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Marketing Strategy of ASICS -
December 8th, 2010
ASICS is a Japanese athletic equipment company. ASICS produces professional footwear and sports equipment designed for football, running, netball, tennis, badminton, squash, martial arts, cricket, golf, wrestling, track & field, cross-training, volleyball, cheerleading, lacrosse, and for many other sport disciplines. In recent years their running shoes have often been ranked among the top performance footwear in the market. ASICS bought the outdoor brand Haglöfs on July 12, 2010 for SEK1,000,000,000 ($128.7 million).
Incorporated: 1949 as Onitsuka Co., Ltd.
Sales: ¥128,901 million ($969 million) (2002)
Stock Exchanges: Tokyo
NAIC: 316211 Rubber and Plastics Footwear Manufacturing; 315228 Men's and Boys' Cut and Sew Other Outerwear Manufacturing; 315999 Other Apparel Accessories and Other Apparel Manufactur- ing; 316219 Other Footwear Manufacturing; 339920 Sporting and Athletic Good Manufacturing
The company name, which was changed to ASICS in 1977, stands for the first letters of the words in the Latin proverb, "Anima Sana in Corpore Sano," meaning "a sound mind in a sound body."
Onitsuka Co., Ltd., the forerunner of ASICS, was established in 1949. Just after World War II, children could not get any sports shoes when they wanted to play sports. According to Onitsuka's philosophy based on "bringing up sound youth through sports," the company has continued to keep the tradition of specializing in the manufacture of sports shoes. The company name expressed this philosophy.
1949: Onitsuka Co., Ltd. is founded in Kobe, Japan.
1963: Precursor to Nike, Inc. imports 200 pairs of Onitsuka Tiger shoes to the United States.
1966: Mexico 66 running shoes are first with Tiger Stripe trademark.
1967: Marup Nylon SP covers feet of a generation of Japanese schoolchildren.
1973: U.S. subsidiary is established.
1975: European unit is established in West Germany.
1977: ASICS is formed by the merger of Onitsuka with GTO and JELENK.
1984: Brazilian venture is established.
1992: ASICS supplies staff, torchbearers at Barcelona Olympics.
2000: Naoko Takahashi wins women's marathon at Sydney Olympics wearing ASICS.
2004: Retro ASICS footwear is brought back in "Onitsuka Tiger" line.
ASICS Corporation is one of Japan's top makers of sport shoes and other equipment. The company takes its name from the Latin phrase anima sana in corpore sano, "a sound mind in a sound body." In the United States, ASICS is best known for its running shoes; it also produces footwear and accessories for a number of other sports, including basketball, volleyball, and wrestling. It dominates the Japanese market for basketball shoes. ASICS has a formidable presence in the international running community. It sponsors the New York City Marathon, where 40 percent of recent competitors wore the company's shoes. The company has subsidiaries in Australia, Brazil, China, Europe, and Korea in addition to its Irvine, California-based ASICS Tiger Corporation unit.
Kihachiro Onitsuka formed the predecessor of ASICS Corp., Onitsuka Co., Ltd., in Kobe, Japan, in 1949. He was motivated by the use of sports as a means to rehabilitate juveniles there after World War II.
Onitsuka lacked experience in making shoes, but he threw himself enthusiastically into researching their physiology. He also drew ideas from other areas of life. The suction cups of an octopus in his salad inspired the design of basketball shoe soles. In fact, the company claimed Japan's first basketball shoes, nicknamed "Bashu," which featured a tiger face on the sole. This would become a company trademark.
Onitsuka displayed a commitment to innovation from the start. The company's first volleyball shoes, introduced in 1951, had vulcanized rubber soles. The Tiger Marathon Tabi incorporated a number of technical innovations. Vinylon, a synthetic fiber, was used in the uppers. A band along the side of the shoe helped support the arch. Onitsuka continued to upgrade its offerings for long-distance runners throughout the mid-1950s. The durable Ekiden Marup was its first marathon shoe with a rounded toe.
One of Onitsuka's offerings even attracted the great barefoot marathon champion Abebe Bikila, who began wearing the company's Magic Runner shoes. This model, introduced in 1959, used a number of vent holes to cool the sole of the foot. Onitsuka had developed the Magic Runner as a means to avoid the corns he had seen on other marathoners' feet. Japanese marathoner Kenji Kimihara used the Magic Runner shoes to win a silver medal at the 1968 Mexico Olympics.
Olympic Prominence in the 1960s and 1970s
The company's products were becoming more common at the Olympics and other world-class sporting events. A number of top athletes from countries other than Japan were wearing Onitsuka shoes; they won silver and bronze medals at the 1964 Tokyo Olympics. A 1966 market survey found nearly two-thirds of athletes at the Boston Marathon wearing them.
Product development continued to keep pace. A variety of new technologies were introduced in training, basketball, and tennis shoes in the early 1960s. Onitsuka reportedly was the first to employ synthetic leather in shoe manufacture. The company also introduced a new line of shoes for soccer, which was being introduced into the elementary school curriculum.
The 1960s also saw Onitsuka's development of the first track shoes with interchangeable spikes in its "Run Spark" line. This allowed sprinters to modify them for specific events and track conditions while extending the life of the shoes.
Onitsuka launched its "Olympic Line" after years of gathering suggestions from top athletes. This series marked the introduction of the ASICS trademark design of two vertical lines intersecting a pair of lines emanating from the heel of the shoe. These lines were said to provide reinforcement as well as decoration. The first shoes to feature the Tiger Stripes were the Mexico 66 model, introduced two years before the 1968 Olympic Games in Mexico City.
One version of the shoes so popular with competitive runners found an unexpected new audience in the late 1960s. The blue nylon "Marup Nylon SP" became the unofficial school footwear of a generation of Japanese youth. More than 400,000 pairs were sold after their introduction in 1967.
The Corsair line of jogging shoes was unveiled in 1969. These were designed for cushioning and comfort. A derivative of the Corsair called the Cortes was one of sports giant Nike's first products.
The reasonably priced "Bomber" line of soccer shoes capitalized on soccer's popularity in Japan in the early 1970s. Onitsuka began to invest in overseas markets. The company set up a U.S. subsidiary in Irvine, California, in 1973. Two years later, a West German unit was established in Dusseldorf.
Technical innovations continued. Onitsuka developed the first shoe designed for the new all-weather, synthetic surface tracks that were being introduced in the 1970s. The Tiger Paw DS-5700 debuted in 1974. Onitsuka was an earlier user of the cushioning material EVA (ethylene vinyl acetate), which would become ubiquitous in all manner of sports shoes around the world. It appeared in Onitsuka's Limber-Up XL trainers in 1975.
Formation of ASICS: 1977
ASICS was created by the merger of Onitsuka Co., Ltd. with fishing and sporting goods company GTO and athletic uniform maker JELENK in 1977. Onitsuka was named president of the new company.
ASICS claimed another innovation with its Rota series of volleyball shoes introduced in 1978. These were said to be the first in which the outsole was designed to absorb shock. The California, a descendant of the Corsair jogger, came out the same year. Among other features, it had a reflective surface to alert drivers in low visibility. ASICS Tiger, the U.S. affiliate, began marketing the Montreal III jogger, which featured a "Cush-Hole" air vent in the heel.
ASICS developed shoes for Japan's Olympic teams to wear to the 1980 Olympic Games in Moscow. However, Japan joined the U.S.-led boycott in protest of the Soviet invasion of Afghanistan, and the shoes were not worn. (They would become part of ASICS' spring 2004 "retro" line-up, however.)
By the early 1980s, ASICS was exporting to 80 countries, including some behind the Iron Curtain. In order to mitigate exchange rate fluctuations and import restrictions, the company began licensing production overseas to the United States (jogging shoes), followed by Israel (training shoes), and Greece and Australia (training apparel).
The company's sales units in the United States and West Germany initially had difficulty breaking into Western markets; together they lost ¥1.2 billion ($5.1 million) in 1981. The dominance of Adidas AG and a lack of effective salespeople limited ASICS in Western Europe.
The U.S. subsidiary was recapitalized and reorganized into the new ASICS Tiger Corporation in August 1981. After problems with excessive inventory, the U.S. unit cut out its distributor in favor of direct sales to retailers. The company began a marketing arrangement with Second Sole Co., a California sporting goods store, during the lead-up to the 1984 Los Angeles Olympic Games. Parent company ASICS Corporation's sales rose 19 percent to ¥73 billion in 1981/82, while pretax profits more than doubled to ¥6 billion. U.S. sales were $30 million.
A joint venture with Cambuci, S.A. began making and selling ASICS brand shoes in Brazil in mid-1984. ASICS also set up subsidiaries in Taiwan and South Korea. Licensed production of ASICS wrestling shoes began in mainland China in early 1988. ASICS began to shift production from South Korea to Indonesia in 1990 due to rising labor costs and frequent strikes.
ASICS designers focused on the problem of minimizing runners' energy loss in the Task XL-1, which came out in 1985. The outsole of these shoes featured a studded "Cactus Plate" reinforced with "Whisker" crystallized fiber material.
Success Gels in the Late 1980s
Shock-absorbing gels began appearing in ASICS shoes with the appearance of the Freaks jogging shoe and the Fable Radick basketball shoe in 1987. The gel allowed for lighter shoes than those cushioned by EVA sponge; it helped make the brand a favorite among competitive runners.
ASICS began building a new ¥4 billion ($27 million) sports engineering lab in Kobe in 1987. Several months later, ASICS Corp. became the Japanese marketing agent for French ski manufacturer Dynamic S.A. ASICS had already been marketing Atomic brand skis in Japan since 1979.
Some of ASICS' efforts were dedicated more towards fashion than performance. It introduced a line of pastel women's sneakers in 1988, and took over distribution for LA Gear sneakers in Japan in 1990.
ASICS Corp. ended the 1980s with international sales approaching $1 billion. The U.S. unit, which was strong in running, volleyball, and wrestling markets, had sales of $110 million in 1989. By belatedly focusing more attention on marketing and advertising in the hype-driven U.S. market, ASICS would see sales growth exceeding 20 percent a year there for the next five years.
New Challenges in the 1990s
In 1990, ASICS recapitalized its subsidiaries in the United States, West Germany (ASICS Tiger GmbH), and Australia (ASICS Tiger Oceania). ASICS Corporation posted its first net loss (¥1.13 billion) since its founding, in the fiscal year ended January 1991. A computer business had racked up significant debt while ASICS closed a Taiwan subsidiary. The company remained committed to raising its international profile. As official shoe supplier for the 1992 Barcelona Olympics, ASICS supplied shoes for 20,000 Olympic staff and 60,000 torchbearers.
ASICS introduced a line of lightweight, durable shoes exclusively for professional athletes in 1990. Marathon Sortie EX featured a proprietary blend of synthetic leather and urethane, allowing for lighter soles. The TARTHER 195 a, a consumer version with thicker midsoles, was introduced the next year.
A unique offering for ASICS Corp. was its President shoes, lightweight dress shoes with static-resistant soles. Aimed at Japanese executives, they sold for up to ¥46,000 ($350) a pair. In the mid-1990s, ASICS brought out a sandal inspired by a medieval Japanese design.
After a return to profitability, sales fell 9 percent to ¥94.62 billion in 1994-95, producing a loss of ¥1.13 billion. The company's U.S. operations were reorganized in 1995; by this time, ASICS Tiger had sales in the range of $250 million a year.
ASICS and other Japanese shoemakers had to deal with the incursion of American brands Nike, New Balance, and Converse on their home turf. To counter, ASICS released a line of shoes without its trademark stripes in April 1997. At the same time, it had taken over Japanese distribution of a hip line of American footwear and snowboard gear for Altoona, Pennsylvania-based Airwalk Footwear.
ASICS benefited from the popularity of niche brands of running shoes in the United States in the late 1990s. The company extended its brand into a series of walking shoes, following the trend of walking as a form of physical fitness.
ASICS remained committed to competitive track and field. It continued to develop new shoes for the ultra-competitive field of sprinting, where success was measured in 1/100ths of a second. The Tiger Paw Cyberzero of 1996 featured a molded heel protector and "holding belts" or straps for support and fit.
ASICS introduced a couple of new sports shoes for young children in 1999 and 2000. The first, called SUKU2, featured straps instead of laces and offered plenty of toe room. The second, the "G.D." series, was named after American physician Glenn Doman, who had studied the effect of exercise on development of children's brains. "G.D." shoes were designed to simulate the feeling of being barefoot, with plenty of cushioning, flexibility, and breathability.
Looking Back, Looking Forward: 2000 and Beyond
The Sydney Olympics in 2000 represented another special achievement for the company. Naoko Takahashi won the women's marathon using customized shoes specially developed for her. One of her legs was a few millimeters shorter than the other. Hitoshi Mimura, ASICS' master craftsman who first joined the company in 1967, fashioned these shoes and ones for other top athletes.
Southeast Asia was another important market for ASICS, providing revenues of ¥200 million in 2001. The company aimed to more than double that figure by 2008 as it built three sales networks focusing on South Korea, greater China, and the rest of the region. Revenues were ¥128.9 billion ($969 million) in the fiscal year ended March 31, 2002. ASICS and its subsidiaries supplied outerwear for Japanese, Dutch, and Italian teams at the 2002 Winter Olympics in Salt Lake City.
The trend toward retro-styled sneakers led to some legal battles for ASICS. It sued discount retailers Target and Fred's and shoemakers Reebok and Harkham Industries, for allegedly infringing upon its trademark stripe design.
ASICS Tiger recalled a number of vintage designs from 1966 to 1983 for its Onitsuka Tiger line-up for spring 2004, as well as a retro-inspired line called SportStyle. ASICS Corporation was projected to have sales of ¥73.5 billion ($622.3 million) for the fiscal year ending March 31, 2004, with net income of ¥1.4 billion.
Principal Subsidiaries: ASICS Europe B.V. (The Netherlands); ASICS Sports Corporation (South Korea); ASICS Tiger Corporation (U.S.A.); ASICS Tiger do Brasil Ltda. (Brazil); ASICS Tiger Oceana Pty. (Australia).
Principal Competitors: Adidas-Salomon AG; Mizuno Corporation; New Balance Athletic Shoe Inc.; Nike, Inc.; Reebok International Ltd.; Saucony Inc.