Hoka: A Challenger Brand’s Quest for Excellence in the Sports Shoe Industry

Case Code: BSTR679 Case Length: 12 Pages Period: 2023 Pub Date: 2024 Teaching Note: Available

Price: Rs.400 Organization : Deckers Outdoor Corp Industry : Countries : United States Themes: Innovation, Brand Differentiation, Competitive Strategy,Marketing Strategy

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Continuous Innovation

One of the first challenges Mermoud and Diard came up against was creating thick and soft foam which would be lightweight at the same time. They finally decided to approach a chemist working for a Chinese shoe manufacturer. The chemist used ethylene vinyl acetate which was found in most shoes, and other proprietary chemicals and applied different baking methods until he finally came up with a material that Mermoud and Nicolas could use to fashion a sole that had 29 millimeters of cushioning and a 19 millimeter boost compared to the traditional shoes available in the market..

Collaboration with Athletes

Hoka followed Nike’s strategy of collaborating with several athletes which had given the latter huge recognition and increased sales for the company. In 2010, Mermoud approached American ultrarunner Karl Meltzer (Meltzer) to try out a pair of Hoka running shoes he had designed with Diard. The shoes looked bizarre – wider, softer, and thicker than most running shoes and Meltzer was skeptical about trying them. However, he did wear them and run across the Sandy, Utah neighbourhood, and was left very impressed with the shoes..

Increasing Brand Visibility

Deckers undertook an aggressive marketing strategy of sponsoring athletes and events, which gave the Hoka brand huge visibility. At the 2021 Ultra-Trail du Mont-Blanc (UTMB), a trail running event which followed the route of Tour du Mont Blanc , the majority of the players were training in Hoka shoes. The sponsorship with UTMB gave Hoka visibility as well as credibility in the running community, according to Deckers..

Competition

The global athletic footwear and apparel industry was highly competitive with brands such as Nike and Adidas dominating the market (See Exhibit V for market share and revenues of players in global athletic footwear and apparel market). Other brands such as Hoka, On, American athletic footwear and apparel company Saucony, and Boston-based sportswear and apparel manufacturer New Balance Athletics Inc. (New Balance) were also garnering attention among consumers by developing innovative designs..

Looking Ahead

Hoka’s success, attributed to its maximalist design and unconventional aesthetics, led to several companies coming out with counterfeits. Deckers in its 2023 annual report admitted that the company faced the challenge of counterfeit products of its Ugg and Hoka brand of shoes being sold in the market. It stated that such products could reduce the company’ sales and have a negative impact on the value of its brands. The company said it was investigating several manufacturers and distributors which were launching counterfeits of Ugg and Hoka shoes..

Exhibits

Exhibit I: Footwear News’ List of Top Selling Running Brands (2019)
Exhibit II: Esquire’s List of the Best Running Shoes for Men (2020)
Exhibit III: Net Sales of Deckers by Brand
Exhibit IV: Fast Company’s World’s Most Innovative Companies (2023)
Exhibit V: Market Share and Revenues of Players in Global Athletic Footwear and Apparel Market (2022)

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