Marketing Matters is a blog that tells marketing stories from an industry, academic and student's perspective. We confront and debate today’s business trends. Views expressed by the blogs do not necessarily reflect the views of the University of Sydney Business School.
Thursday, 13 September 2012
Billabong – Where Marketing Really Does Matter
When Launa Inman took over as CEO of Billabong in May 2012,
she knew she had a huge challenge ahead of her to turn around the company.Launa
recently announced a $275.6 million loss at Billabong, which means she has a
daunting task of turning around the fortunes of the company.However, her previous experience at Target
and Officeworks, along with her passion for marketing is likely to stand her in
Billabong is an iconic Australian brand, closely associated
with surf, sun and fun – all great ingredients for an Aussie marketing success.
But along the way, Billabong lost itsdirection – especially in terms of its customer strategy, knowing who are
its loyal customers and exactly what they want in terms of athletic products.
The previous CEO of Billabong, Derek O’Neill, made a fatal mistake
that is common in companies faced with a financial crisis.He cut the marketing budget and pulled back from
investing in the Billabong brand.Instead of seeing the company recover from flagging sales, O’Neill
steered the company down a path of further self destruction.The company closed numerous stores and sold
off inventory at reduced prices, but did little to develop its presence in key
markets.Then, a major American
customer, PacSun,began manufacturing
its own house brand, providing strong competition to Billabong and further
reducing sales in the US.
Marketing lies at the heart of Launa Inman’s turnaround
strategy.Interestingly, the Billabong
brand has high awareness globally, but until now, this asset has not translated
into sales.For example, in Australia,
brand awareness is 86% of the population, yet only 46% have actually bought the
Billabong label.Globally, this
difference is similar and Inman recognizes the high brand awareness means there
is a huge opportunity for the Billabong brand.
Despite the strength of the brand, Billabong struggles to
differentiate itself in the marketplace from some of its competitors, including
its rival Quicksilver. For both brands,
their core customers are sports enthusiasts.Yet neither brand has established a strong identity of its own.One of Inman’s first tasks will be to set out
a strategy that positions the Billabong brand in an uncluttered space within
the sportswear market.
Billabong customers are passionate about the surf,
snowboarding or skating.However, there
is a significant customer segment who share in Billabong’s brand values of a
healthy and active lifestyle, but do not actually participate in sports.This group offers huge potential for
Billabong, but the company must work hard to make the brand more attractive.This is true, especially within its retail
spaces.The cluttered merchandising in
Billabong stores needs to change to reflect the brand image ofnew and exciting lifestyles.Inman has set out plans to tackle the retail
experience and adopt a fresher, contemporary look.
Tracking if Inman’s strategy changes the fortunes of
Billabong will make an interesting marketing study.If you were in Launa Inman’s role as CEO of Billabong, what would you do
to turn around the company?