Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Toms shoes in 2016 an ongoing dedication to social responsibility

01/01/2021 Client: saad24vbs Deadline: 2 Day

CASE 12


TOMS Shoes in 2016: An Ongoing Dedication to Social Responsibility

Margaret A. Peteraf Tuck School of Business at Dartmouth


Sean Zhang and Meghan L. Cooney Research Assistants, Dartmouth College


While traveling in Argentina in 2006, Blake Mycoskie witnessed the hardships that children without shoes experienced and became committed to making a difference. Rather than focusing on charity work, Mycoskie sought to build an organization capable of sustainable, repeated giving, where children would be guaranteed shoes throughout their childhood. He established Shoes for a Better Tomorrow, better known as TOMS, as a for-profit company based on the premise of the “One for One” Pledge. For every pair of shoes TOMS sold, TOMS would donate a pair to a child in need. By mid-2016, TOMS had given way over 50 million pairs of shoes in over 70 different countries. 1


As a relatively new and privately held company, TOMS experienced consistent and rapid growth despite the global recession that began in 2009. By 2015, TOMS had matured into an organization with nearly 500 employees and almost $400 million in revenues. TOMS shoes could be found in several major retail stores such as Nordstrom, Bloomingdale’s, and Urban Outfitters. In addition to providing shoes for underprivileged children, TOMS also expanded its mission to include restoring vision to those with curable sight-related illnesses by developing a new line of eyewear products. For an overview of how quickly TOMS expanded in its first seven years of business, see Exhibit 1 . 2


2015


2014


2013


2012


2011


2010


2009


2008


2007


2006


Total Employees


470


450


400


320


250


72


46


33


19


4


Thousands of Pairs of Shoes Sold


25,000


10,000


7,250


2,700


1,300


1,000


230


110


50


10


EXHIBIT 1


TOMS’ Growth in Employees and Sales, 2006–2015


Source: PrivCo, Private Company Financial Report, “TOMS Shoes, Inc.,” created April 18, 2016.


Company Background

While attending Southern Methodist University, Blake Mycoskie founded the first of his six startups, a laundry service company that encompassed seven colleges and staffed over 40 employees. Four startups and a short stint on The Amazing Race later, Mycoskie found himself vacationing in Argentina where he not only learned about the alpargata shoe originally used by local peasants in the 14th century, but also witnessed the extreme poverty in rural Argentina.


Determined to make a difference, Mycoskie believed that providing shoes could more directly impact the children in these rural communities than delivering medicine or food. Aside from protecting children’s feet from infections, parasites, and diseases, shoes were often required for a complete school uniform. In addition, research had shown that shoes were found to significantly increase children’s self-confidence, help them develop into more active community members, and lead them to stay in school. Thus, by ensuring access to shoes, Mycoskie could effectively increase children’s access to education and foster community activism, raising the overall standard of living for people living in poor Argentinian rural areas.


Dedicated to his mission, Mycoskie purchased 250 pairs of alpargatas and returned home to Los Angeles, where he subsequently founded TOMS Shoes. He built the company on the promise of “One for One,” donating a pair of shoes for every pair sold. With an initial investment of $300,000, Mycoskie’s business concept of social entrepreneurship was simple: sell both the shoe and the story behind it. Building on a simple slogan that effectively communicated his goal, Mycoskie championed his personal experiences passionately and established deep and lasting relationships with customers.


Operating from his apartment with three interns he found on Craigslist, Mycoskie quickly sold out his initial inventory and expanded considerably, selling 10,000 pairs of shoes by the end of his first year. With family and friends, Mycoskie ventured back to Argentina, where they hand-delivered 10,000 pairs of shoes to children in need. Because he followed through on his mission statement, Mycoskie was able to subsequently attract investors to support his unique business model and expand his venture significantly.


When TOMS was founded, TOMS operated as the for-profit financial arm while a separate entity titled “Friends of TOMS” focused on charity work and giving. After 2011, operations at Friends of TOMS were absorbed into TOMS’s own operations as TOMS itself matured. In Friends of TOMS’s latest accessible 2011 501(c)(3) filing, assets were reported at less than $130,000. 3 Moreover, as of May 2013, the Friends of TOMS website was discontinued while TOMS also ceased advertising its partnership with Friends of TOMS in marketing campaigns and on its corporate website. The developments suggested that Friends of TOMS became a defunct entity as TOMS incorporated all of its operations under the overarching TOMS brand.


Industry Background

Even though Mycoskie’s vision for his company was a unique one, vying for a position in global footwear manufacturing was a risky and difficult venture. The industry was both stable and mature—one in which large and small companies competed on the basis of price, quality, and service. Competitive pressures came from foreign as well as domestic companies and new entrants needed to fight for access to downstream retailers.


Further, the cost of supplies was forecast to increase between 2013 and 2020. Materials and wages constituted over 70 percent of industry costs—clearly a sizable concern for competitors. Supply purchases included leather, rubber, plastic compounds, foam, nylon, canvas, laces, and so on. While the price of leather rose steadily each year, the price of rubber also began to climb at an average annual rate of 7.6 percent. Wages were expected to increase at a rate of 5.8 percent over a five-year period due to growing awareness of how manufacturers took advantage of cheap, outsourced labor. 4


In order to thrive in the footwear manufacturing industry, firms needed to differentiate their products in a meaningful way. Selling good-quality products at a reasonable price was rarely enough; they needed to target a niche market that desired a certain image. Product innovation and advertising campaigns therefore became the most successful competitive weapons. For example, Clarks adopted a sophisticated design, appealing to a wealthier, more mature customer base. Nike, adidas, and Skechers developed athletic footwear and aggressively marketed their brands to reflect that image. Achieving economies of scale, increasing technical efficiency, and developing a cost-effective distribution system were also essential elements for success.


Despite the presence of established incumbents, global footwear manufacturing was an attractive industry to potential entrants based on the prediction of increased demand and therefore sales revenue. Moreover, the industry offered incumbents one of the highest profit margins in the fashion industry. But because competitors were likely to open new locations and expand their brands in order to discourage competition, new companies’ only option was to attempt to undercut them on cost. Acquiring capital equipment and machinery to manufacture footwear on a large scale was expensive. Moreover, potential entrants also needed to launch costly large-scale marketing campaigns to promote brand awareness. Thus, successful incumbents were traditionally able to maintain an overwhelming portion of the market.


Building the TOMS Brand

Due to its humble beginnings, TOMS struggled to gain a foothold in the footwear industry. While companies like Nike had utilized high-profile athletes like Michael Jordan and Tiger Woods to establish brand recognition, TOMS had relatively limited financial resources and tried to appeal to a more socially conscious consumer. Luckily, potential buyers enjoyed a rise in disposable income over time as the economy recovered from the recession. As a result, demand for high-quality footwear increased for affluent shoppers, accompanied by a desire to act (and be seen acting) charitably and responsibly.


While walking through the airport one day, Mycoskie encountered a girl wearing TOMS shoes. Mycoskie recounts:


· I asked her about her shoes, and she went on to tell me this amazing story about TOMS and the model that it uses and my personal story. I realized the importance of having a story today is what really separates companies. People don’t just wear our shoes, they tell our story. That’s one of my favorite lessons that I learned early on.


Moving forward, TOMS focused more on selling the story behind the shoe rather than product features or celebrity endorsements. Moreover, rather than relying primarily on mainstream advertising, TOMS emphasized a grassroots approach using social media and word of mouth. With over 3.5 million Facebook “likes” and over 2 million Twitter “followers” in 2016, TOMS’s social media presence eclipsed that of its much larger rivals, Skechers and Clarks. Based on 2016 data, TOMS had fewer “followers” than Nike, and fewer “likes” than both Nike and adidas. However, TOMS had more “followers” and “likes” per dollar of revenue. So when taking company size into account, TOMS also had a greater media presence than the industry’s leading competitors (see Exhibit 2 for more information).


2015 Revenue (Mil. of $)


Facebook “Likes”


“Likes” per Mil. of $ in Revenue


Twitter “Followers”


“Followers” per Mil. of $ in Revenue


TOMS


$ 390


3,522,891


9,033


2,170,000


5,564


Clarks


2,123


1,634,803


770


42,300


20


Skechers


3,150


1,921,582


610


32,700


10


adidas


 16,920


23,362,006


1,380


2,650,000


157


Nike


30,700


24,020,024


782


4,070,000


133


EXHIBIT 2


TOMS USE OF SOCIAL MEDIA COMPARED TO SELECTED FOOTWEAR COMPETITORS


TOMS’s success with social media advertising can be attributed to the story crafted and championed by Mycoskie. Industry incumbents generally dedicated a substantial portion of revenue and effort to advertising since they were simply selling a product. TOMS, on the other hand, used its mission to ask customers to buy into a cause, limiting their need to devote resources to brand-building. TOMS lets its charitable work and social media presence generate interest for the company organically. This strategy also increased the likelihood that consumers would place repeat purchases and share the story behind their purchases with family and friends. TOMS’s customers took pride in supporting a grassroots cause instead of a luxury footwear supplier and encouraged others to share in the rewarding act.


A Business Model Dedicated to Socially Responsible Behavior

Traditionally, the content of advertisements for many large apparel companies focused on the attractive aspects of the featured products. TOMS’s advertising, on the other hand, showcased its charitable contributions and the story of its founder Blake Mycoskie. While the CEOs of Nike, adidas, and Clarks rarely appeared in their companies’ advertisements, TOMS ran as many ads with its founder as it did without him, emphasizing the inseparability of the TOMS’s product from Mycoskie’s story. In all of his appearances, Mycoskie was dressed in casual and friendly attire so that customers could easily relate to him and his mission. This advertising method conveyed a small-company feel and encouraged consumers to connect personally with the TOMS brand. It also worked to increase buyer patronage through differentiating the TOMS product from others. Consumers were convinced that every time they purchased a pair of TOMS, they became instruments of the company’s charitable work. Representative advertisements for TOMS Shoes are presented in Exhibit 3


An image of a Toms advertisement Instead of appealing to consumers desire for stylish footwear, TOMS advertisement instead addresses the consumer’s sense of social consciousness by encouraging people to not only provide shoes to a child in need, but to also vote.


Source: TOMS.


EXHIBIT 3


Representative Advertisements for TOMS Shoes Company


As a result (although statistical measures of repeating buying and total product satisfaction among TOMS’s customers were not publicly available), the volume of repeat purchases and buyer enthusiasm likely fueled TOMS’s success in a critical way. One reviewer commented, “This is my third pair of TOMS and I absolutely love them! . . . I can’t wait to buy more” 5 Another wrote, “Just got my 25th pair! Love the color! They . . . are my all-time favorite shoe for comfort, looks & durability. AND they are for a great cause!! Gotta go pick out my next pair.” 6


Virtually all consumer reports on TOMS shoes shared similar themes. Though not cheap, TOMS footwear was priced lower than rivals’ products, and customers overwhelmingly agreed that the value was worth the cost. Reviewers described TOMS as comfortable, true to size, lightweight, and versatile (“go with everything”). The shoes had “cute shapes and patterns” and were made of canvas and rubber that molded to customers’ feet with wear. Because TOMS products were appealing and trendy yet also basic and comfortable, they were immune to changing fashion trends and consistently attracted a variety of consumers.

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

University Coursework Help
Helping Hand
Top Essay Tutor
Writer Writer Name Offer Chat
University Coursework Help

ONLINE

University Coursework Help

Hi dear, I am ready to do your homework in a reasonable price.

$62 Chat With Writer
Helping Hand

ONLINE

Helping Hand

I am an Academic writer with 10 years of experience. As an Academic writer, my aim is to generate unique content without Plagiarism as per the client’s requirements.

$60 Chat With Writer
Top Essay Tutor

ONLINE

Top Essay Tutor

I have more than 12 years of experience in managing online classes, exams, and quizzes on different websites like; Connect, McGraw-Hill, and Blackboard. I always provide a guarantee to my clients for their grades.

$65 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Week 10 capstone care plan part 4 - Guide to the nqs - Freedom writers quotes marcus - May lee chai saving sourdi pdf - Monash computer science electives - Automotive servicing nc ii learning module - History exam part 3 - Job application - Market Plan - What is a theoretical orientation in counseling - Discovering the humanities online book - We ll never conquer space essay - Chicken wings parts names - Earl shilton social institute - Personal experience speech ideas - Sustainability management - Monash special development school - Part C: Your Marketing Plan - A debit memorandum on a bank statement indicates: - Energy skate park answer key - Order 2570279: Merger - Temperate deciduous forest average rainfall - What is 2 times x squared - Can someone help with a research paper about prison reform? - Research - All bakery products list - The knowers by helen phillips pdf - Qub ac uk qol - Sheffield city council funerals - Arcair k3000 parts breakdown - Discussion - 3 Subjects ... 2 Assignmens - Discussion DQ3 - Comfort height toilet wickes - Safety activity scenarios and questions - Sap me59n no suitable purchase requisitions found - Trevor noah stand up british colonization - Ph of common materials lab answers - English Comp 2 Week 4 - What happens if i fail a unit deakin - Four stages of appreciative inquiry - Is vinegar and baking soda exothermic or endothermic - Bhopal gas tragedy ethics - Locate a bad news message somewhere on the internet - Contemplative prayer thomas merton - Getting started with salesforce communities - 3917 alvarado st edinburg tx - Types of vessels ppt - Sace research project proposal examples - Fluorine electron dot diagram - "A" WORK PLAGIARISM FREE - Extreme switch console settings - Fundamentals of international business textbook pdf - Experiment 1 classification of bones - Buying Options - Rbt ethics scenarios - Www coca cola com application - Fronius solar web ip address - Biology - Managerial Accounting - 4 d's of abnormal behavior - Guess my number python code - According to geertz the core of religion is - Artie bucco hand gestures - 23a ferguson avenue myrtle bank - How to replace missing values in spss - University of ottawa political science - Introduction to java 11th edition pdf - Brother printer unable to print 4f - Versa lite burn brite - PBS video: Amazon Empire - Ex 6 1 determining gross profit - Why i live at the p o pdf - Rex c100 change to fahrenheit - Ikea ps 2014 corner easy chair with cushions - What is the genotype of individual ii-4 - Springfield nor easters case solution - Accounts terms and definitions - APA format and writing priorities - BUNS603 - Human Resources Managemen - Water rocket launcher designs - Z3x 29.5 loader failed to create process - Sc4730 environmental science - Core skills workout text evidence hl answers - Port of salalah employees self service - History of king lear - Dennis eagle euro 6 - Profit and loss statement powerpoint presentation - Articlee writing - Gre pipe curing blankets - We didn't start the fire meaning - Simulink pid temperature controller - Curtin oasis blackboard login - WEEK VI PTA - Criminal law irac example - Schroder equity opportunities fund - Phd in enterprise risk management - Acgih industrial ventilation course - Radiometric dating game