New Balance Athletic Shoe Inc.

THERE IS NO “TOO FAST” FOR LOVE

By La’Trina Franklin
 Summary

Arch Supports & prescription footwear remained the focus of

New Balance sine the 1960’s. 1961-Trackster was invented

the world’s 1st performance running shoe made with a ripple

sole and available in multiple widths. Selling arch supports

to police officers and waiters giving them ease and comfort

while on duty. New Balance has been a brand concerned with

meeting the needs of the everyday athletes. Part of

producing superior footwear and athletic apparel is

manufacturing it to fit all widths and sizes, because a

better fit produces better performance.

To ensure the best fitting, best performing shoes and

apparel, the company focuses on improving technology and

production methods. A big part of that is maintaining five

manufacturing facilities here in the United States where

they continue to produce shoes and apparel that meet the

standards that the founder employed for more than 100

years. New Balance have also remained committed to a core

set of values that include integrity, teamwork and total

customer satisfaction. Today New Balance is a family of

brands including New Balance, Dunham, PF Flyers, Aravon,

Warrior and Brine.

New Balance holds onto its history through the numbering

system that owes its origins to a man named Arthur Heckler.

Instead of naming the different shoe models, Heckler chose

to number them because he wanted to place an emphasis on

the New Balance philosophy, not any one particular shoe. To

this day, that philosophy is upheld as model numbers are

advanced to incorporate new technologies and designs.

Key Facts

New Balance began as a Boston-based arch support and

prescription footwear to improve shoe fit in 1906 by

William J. Riley a 33 year old British émigré who committed

himself to helping people relieve the pain suffered from

time spent all day working on their feet. His design fit

better, and felt better than anything else on the market,

and by 1909 Riley was listed in the Boston business

directory under 'shoemaker.'

19 years later Riley designed his first running shoe for

the Boston running club known as the Boston Brown Bag

Harriers. The success of this shoe spread quickly and by

1941 New Balance was creating custom-made shoes for

running, baseball, basketball, tennis and boxing.

With the introduction of the Trackster in 1961, New Balance

began a new direction in shoe manufacturing. The Trackster

was the first running shoe available in multiple widths, a

feature which would become the standard for New Balance

offerings.

1934 Riley partnered with his leading salesman Arthur Hall

the company developed into a specialized shoe manufacturer

in the 1970's, and has grown to become a leading global

athletic products company.

✔ Key Investors:
Teamwork was a critical component to the development of New

Balance; the owners were willing to take risks and

encourage others to do the same. The executive management

team, many of whom have been with the company for over 20

years are as follows:

James (Jim) Davis, Chairman

Anne Davis, Vice Chairman & Executive Vice President

Administration

Robert DeMartini, CEO

John E. Larsen, President Emeritus/Advisor

Jim Tompkins, President & COO

John Withee, Executive Vice President & CFO

Paul Heffernan, Vice President, Consumer Experiences

Fran Allen, Executive Vice President Sales, U.S & Canada

Herb Spivak, Executive Vice President Global Quality

Assurance & Product Integrity

John Wilson, Executive Vice President Manufacturing

Joe Preston, Executive Vice President, Global Footwear,

Product & Marketing

Alan Rosen, Vice President & Treasurer

Carol O'Donnell, Vice President Corporate Human Resources

Edith Harmon, Vice President Advanced Concepts

Stephanie Smith, Vice President Retail

Peter Zappala, Vice President Key Account Sales

Jim Sciabarrasi, Vice President Sourcing & Procurement

Jim Connors, Vice President Global Design & Development

Bill Hayden, Vice President Finance

Edward Haddad, Vice President Intellectual Properties &

Licensed Products

✔ SWOT Analysis

remained loyal to producing a product that was customer

satisfied in doing so they focused on multi-width sizing

and fit opposed to just a fashionable product. Large

retail accounts were managed by a total of 10 head sales

agents, 6 of whom were strategic account managers. The

company relied on a sales force that was composed of

 independent agents and was investing in a sales force

automation system to increase the agents’ productivity;

in terms of information technology, a new sales force

automation system enabled sales representatives to place

direct orders remotely, access New Balance’s inventory

information, and check on delivery status business-to-

business. Withee explained, the Business-to-business

application would help retailers directly manage basic

ordering, thereby freeing up the sales representative to

engage with the retailer and make recommendations about

new items to carry or options for reducing inventory

levels. Allen noted that as you get to a certain point

in sales volume; you grow out of independent sales force.

Since the company does not have any in house accounts

they prefer using independent, dedicated sales agencies

with an entrepreneurial mindset; but exclusive to New

Balance and compensated through a sales–based commission.

New Balance divided their specialty dealers into two

groups: key accounts and specialty dealers were the

privately owned and independent retailer store while the

key accounts were there largest retailer customers: Foot

Locker a major chain that , on its own accounted for over

3,000 doors (3,500 retailers representing over 1200 sites)

in the US. For New Balance to maintain a strong

relationship with both accounts were critical for business

and they managed both very well.

Nike and Reebok, who outsourced nearly all of their

production to Asian manufacturers, while New Balance used

outsourcers for only 75%, final product assembly took place

in one of New Balance’s five factories in the Northeastern

United States. New Balance sourced the soles for most of

its shoes from two suppliers in China, they had two

materials warehouses in Skowhegan, ME and one in Lawrence,

MA, while their manufacturing plants were in Skowhegan, ME,

Norway, ME, Norridgewock, ME Lawrence, MA, and Boston, MA

which in my opinion was really strategic planning because

this give lead time 8-9 days in 2001 but by 2005 lead time

was at 2-3 days which also obviously showed they had

manpower to back-up the supply and demand during this

period.

✔ FINANCIALS:

Key Financials for New Balance Athletic Shoe, Inc.

In 2004 New Balance Sales and Media Expenditure among

their competitors were $1,022.0 million total brand
advertising expenditure was $17.3 million and worldwide
 sales for the company was 1,500.00 with N/A Footwear
Sales, N/A Total Assets, and N/A Net Income

Company Type Private

Fiscal Year-End December

2006 Sales (mil.) 678.8 (est.)

1-Year Sales Growth (13.6%) (est.)

2006 Employees 2,800

1-Year Employee Growth 0.0%

Adidas Fila USA NIKE

Annual Sales 6,709.1 176.1 8,233.2

Employees 25,067 706 30,200

Market Cap (£ mil.) 0.0 0.0 13,488.8

✔ CONCLUSSION:

From the beginning, New Balance has prided itself on its

American roots, and to this day headquarters remain in

Boston, MA. Demonstrating Responsible Leadership, the

company blinds global brands that athletes are proud to

wear, associates are proud to create and communities are

proud to host.

At New Balance adhering to a unique set of philosophies;

they focus on function over fashion; making shoes in

multiple widths; continually effort to make many shoes in

the US; nurture strong retail partnerships; and support

grassroots initiatives. Although the business has grown

substantially over the past five years, Nee Balance has not

lost sight of who they are or where they are from.

✔ RECOMMENDATIONS:

T hough the company has remained a “comfort over

fashion” image I believe that the company could go

a lot further if they touch on fashion slightly

however not losing sight of customer focus. Because in

high sight everyone buys shoes and everyone rather young or

old like comfort. From my observation working at Nordstrom

in Indianapolis, IN. at the Circle Center Mall we sold New

Balance’s, Nike’s, Puma’s, Reebok and Adidas-Salomon.

Typically the younger (youth) went toward the other brands

because of the features which were higher priced. Staying

competitive with the market is very important for any

business and always being aware of the needs of your

audience. In my opinion New Balance is looked at as an old

comfortable shoe brand (by consumers) but why not be able

to appeal to both young and old.

New Balance never pays famous athletes to wear their shoes

and clothing, instead they rely on health club

professionals, coaches, instructors, and trainers like us

to spread the word and set the example. That's why they

offer you the chance to buy their products at below market

prices through the New Balance Pro F.I.T. program this is a

great example of staying customer focused. Pro F.I.T.

membership is free, but the rewards are priceless. It's the

company way of recognizing how important their consumers

are to the success of the business. This is another ongoing

recommended value that New Balance should continue to keep

up that set themselves apart from their competitors by far.