How Can New Balance Grow From Cold To Explosive In 3 Years?

From any point of view, the popularity of New Balance seems to be logical.

In the past two years, the heroes and heroines of the popular Korean dramas such as "beautiful you", "secret garden" and "stars from you" will wear a pair of New Balance shoes, which is undoubtedly a natural market catalyst for a consumer brand.

In addition, New Balance also caught up with China's running trend.

In the Baidu index, jogging was searched. The number of searches per day was 496 from the highest in 2011 to 1330 in 2014, nearly 3 times that of the former.

"Experience abroad shows that when GDP per capita exceeds 15 thousand dollars, jogging will become popular.

The speed of Internet development in China will only advance this development.

New Balance, general manager of China Zhang Hongwen said.

Jogging is the label of "American president shoes".

The most direct evidence is still sales.

From 2012 to 2014, the annual sales volume of the US brand in mainland China reached 3 digits, and the number of stores in China increased from 301 in 2011 to more than 1600 in 2014.

Moreover, the above performance is achieved in the low market situation.

According to statistics from Euromonitor, China's sports product market in 2012 was 139 billion yuan, down 2% from 141 billion 700 million yuan in 2011, and the total market volume in 2013 only recovered to 14 billion yuan.

If you do not know the New Balance two years ago, this achievement is nothing unusual.

But in fact, New Balance in 2011 is "hot potato" in China.

In the first half of this year, Zhang Hongwen, who was resting in Taiwan, received a call from a headhunter to ask if he was interested in serving as general manager of New Balance China.

Zhang worked in Nike, and he knew very well about the situation of New Balance in China at that time. "Sales of stores are not up to rent, and no dealer is willing to sell this brand because they can't earn money."

This is an open secret in the industry.

After the trademark dispute in 1990s, New Balance returned to mainland China through proxy system in 2003, and established its own business.

However, due to the long product line, lack of emphasis on marketing and the scale of the dealer system, its performance in the Chinese mainland market is not satisfactory.

Zhang Hongwen finally accepted the opportunity: "New Balance is an undervalued brand in China, and I see an interesting challenge."

Similar to a kind of "bottom up" thinking, saving a bottomed brand has a sense of accomplishment.

But the key is where to start. At that time, New Balance was already full of problems.

Zhang Hongwen still remembered the time when he was in office. Because of the confusion of the internal process, even the dealer's orders could not be input into the system, and the corresponding products could not be found in the warehouse.

It can be said that the brand is "totally messed up" from commodity mix to internal operation and even to organizational design.

New Balance, which is out of balance, needs to start from scratch.

That period was also the most difficult day for Zhang Hongwen and his team. They worked for more than 10 hours a day.

"It didn't take 2 years, but it took 5 years to catch up."

Zhang Hongwen said to the first financial weekly.

After taking office in July 2011, the first thing Zhang Hongwen did was to go around the country.

In the meantime, Zhang carefully calculated the area of New Balance's 301 stores, including warehouses, with an average area of only 63 square meters, while Nike's flagship experience store in Huaihailu Road, Shanghai, had 3700 square meters.

It is in the area of 63 square meters that New Balance will display a series of products such as running, fitness, tennis, training and so on. Too many information can not leave a clear impression of New Balance brand to consumers, so the marketing resources are also diluted.

Zhang Hongwen decided to cut down the products of 2/3 sold by New Balance.

In the remaining products, he has established the "3+1" product strategy developed by New Balance in China: jogging shoes series, antique leisure jogging series, Anglo American production series and children's shoes, and all marketing and store resources are all concentrated on these 3 product lines for promotion.

This strategy is called "centralization".

"First, I believe in Less is more.

Second, 3 years ago, our marketing budget for the whole year may not be as long as some brands spent a day, so we can't flood everywhere. "Zhang Hongwen said," we need to produce the strongest products and concentrate on the consumers.

The first year concentrates on one or two, then slowly expands. "

In 2011, Zhang Hongwen chose the main theme of the retro jogging series.

At that time, he chose to play the main role of the retro leisure jogging series. Zhang Hongwen mainly used the past retail experience to judge.

"The trend of sports shoes is very much related to the mainstream clothing of young people in the second half of the season."

Zhang Hongwen said.

The hip hop style was popular in 2000, and the big trouser leg was the trend. It matched the shoes with a rather heavy appearance.

The popularity of straight jeans became popular in 2002, which made CONVERSE (Converse) shoes sell well.

In 2009, with the full spread of fast fashion brand ZARA and UNIQLO in China, the small trouser legs became a new scenic spot on the street, while the New Balance retro leisure series with comfortable elements was the first choice.

Zhang also used this theory to convince colleagues in the US headquarters: "Chinese consumers need a big brand.

The fabric is better and the vamp is simple. New Balance's Retro leisure series has all these characteristics.

However, when Zhang Hongwen introduced the product pformation plan to the channel level, he encountered great resistance. Dealers were "very resistant".

At that time, the distribution system of New Balance was small and dispersed, and many dealers had only one or two stores.

It is time-consuming and exhausting to persuade all families and families.

It is imperative to integrate distributors' work.

"If a distributor opens only one or two stores, he has no financial support to invest in brand operation in the background."

Zhang Hongwen said.

Referring to a series of data, Zhang Hongwen divided China's cities into 22 urban clusters and 28 key cities, and unified resources in these key cities.

Only one dealer can be trained in each region to help them grow larger and form a single dealer system.

The advantage of this system is that dealers do not need to worry about vicious competition between them, and can concentrate on business.

"Through the adjustment of financial algorithm and commodity mix, we can figure out how much resources each dealer needs to invest and generate reasonable profits."

Zhang Hongwen told the first financial weekly that when the size and capability of the key distributors increased, the lower dealers would be developed - similar to the "irrigation" theory in agriculture, the pipes should be connected before planting, and then the pipes should be gradually extended to expand the scale of the area.

In the process of integration, there are bound to be some small dealers being merged.

"No one is willing to give up his own interests," Zhang, a sales person, has long anticipated this situation. "In the general direction, we must stick to our principles, but we must ensure that dealers have their own reasonable profits."

Several channel carding continued until 2012.

At present, New Balance has 4 general agents and 26 provincial distributors in mainland China, with 70 distributors on average.

Outside the small water pipes also began to dredge, the channel sank to the two or three line city, opened 5 stores in Lhasa.

The company hopes to set up a certain size store in each area and build a stronger backstage.

In order to activate a potential brand and rationalize the distribution system is only a basic job, New Balance's operation system in China needs to be rebuilt.

The starting point of this reform is product configuration.

In the early 2012, Wang Jianzhi, product director of New Balance, usually had to manage the 6 to 8 season portfolio.

He discussed the color and fabric of his products 16 to 18 months in advance of each quarter. He needed to consider the theme of the seasonal products and estimate the quantity of each SKU according to the overall size.

This job requires precise data and judgement of popular perception.

In 2013, New Balance launched its 574 travel series theme shoe for the first time.

On the basis of bright blue and bright orange that has been selling well before, Wang Jianzhi boldly introduced bright green.

This is not a very popular color.

But in the final statistics of sales, the shoes were sold out, both men and women liked it.

"In fact, consumers' acceptance of colors is higher and bolder than we think. This is also the most special place for Chinese consumers."

Wang Jianzhi said.

His original intention is only to consider the relevance of summer to green.

For every season's product, Wang Jianzhi will discuss topics with his colleagues.

In addition to the 574 traveller series that was launched in 2013, this year New Balance pushed the 580 Street series, adding more street elements to product design and collocation.

In the next two quarters, neon series and detective series will be launched to enhance product storytelling.

The launch of the joint name is also an important attempt at the shoe brand.

"Joint funds will help us bring out some stories and guide the direction of the product."

Wang Jianzhi said.

For example, to talk about a camouflage style in a particular season, New Balance will cooperate with some fashion shops in addition to the products to be sold during the season, so that they can bring out a story related to camouflage to enhance consumers' impression of products.

From 12 to 16 months after the product was put on shelves, New Balance's sample has just been completed. Wang Jianzhi's team needs to communicate with headquarters again to see if the product mix needs to be adjusted and whether there are special needs in China.

The first 1 years before the new product was launched, the marketing department began to discuss the specific marketing promotion plan for the product.

After the marketing plan is confirmed, the New Balance will hold an order meeting with the supplier 8 months before the product is launched.

After Zhang Hongwen took office, he extended the order period of dealers from 6 months in advance to 8 months in advance. This is the adjustment made for the implementation of the "demand driven prediction mode".

The sales and product teams of New Balance will recommend the dealer's next product mix and order volume for each store in the next 18 months based on market consultation, number of stores, number of shops in the future, and year-on-year growth in the forecast.

"The general mode is Push mode, which is based on performance.

Our way is not to buy more.

Inventory is the engine that pushes retail sales, but the wrong inventory is poison, "Zhang Hongwen said." this can focus our attention on the market operation.

The real profit is not based on rebate, but by daily store operation and reasonable sales mix.

At present, New Balance's "demand driven prediction model" has been launched to provincial agents, and is expected to be launched in the second tier and three tier cities in 2015.

In fact, other sports brands are also running.