Question

Shoes Plus Information: A Winning Formula

Skechers USA, Inc., a $2-billion-a-ycar company, describes itself as "an award-winning global leader in the lifestyle footwear industry, [and] designs, develops and markets lifestyle footwear that appeals to men, women, and children of all ages.... With more than 3,000 styles, Skechers meets the needs of male and female consumers across every age and demographic " Any shoe company could say something similar. What separates one from another? Increasingly, it isn't the shoes. It's the information.

Information systems are woven into every part of Skechers's business. Its recent investment in Oracle applications, including cloud computing (introduced in the "Telecommunications, Networks, and the Internet" section of this chapter) demonstrates the company's commitment to information systems. Mark Bravo, Skechers senior vice president of finance, says, "As we manage growth, we are establishing a business structure that lowers costs and creates more value and flexibility across the business. The ... cloud services help us to lighten our lT overhead and enable us to respond more quickly to market opportunities." Therefore, it was natural that Skechers would turn to information systems to help with customer retention. In a fast-moving consumer product category like shoes, using information to understand, attract, and retain customers is even more important than having the latest technology. Many companies use loyalty programs to help retain customers. A pizza shop might give its customers a card that is punched every time they buy a pizza. When the card has 10 punches, the customer can order a free medium pizza with two toppings. Loyalty programs reduce the chances of a regular customer switching suppliers even if another shop sells pizza for less during a promotion or offers a different advantage. After Skechers decided to offer a loyalty program, their challenge was this: How to design the program for greatest

sales impact? The company had to balance ease of earning rewards, the value of the rewards, and other factors so they gave away as little as possible while retaining as many loyal customers as possible. In the pizza shop, a free pizza after buying five might cost too much revenue; a free pia after twenty might put the rewards too far out in the future to be attractive. Ten is a good middle ground. The loyalty program that Skechers designed, planned jointly by their marketing and information systems departments, is called Skechers Elite. Members earn free merchandise ($10 credit for every $150 spent), get free shipping, and enjoy special promotions. In addition, Gold members (who spend at least $750 on Skechers shoes in a calendar year) and Platinum members ($1,000) get higher merchandise credits, sneak peeks at future products, and earn other higher benefits. Skechers couldn't operate Skechers Elite without information systems. The system that supports this loyalty program records information about members, their purchases, and the rewards they're entitled to, so members can track their participation online. In addition, the system provides Skechers's management with information about the purchase patterns of regular customers, such as shoe designs that appeal to them. The system also lets Skechers send targeted promotional materials to its best customers. Does this use of information technology pay off? According to analyst Peter Chu, it does. He found on November 2, 2011, that Skechers (SKX) stock performance outpaced that of the other shoe manufacturers he tracked. He considers that performance "a bullish sign of underlying fundamental and technical strength

."

Discussion Questions 1. Which information systems applications described in the case are unique to Skechers and would not benefit other shoe manufacturers? Which aspects of their loy- alty program could other firms duplicate and quickly benefit from? Which would take competitors longer to use or offer?

2 What kind of information does the Skechers Elite pro- gram use? Aside from its direct benefit in increasing customer loyalty, what other benefits might the pro- ram have? How could Skechers use the information in its planning and sales activities?

Answer 1

Answer 1 :

(a) . In the case, the information that emphasises uniqueness of skechers  , The skechers concentrate more on information system for their bussiness growth . They also invested on oracle applications. Their main focus is to retain their loyal customers , by the offers thay are prividing customers will definetly choose to stick to them and will not switch to different product.

(b). In their loyality programs , the customers are getting benefitted from various timely rewards and free shippng on certain amount of puchase and also special promotion on for their Elite Members . They also included free offers on ceratin yearly puchases whichhelps in retaining their valuable customers in long run . Thse offers and rewards with certain changes techniques can easily be copied by competitors of skechers and quickly benefit from.

(c). The understanding of the skechers about their customers purchase , their patterned choices and their moods over yearly puchases are some of the points that best describes the high sales of skechers .

Designing a program for greater sales impact needs a company to balance ease of earnings rewards , the value of the rewards and other factors so they gave as liitle as possible along with retaing maximum customers as possible . This understanding between customer and supplier would take competitors longer for their success.

Answer 2 :

(a). The information that sketchers elite program use are :

1.Records the information about the members , their purchase , and rewards they are entitled to.

2. Members can also track their participation online .

In addition ,

1. The system provides skechers management with information about the purchase patterns of regular customers . 2. They also send target promotional materials to its best customers.

(b). The other benefits that skechers can have includes , the festive season offers on their products , they can also promote seasonal sales for a week .The seasonal sales for the elite members can also be extended that attracts more members to become their elite members , which will definetely increase the number of retaining customers on their products . Elite members can also ask their freinds and family to get enrolled with sketchers elite program because of the benefits they offer in long run.

(c). Skechers could use vasrious information of their customers in planning and sales activities by judging their patterns , their attractions towards the product , their attraction towards various offered promotions . These information is useful for skechers in planning as :

• Skechers will plan their offers on the days when customers are best available.
• they can increase or decrease offers in various seasonal timimgs .
• The attraction of customers towards a certain product .
• Offering more to Customers who are bringing more customers by sharing about skechers .

Thses can be some factors that will help in planning and sales activities for the best benefits to the customers as well as skechers.