was intense rivalry among competitors and because of the mergers
and acquisitions some brand names had continued in the market place while the original companies had
long disappeared e.g. Koho. Nevertheless CCM had to pay attention to the other players in the
marketplace. Competitors varied as to the equipment that they manufactured.
Reebok
Reebok and CCM were sister brands owned by Reebok International (See Exhibit 6 for Income
Statement) which also owned Rockport, the well known brand of shoes5. In the hockey equipment
5
In 2008 Rockport was responsible for 11%, Reebok was responsible for 80% and Reebok-CCM Hockey was responsible for 9% of the Reebok’s
division sales. In US dollars, Reebok-CCM sales were US$275 Million. In 2007 Reebok-CCM sales were US$287 Millions. (Source: Adidas Group,
2008 Annual Report. Currency conversion calculated by case author)
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market, while the two brands competed against one another, the product lines were developed in
tandem to cover as much of the market as possible. In 2008, Reebok had 20% of the global hockey
equipment market (Exhibit 7). Prior to 2008, Reebok, in hockey, was branded simply as RBK and was
perceived to be a relatively recent entry into the hockey market having launched its hockey line only in
2004. The association with CCM was not perceived in a negative manner and the company was seen as
having a real presence in head-to-toe and goalie. It had a very strong market share in all categories.
Sidney Crosby was strongly associated with the brand and as a result it had a fair amount of visibility and
credibility. The company was a leader in goalie equipment and had the image of being stylish,
innovative, and modern with good marketing.
Reebok positioned itself as the technology brand that provided performance for the success-driven
hockey player. Its marketing strategy was well rounded and touched on print, TV, the Web, social
networks, retail and grassroots by pushing both product and the endorsees. Tag Lines included, “Do
you look for an opening. Or create an opportunity? Your move.” And “What happens when you get the
puck? Do you cradle it? Or give it hell? Your move.” Its key partnerships included the, NHL, AHL, ECHL,
USA Hockey, Hockey Quebec, and other major hockey associations. Key endorsees other than Sidney
Crosby included Patrice Bergeron, Jason Spezza and Pavel Datsyuk. On the web, Reebok used contests,
banner ads, blogs and it also had a corporate Facebook page. Traditional print media such as
Hometown Hockey, THN, NE Hockey Journal and other media were also used. TV commercials relied on
endorsees and at the retail level the company used window treatments and branded fixtures. Finally,
Reebok was involved at the grassroots level with Quebec International Pee-wee tournament, Ontario
Minor Hockey Association (OMHA), USA Hockey contests and AAA Program sponsorships.
Bauer
Bauer was the strongest and oldest competitor in the hockey equipment industry with 39% of the
global hockey equipment market in 2008. It was a well known Canadian company that manufactured
goalie as well as head-to-toe equipment. Nike had purchased Bauer in 1998 and shortly after, Nike had
launched its own line of hockey equipment. The line failed, however, in spite of the association
between Nike and Bauer. Many of the younger hockey players, the Boss, saw Nike as an outsider, a
basketball and apparel company, not a hockey company. Nike never became a big competitor in the
hockey equipment market. But Bauer’s skates were the brand of choice among all segments of the
market. The company had benefited tremendously from its association with Nike, especially in the area
of marketing and product launches. The company positioned itself at the high end of the market, with a
strong brand of hockey equipment to meet the personalized needs of the consumer. Bauer was seen as
a well-known company with good quality equipment, stylish and solid.
A key element of Bauer’s strategy was the use of diverse media outlets and heavy reliance on
professional endorsements. The tag lines for their equipment included “Power reigns supreme” and
“Lighter stick, heavier scoring.” They had key partnerships with the International Ice Hockey Federation
(IIHF), Hockey Canada and USA Hockey. Key endorsees included Patrick Kane, Evgeni Malkin, the Staal
brothers and others. These endorsees were featured in videos, interviews and TV ads. Their ads
appeared in The Hockey News, Hometown Hockey, NE Hockey Journal and other print media.
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Advertising on the Web was mostly video based. In-Store merchandising and imagery included special
product launch initiatives.
Easton
Easton Hockey was a division of Easton-Bell Sports Inc. with global sales in excess of US$750 Millions6.
In existence for about 20 years, Easton Hockey had a name in sticks and gloves and was a growing force
in skates. Consequently, only recently could it be described as a “head-to-toe” brand. It did not
participate in the goalie sector. For the most part, this company was reasonably well respected. It had
acknowledged expertise and leadership in sticks since it was the first to launch the one-piece composite
stick. It defended its position well but its market in skates was relatively small. It was often seen as a
leader of tomorrow: trustworthy, proven and an innovator in stick technology which was consistent with
its intended positioning. Its marketing strategy focused on mass media and professional exposure.
Easton had some focus on in-store point of purchase and the Web. Its creative tag line was “Confidence
is everything”, and “Protechnology.” The company had key partnerships with the NHL and it was a
sponsor of the Canadian Hockey Association. Key endorsees included Dan Heatley, Henrik Zetterberg
and Jarome Iginla. For its media strategy, it did not use TV but it used Hockey publications and the Web:
minimal banner ads, YouTube channels with some videos and a minimally maintained Facebook page.
Graf
This company seemed to rely mostly on word of mouth for its communications. It was well known for
its technologically advanced, ultra comfortable skates. It was a niche player that specialized in high end
skates only. It also did a lot of special make-ups for different retailers. Beyond the skate category, it did
not seem to have any special expertise except perhaps for gloves. The company was very product driven
with a strong emphasis on retail and staff education via their “Graf School.” Originally established in
Switzerland in 1921, it was now located in Calgary. It traditions were rooted in old world quality:
traditional look and craftsmanship. It had minimal presence on the web, used no social media, no print
nor TV.
Other competitors included Sherwood, Vaughn and Warrior but their presence was not a cause for
concern to Ross and Katherine since they did not compete in the skate market.
THE HOCKEY SKATES MARKET
Hockey skates, together with sticks, were what drove the industry. These two pieces of equipment were
among the most visible that players used and their technology often gave users an additional edge on
the ice. As a result, many manufacturers devoted a considerable portion of their R&D budget to skate
development, looking for the next breakthrough in technology. Skates were often named, e.g. the V08,
and players would identify with specific skates from different companies.
6
http://eastonhockey.com/about. Retrieved 2 Dec. 2009
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When purchasing a skate, buyers’ criteria included brand, durability, fit and comfort, weight, and price.
Depending on the market segment, the look of the skate was also important. For younger players, 12
years to 15 years old, parents had some influence and for the older players, parents played the role of
treasurer. Judging the quality of a skate was difficult for most buyers. Apart from weight (the lighter
the skate, all things being equal, the faster the user will be), most of the quality features were hidden
from the buyer, except for the runner, the metallic blade of the skate that came into contact with the
ice. Blades were either stainless steel or carbon steel. Carbon was considered the cheaper blade but it
delivered a much better edge which provided better and faster skating, it just did not last as long as
stainless steel blades.
In general, skates were sold at different price points. Quality high end skates, with the best features,
benefits and materials were priced between $400.00 and $700.00. Medium quality skates were priced
between $199.00 and $399.00 and the low end skates were priced at less than $199.00. The high end
skates had the better performing materials both from a durability and weight standpoint: an excellent
skate had durable materials that did not add weight. Buying a pair of skates was similar to purchasing
tires for a car: a physical inspection of the product did not provide the buyer with much additional
information. Skates were sold through different channels but high end skates were concentrated in the
independent stores. Exhibit 8 shows the ranking of the different competitors in the skates market.
CCM Skates
The CCM brand had seen a sharp decline in sales and profits since its peak year in 2004. CCM had fallen
out of the consideration set of elite players and instead had shifted toward entry products since sales
declines had come almost exclusively from elite products. Recent products had not lived up to
expectations as CCM was unable to replicate past success such as the Vector Pro Skate launch and V110
stick launch. In addition, credibility with the “Boss” (the 12 – 18 year old target segment) and retail
partners had slipped.
Decisive action was needed to restore the CCM brand to its rightful and historic position in the market
as a leading hockey brand. Thus, in the fall of 2007 CCM launched the new U+ Pro Skate. This skate was
believed to be the next generation in hockey skates and with the use of an impressive NHL roster of
endorsees, numerous league partnerships and a well thought out marketing plan; the U+ Pro was
thought to be the product that would save the CCM Brand. Accordingly the 2008 objectives were as
follows:
1.
2.
3.
4.
Re-establish CCM’s credibility as a high performance skate brand among elite players.
Create consumer pull at retail around the U+ story
Regain the confidence of key retail partners across North America and Europe.
Acquire/adapt and translate technology to mid and entry price point products without
compromising the elite segment.
5. Create a solid connection to the technology story and platform across key product categories.
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The go-to-market strategy for new product launches at CCM was built around a three pronged approach
known within the organization as the POWER TRIANGLE. Successful market launches required the
product to be innovative, used and validated by the pros and to have a performance/technology story
that created a unique selling proposition. All three components were needed in order to insure the best
chance of a successful launch. The components of the power triangle were:
1. PRODUCT INNOVATION: The concept of new product development with the end result being an
innovative product that is visibly different and demonstrably better than the competition.
2. PRO VALIDATION: Led by a team of NHL athletes including Ovechkin, Lecavalier, Thornton,
Tavares and others, the product is tried, tested and validated by the best players in the game
prior to market launch.
3. MARKETING COMMUNICATIONS: To relay the technology and validation story, it is essential to
wrap it up into a compelling story that will inform and entice the target market to visit their local
CCM authorized dealer. CCM needed them to experience the product for themselves.
Figure 1
THE POWER TRIANGLE
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2007 – 2008: The Launch of the U+ Pro Skate
The U+ Pro skate featured U Foam, a one piece construction that when heated, took the unique shape
of each individual foot. There were no sandwich layers, like traditional constructions, or pre-set shapes
like competitors. This skate was the only true custom fit skate on the market. It also featured the
Rocket Runner, a new blade technology (Exhibit 9). Both of these new technologies resulted in the
lightest skate on the market as well as the most thermo-formable.
It was first introduced to NHL players during training before the season started. The players who tried it
wanted it. CCM started the season on strategy, with almost 50 NHL players using the new CCM U+ Pro
skate. The goal was to grow that number to 100 by the end of the 07-08 hockey season.
The focus was then put on the trade. In order to get dealers to believe in the skate, CCM invited more
than 150 of its best customers worldwide to Montreal. Dealers were given the full treatment: they
received a full presentation on the new skate and its technology, were able to test it on the ice at none
other than the Bell Center, watched the Montreal Canadiens practice and were then wined and dined
before returning home. All left believing in this new product, but more importantly with a renewed
energy in the CCM brand.
Once the skate was launched at retail in March 2008, CCM went full force with marketing initiatives
geared towards the consumer. It ran a print ad featuring new creative in all hockey publications (Exhibit
10), focused heavily on digital marketing with a 15 sec spot on YouTube and ccmhockey.com, shipped instore support, including a stand-alone display for the new skate, and demonstrated the skate to more
than 1,000 kids across North America through grassroots events in conjunction with hockey camps.
CCM`s marketing initiatives were stronger than ever and were slowly being noticed by the ‘Boss’.
Shortly after launching, it became apparent that the U+ Pro skate was experiencing quality issues.
Although the product had been tested extensively, there were durability concerns that became
apparent only after prolonged use. The siding on the skate began to bubble and eventually fray and tear
with continued use. Even though these cosmetic issues did not affect the performance of the skate,
customers expressed their frustration at the short term durability of a high-end skate retailing at
$649.99. As a band-aid solution, CCM quickly began to replace the problematic skates with a new pair of
the same skate.
During this time, the product development team worked at length to rectify the durability issues of the
skate as well as to address the Rocket Runner uncertainties felt by the trade7. Once the improvements
were finalized, CCM was ready to re-launch the skate at retail in time for 2009.
2008-2009
The new U+ Pro Reloaded skate featured an extra outer and more durable Surlyn layer (similar to a golf
ball); a new pro approved felt tongue, added padding in the ankle area and a tighter heel lock. CCM had
addressed all the product difficulties experienced in 2008 but did not change the overall ‘look’ of the
7
Because of the new technology associated with the Rocket Runner, sharpening the skates was also more challenging.
P a g e | 11
skate for the 2009 launch (Exhibit 11). The product team felt there was not enough time to properly test
any new graphics before re-launching and did not want to face the same challenges as the previous
year. With the help of a re-launch marketing plan, the decision was made to keep the ‘look’ the same.
This decision may have proved to be CCM’s downfall. “When we came out with the new skate,
consumers did not know that we had improved it,” the assistant brand manager said, “Time was against
the development of new styling when the problems with the original skate developed” The “reloaded”
skates hit the stores in March 2009 but the campaign was launched in July, four months after it hit the
stores.
CCM had the support of history and a strong heritage but, even though at the mass merchandisers’ level
skates were still selling, it had lost the support of the independents. CCM therefore emphasized
regaining dealer confidence in the product. Consequently, as in the fall of 2007 with the launch of the
first skate, CCM decided to invite 240 of its top dealers back to Montreal. However, this time, the focus
was really put on product knowledge, thus CCM created the U+ University. Those invited represented
the skate fitting specialists in each store and the importance of product knowledge and custom fit was
really stressed over the 2-day training program. Dealers were put through an extensive curriculum,
which included a fit session, classes, a factory tour and an on-ice demo session. Dealers were impressed
with the fact that CCM still manufactured its top model skate in Canada, the only company to still do
this. At the end of their stay, the skate fitting specialists graduated and were sent off with a new pair of
skates, a seeding strategy CCM felt would make a difference with an impressionable floor salesperson.
In addition to the U+ University, CCM re-vamped its 3point5.com site to include all content from the
university program. 3poin5 was an interactive web site used to train floor staff on CCM products across
North America & Europe. By including the content of U+ University on this site, CCM was further
educating those who were not able to attend the Montreal product knowledge sessions.
Another obstacle CCM faced in 2009 was an internal re-structuring which resulted in a new marketing
team. With this new team in place, it was felt that the brand needed to return to the drawing board to
refresh its image and create a new campaign platform to communicate the launch of the new U+
Reloaded skate. However late it was, CCM, with the help of an agency, launched its new creative
campaign in July 2009, 4 months after the skate hit stores. Once finalized, this campaign was adapted
into in-store point of purchase material that was delivered at the end of September 2009, 6 months too
late. Exhibit 12 shows a sample ad for the new skate and Exhibit 13 shows the in-store point of purchase
material that was used.
CCM still faced many challenges with the U+ Pro Reloaded skate as consumer perception was that the
skate was the same as the 2008 version. Although floor staff had been educated on the benefits of the
improved skate, consumers were not walking into stores requesting a CCM skate. This was the biggest
challenge CCM faced.
2010
With planning for Fall 2010 fast approaching, CCM was getting ready to launch the next generation of
U+ Pro skates. The foundation of the new skate remained the thermo-formable U-FOAM technology but
P a g e | 12
the skates featured a new design that had tested exceptionally well in focus groups across North
America and Europe. With learning from past models, the fit had been vastly improved. Combined with
thorough on-ice testing the new skate was ready to perform on the ice in 2010. Exhibit 14 compares the
new skate with competitive models.
But there were some changes to the launch plan relative to previous years. Usually, CCM launched a
new product in November at a sales meeting and the product hit the market in March/April. This time,
however, the new design was to be launched to hit the stores in the Fall of 2010. This was a risk
because much of the sales for new skates were made in the summer and tapered off at the end of
summer with “back to school.” (At CCM this was referred to as “back to hockey.”) Thus, many
customers would have already bought their skates so that they could break them in during the summer
and use them during the upcoming season. But the CCM launch team was hoping that a pre-launch
teaser campaign and the consequent excitement would motivate buyers to wait. The teaser campaign
together with an excellent launch execution would be the winning formula for the success of the next
generation of the U+Pro skate.
THE ISSUE
With the future of the CCM brand dependent on the success of this skate launch, CCM required a
powerful launch plan covering both consumer and retail channels. Both Ross and Katherine were
wondering what should be the ideal strategy to adopt that would once again position CCM at the top of
the skate category. CCM had budgeted approximately $1Million for the brand. In the past this budget
had been allocated in the following manner: 15% media and internet, 12% production, 9% creative, 10%
point of purchase, 20% events/PR, 5% research, 2% seeding, 16% sales and marketing, and 10%
miscellaneous.
P a g e | 13
Exhibit 1
Global Hockey Equipment Industry Sales
Year
2009*
2008
2007
2006
2005
2004
2003
Annual Sales($US000,000)
615
620
642.03
603.07
569
534
524
% Change
₋.8
₋3.4
6.5
6
6.6
1.9
*Estimated
Source: Company files
Exhibit 2
Global Hockey Equipment Market by Category, 2007
Source: Company files
P a g e | 14
Exhibit 3
Alexander Ovechkin
Alexander “the Gr8” exploded onto the NHL scene during his rookie campaign, igniting fans with both
his fascinating skill along with his reckless style of play. Ovechkin captured the Calder Memorial Trophy
as the NHL’s rookie of the year in 2006, becoming only the second rookie in history to surpass both the
50-goal and 100-point plateaus. He was also named to the NHL’s First All-Star Team in each of his first
three full seasons in the league, becoming the first player in 55 years to receive that honor. Ovechkin
has already amassed a significant collection of awards including multiple Lester B. Pearson, Hart, Art
Ross and Rocket Richard Trophies for finishing first in points and goals and as league MVP. Ovechkin not
only punishes his opponents on the scoreboard but also with his body, often ranking in the top 10 for
hits. Alex continues to dazzle the hockey world with his lightning quick speed and cannon of a shot; April
3, 2008 – He would break Luc Robitaille’s record for most goals by a left winger in one season. At the
2008 IIHF World Championships, Ovechkin helped lead Russia to the gold medal by finishing with 12
points (six goals, six assists) in nine games. Ovechkin will lead Russia at the Olympics in Vancouver and
will continue to stamp his name on the global game. Alex is the face of the CCM brand globally and will
play a key role in the launch of the new skate program.
Source: Company files
Exhibit 4
2008 Hockey Equipment Market: Consumer Segments
Share of
Consumers
Share of
market in
US$
Level of Play
Age
Regional
Prioritization
Personal
Expression and
Performance
Group
49%
Smart
Performers
Price Seekers
45%
6%
59%=$365.8 Mill
37% =$229.4 Mill.
4% =$24.8Mill.
Recreational/Elite
18-20 yrs
CAN(1),
US(2)RUS(3),
CZE(4)
Recreational/Elite
12-17 yrs
CAN(1), US(2)
Recreational
18-20 yrs
SWE(1), FIN(2)
Source: Company files
P a g e | 15
Exhibit 5
Distribution of CCM’s Sales by Channel
Channels
Distributors to Pro Shops
Independent Retailers
Buying Groups (Independents)
Mass Merchandisers
General Sporting Goods
% in US
3%
47%
31%
.3%
19%
% in Canada
5%
24%
22%
28%
20%
Source: Company files. Percentages do not add to 100 because of rounding.
Exhibit 6
Income Statement Summary: Reebok International (€ in millions)
Net Sales
Gross Profit
Gross Margin
Operating Profit
Operating Margin
2008
2007
%Change
2,148
795
37%
(7)
(.3%)
2,333
902
38.7%
109
4.7%
(8%)
(12%)
(1.7%)
(106%)
(5%)
Source: Adidas Group, Annual Report 2008, pp102
Exhibit 7
Global Market Shares of Hockey Equipment Companies (%)
2006
Bauer
27
Reebok
17
CCM
16
Easton
18
Graf
3
*Includes the Mission and Itech brands.
2007
28
18
14
18
3
2008
39*
20
15
19
3
Source: Company files
Exhibit 8
Global Market Share Ranking of Hockey Equipment Companies: The Skates Market
Brand
Bauer
Reebok
CCM
Easton
Graf
Source: Company files
Rank
1
2
3
4
5
P a g e | 16
Exhibit 9
The U+ Pro Skate
P a g e | 17
Exhibit 10
Sample Advertising for the U+ Pro Skate
P a g e | 18
Exhibit 11
The U+ Pro Reloaded
P a g e | 19
Exhibit 12
Sample Advertisement for the U+Pro Reloaded
P a g e | 20
Exhibit 13
In Store Point of Purchase Material for the U+Pro Reloaded
P a g e | 21
Exhibit 14
Competitive Comparisons
High End Skate Comparisons
Model
Skate Positioning Story
Technology Story
USP
Bauer Vapor X60
Built for the quick player
who thrives on acceleration
X-Rib external structure
combined with patented
integrated
ankle/heel/tendon guard
Lightweight and stiff skates preferred
by NHL players
Bauer Supreme TotalOne
Designed for the power
player who looks to
maximize every stride
Anaformable alive
comosite quarters with
anatomical shape
No negative space to unique
anatomical construction
Easton Synergy EQ5
Power and comfort
combined
Heat moldable foam
quarter with composite
reinforcements
The Balance of Power. Combination
of fit customization and composite
Easton Synergy S17
Lightweight composite
skate for agility and speed
One piece composite
skate
Full composite shell for the lightest
skate on the market
Reebok 11K
Power construction with the
customization of the Pump
Graf
Various skate models at
each price point with
different fits
CCM U+ (Fall 2010)
Lightweight fully
customizable construction
for maximum energy
transfer
Pump technology for
customization, lightweight
ProArmour quarter
No real technology in
their product. Older,
softer materials for
comfort
U-Foam for
thermoformability with
one piece quarters
Customization of the Pump
Variety of different models to fit
different feet
True Fit Customization