Case Study: Quiksilver

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Quiksilver, Inc. Case Study

Brief Company Description

Founded in 1976, Quiksilver, Inc. (hereinafter alternatively "the company") is headquartered Huntington Beach, California and competes in the global surf- and sports-apparel and accessories industries. The company initially catered to an exclusive market of surfing enthusiasts by providing innovative utilitarian product designs. For example, the company's promotional literature states that, "When Quiksilver boardshorts arrived on the market in 1970, they were the first to use two snaps and a Velcro closure to ensure they stayed on in the heaviest conditions; the first to utilize a yoked waist and scallop legs to maximize comfort and ease of movement; the first to use durable, quick-drying cotton" (About Us 2012, p. 1). Drawing on the success of its initial offerings, the company integrated bold design and colors into its surf-themed product lines and experienced a positive response from its targeted market to the extent that its economic success allowed it to go public in just a few years. For instance, the company's Web site reports that, "In 1986, Quiksilver's initial public offering and subsequent listing on the NASDAQ exchange provided funds for growth more than a decade before the other companies had even thought about it. In 1998 Quiksilver's move up to the New York Stock Exchange underlined its ambitious approach to business in the new century" (About Us 2012, p. 3). Likewise, the company modeled the way for others in the surf-theme industry when they launched the first Quiksilver Boardriders Club in 1992 in Waikiki (Quiksilver Profile 2012). According to the company's corporate profile, "Quiksilver led the way into branded concept stores, a new way of retailing that has impacted the entire industry. With 500 stores worldwide in 2006, Quiksilver still leads the way" (Quiksilver Profile 2012, p. 2).

Today, the Quiksilver brand is featured on shirts, walkshorts, T-shirts, fleece, pants, jackets, snowboard wear, footwear, hats, backpacks, wetsuits, watches, eyewear, and other accessories to men, women, boys, girls, toddlers, and infants and the company designs, develops, produces, and distributes apparel, footwear, accessories, and related products (Quiksilver Profile 2012). Beyond the foregoing, the company also products various branded lines including the following:

1. Under its brand, Roxy, the company provides sportswear, swimwear, footwear, backpacks, snowboard wear, snowboards, bedroom furnishings, and other accessories for girls, toddlers, and infants;

2. Under the brand DC, the company produces skateboard shoes, snowboard boots, sandals, and apparel for young men and juniors;

3. Under the brands Hawk, Lib Technologies, and Gnu, the company provides skateboard products, and snowboards and accessories (Quiksilver Profile 2012).

At present, Quiksilver markets its product lines in more than 90 countries throughout the Americas, Europe, and the Asia/Pacific, through a network of surf shops, skateboard shops, snowboard shops, select department stores, independent specialty or active lifestyle stores, and specialty chains, as well as through its 770 owned or licensed company stores (Quiksilver Profile 2012). The company's stock performance for the past 22 years compared to its major competitors is presented in Figure 1 below.

Figure 1. Common stock performance of Quiksilver, Inc. versus Nike and Adidas: 1990 to date

Key:

ZQK

Quiksilver, Inc.

NKE

Nike

ADDYY.PK

Adidas

Source: Yahoo! Finance at http://finance.yahoo.com/

Although the company's stock performance compared to its competitors appears bad, the company's fiscal performance has not been completely dismal and there have been some bright spots as various marketing initiatives have had their effect. Nevertheless, one market analyst reports that, "An ideal company will be consistently strong in its earnings and cash-flow generation. In the past five years, Quiksilver's net income margin has ranged from -18% to -0.2%. In that same time frame, unlevered free cash flow margin has ranged from -3.4% to 13.4%" (Chokkavelu 2012).

2.

Business Environment

Because the company competes in more than 90 countries, including all of the existing major economic powerhouses as well as emerging economies, especially in its Asia/Pacific region where surf- and sports-minded enthusiasts abound, the general business environment in which Quiksilver competes differs widely, but can reasonably be expected to be tied to downturns in the global economy. This assertion is supported in part by the precipitous decline in the company's performance during the Great Recession of 2008 as shown in Figure 1 above. The fact that Quiksilver's primary competitors in Nike and Adidas also experienced similar declines is also illustrative of this effect, but it is also readily apparent that Nike and Adidas have shrugged off the effects of this economic downturn to emerge stronger than ever while Quiksilver is struggling to remain competitive despite the historic effectiveness of its international business strategy and organization which are discussed further below.

3.

International Business Strategy and Organization

In the past, the company's marketing team has been effective in keeping up with changing consumer tastes and preferences in its increasingly globalized market. Although the company has increased its product lines and other offerings, its basic international business strategy has been to highlight the authenticity of the Quiksilver brand and the company's long history of innovation and contributions to the surf- and sportswear industry. Some authorities suggest that this is highly effective business strategy for companies seeking to grow their international markets in the sporting goods market in general and the surf wear industry in particular. For instance, Jackson and Andrews (2004) report that, "The search for history, patrimony, and authenticity is a strategy to compete within the sporting goods market. Market standardization is a problem for brand identity; affirming authenticity is both a response to the demand and a way to dominate new competitors in the market and to set off the sporting goods market" (p. 253). In fact, this specific international business strategy has been used by both of Quiksilver's primary competitors, Adidas and Nike, to highlight the authenticity and lengthy history of their brands. For example, a 1998 marketing initiative produced by Adidas is representative of this type of strategy wherein the advertisement states: "Do you remember your studs? In 1954 we created the first 'screw-on studs, ' then, everybody else did too. Today, we have created Traxion & #8230; Soon, everybody else will do the same" (quoted in Jackson & Andrews 2004, p. 253).

While smaller companies such as Quiksilver may not enjoy the same research and development resources as their larger counterparts in Adidas and Nike, it is apparent that the prediction that "soon everybody else will do the same" is applicable to this marketing strategy. Indeed, Jackson emphasizes that, "Reference to history through advertising is a marketing strategy to challenge Nike and other brands. The strategy of staging history may also be observed in smaller markets like the surf-wear market. Harry Hodge, Quiksilver and Na Pali co-founder, argues that 'what makes us different from other brands is our long history in sport and in surf & #8230; many brands in this sector don't have the heritage and the authenticity of Quiksilver'" (quoted in Jackson & Andrews 2004, p. 253).

This international business strategy is also reflected in the company's promotional literature maintained in its "About Us" page where the point is made that by purchasing Quiksilver products, consumers receive far more than just a high-quality brand -- they buy into a lifestyle: "Quiksilver's fist themed offering, Quiksilver Country 1978, offered retailers and customers a complete package for the first time. The soulful prints and panels of the garments were reflected in the advertising and in-store displays. All told a story about a place of perfect waves, a place where surfers wanted to be. Echo Beach and Warpaint carried the themed approach through the 1980s and into the '90s, identifying Quiksilver as a lifestyle, not just a brand" (About Us 2012, p. 2).

By drawing on this attribute, the company has parlayed its "where surfers wanted to be" theme into a cross-cultural marketing approach that relies on a lifestyle rather than a specific country to attract and retain customers. For instance, the company's Asia/Pacific segment includes revenues generated mostly from Australia, Japan, New Zealand and Indonesia. To date, the company has positioned their branded-content product lines for their target markets in these different countries by using mainstream popular media that features their various brands, depending on the movie theme. For example, Quiksilver teamed up with Australian surfing champion Stacey Peralta and skateboarding pros to create the movies, 'Riding Giants,' 'Dogtown' and 'Z-Boys' which enjoyed popular reception among the company's target market in the international big-wave surfing market throughout the Asia/Pacific region (Kirby & Marsden 2006). Likewise, Kadner (2010) reports that, "Wyoming production house Brain Farm, which specializes in high-end action-sports cinematography, recently used the Phantom HD camera for an ad campaign for surfwear and boardsports manufacturer Quiksilver that featured a number of world-famous surfers catching waves in ultra-slow motion" (p. 12). The company's international business strategy also draws on its historic celebration of female surfers such as Stephanie Gilmore who has been signed to a contract with Quiksilver through 2015, as well as 10-time men's world surfing champion, Kelly Slater, thereby creating a "surfing superpower" with "two of surfing's most supreme beings, two… [END OF PREVIEW]

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