1  

Executive Summary

Li-Ning is a well known Chinese athletic shoes and equipment brand. A famous Olympic

champion, Mr. Li Ning, founded it in 1990. Way of Wade, which was developed by Li-Ning and

one of the NBA’s superstar, Dwyane Tyrone Wade, Jr in 2012, is a series of high-performance

basketball shoes. The 4th generation of the series, WOW4 was released in October 28, 2015.

Nowadays, with huge competition from both domestic competitors and international competitors,

Li-Ning is suffering sales figure and market share in China. Li-Ning hasn’t focused too much on

the North American market, as the sales in China consists of 97% of Li-Ning’s total sales. There

are no retail channel of WOW4 sneakers in Canada; however, with Dwyane Wade’s international

popularity, we found it an opportunity to expand in Canada. We would have Foot Locker

carrying WOW4 shoes. Besides, with the new Li-Ning online store in Canada, people can buy

authentic Li-Ning shoes directly from online. In the short-term, WOW4 is going to accurately

implement its marketing plan, whereas in the long run, WOW4 wants to expand the business to

other big regions in Canada. In terms of financial estimation, the net income is negative for the

first operating year, which is expected due to various difficulties. However, we are quite

confident about keeping a six-figure increase of net income for both the second and third

operating year.

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Table of Contents

Introduction 3

Analysis of the Marketing Situation 4-12

CDSTEP Analysis 4-6

Competitor Analysis 6-8

Customer Analysis 8-9

Company Analysis 9-10

SWOT Analysis 11-12

Strategy and Recommendations 12-20

Marketing Strategy 12-19

Product 12-13

Price 13-14

Placement 14-16

Promotion 16-19

Financial Assessment and Budget 19-20

Implementation and Control 20-22

Action Plan 20-22

Contingency Plan 22

Exhibits 23-31

References 32-33

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Introduction

This report we made focus on how WOW4 would expand into the Canadian market. First of all,

the marketing situation is analyzed internally and externally. It includes the background,

competitors, and the company itself. Both potential advantages as well as disadvantages for

WOW4 in Canadian sneaker industry are presented. Moreover, further recommendations and

detailed strategy, which contains 4Ps and financial assessment, are given. Estimated figures are

explained. Last but not least, the report defines an action plan and contingency plan.

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Analysis of the Marketing Situation

Relevant factors and trends of the CDSTEP

Demographic environment

• The main focus of our sales and marketing efforts lies in the Great Toronto Area.

• According to the census conducted by Statistics Canada1, In 2011, the population of

Toronto census metropolitan area (CMA) was 5,583,064, representing a percentage

change of 9.2% from 2006. This compares to the national growth of 5.9% and to the

average growth among all CMAs of 7.4%.

• Also, according to the population by five-year age groups and sex chart, WOW 4 has a

large target market (15-24 years old) of 752,090 people, which is around13.47% of the

whole population. This presents a promising future for WOW4.

• Only 53.8% of GTA’s population classifies English as their mother tongue, with 17.8%

of GTA’s population classifies Chinese (Cantonese and Mandarin) as their mother

tongue. Although WOW4 will conduct most of the marketing efforts in English, having

knowledge of the variety of language usage in GTA will help WOW4 in website design

and overall approach.

Cultural & Social environment

                                                                                                               1  Census  metropolitan  area  of  Toronto,  Ontario    http://www12.statcan.gc.ca/census-­‐recensement/2011/as-­‐sa/fogs-­‐spg/Facts-­‐cma-­‐eng.cfm?Lang=Eng&GK=CMA&GC=535  

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• The roots of basketball are firmly embedded in Canada. In fact, in 1891 Dr. James

Naismith, a Canadian who hailed from Almonte, Ontario, invented the game2. The

Toronto Raptors and Vancouver Grizzlies joined the NBA beginning in the 1995-96

season, becoming the first non-U.S. cities to join the league.

• As per a research conducted by Solutions Research Group in 2006, basketball will be

the top sport in fan base growth (by 56%) in the next 10 years.

• According to Solutions Research Group analysis of Statistics Canada data3, Canada’s

visible minority population will grow by over 70% by 2017, while the rest of the

population will grow by a mere 3%.

• Overall, the leading sport among fast-growing visible minority groups is Basketball

(37%), followed closely by soccer (36%). Hockey is in the third position (22%)

followed by football (12%) and baseball (11%).

• Basketball is #1 among Black and Chinese Canadians, while soccer takes the top spot

among those of West Asian and Hispanic backgrounds. Hockey leads among South

Asian Canadians.

• This is important, as firstly, Greater Toronto Area is a highly diversified area, visible

minorities consist of a high portion of the whole population; and secondly, as a

Chinese brand, Li-Ning and WOW4, if being marketed properly, may be the first

choice of Chinese Canadians, as the brand itself is familiar and approachable.

                                                                                                               2  History  of  Basketball  in  Canada,  http://www.nba.com/canada/History_of_Basketball_in_Canad-­‐Canada_Generic_Article-­‐18023.html  3  https://en.wikipedia.org/wiki/Greater_Toronto_Area#Demographics  

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Economic Environment:

• Ontario generates 37% of Canada’s national GDP, and The Greater Toronto Area is a

commercial, distribution, financial and economic centre, being the third largest financial

centre in North America. The region as a whole generates about a fifth of the GDP of

Canada, and is home to 40% of Canada's business headquarters4.

Competitor Analysis (See Exhibit 1)

Direct competitor

Under Armour Curry 2 stands as WOW4’s major direct competitor. Curry 2 is the second

generation of Stephen Curry’s signature performance basketball shoes. Curry just won the NBA

championship and MVP last season. The prices are labelled at $129.99 in Champ’s Sport5 and

$159.99 in Footlocker6. As an international sports brand, UA is famous for its professional sports

wears and equipment at the early stage of brand expansion. With the glorious performance of

Stephen Curry during last NBA season, Curry 1 managed to gain a huge success in American

market.7 In other words, UA has a well-known brand reputation as one of the most professional

providers for sports equipment and its Curry 1 has already started penetrating the sneaker

market. In sum, Curry 2 has upper hand against WOW4 in terms of promotion. However, UA

has difficulty repositioning itself as a footwear powerhouse and convincing consumers that their

basketball shoes are as good as their tanks. On the other hand, Li-Ning positions WOW4 as a

                                                                                                               4  https://en.wikipedia.org/wiki/Greater_Toronto_Area#Demographics  5  http://www.champssports.com/Mens/Basketball/Shoes/_-­‐_/N-­‐24ZfmZrj  6  http://www.footlocker.ca/en-­‐CA/Mens/Under-­‐Armour/Shoes/_-­‐_/N-­‐24Z10qZrj  7  http://www.businessinsider.com/nike-­‐passed-­‐on-­‐stephen-­‐curry-­‐2015-­‐5  

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pair of elite basketball shoes since day one and has profound reputation in terms of making

sneakers.

Indirect competitor

Timberland boots have gained popularity for the past several decades. The classic design and

durable feature contribute to Timberland’s footwear icon, which is hard for any brand to

challenge. Considering the chilly winter in Canada, it is reasonable to assume that due to its

warm-keeping feature, Timberland has advantages over WOW4 during fall and winter. On the

other hand, the function of Timberland is quite rigid, which is set as working boots. In recent

years, the company attempts to reposition itself as a fashion brand8. However, the final influence

is still pending.

Likelihood of new competition

It is relatively easy for sports brand to enter athletic footwear industry. However, it is hard for a

company to sign famous athletes and build one signature line of basketball shoes. In sum, the

possibility that no name brand enters the competition is low; however, existing competitors are

expected to keep promoting new sneakers which result upcoming competition.

Intensity of competition

The sales of athletic shoes sum to $1.3 billion in 2013 across the country and have a rough 5%

increase per year9. According to the statistics from footlocker10 and champs11, there are 8

                                                                                                               8  http://www.elle.com/fashion/trend-­‐reports/news/g8418/timberlands-­‐fashion-­‐birkenstock/  9  https://www.npdgroup.ca/wps/portal/npd/ca/news/press-­‐releases/athletic-­‐shoe-­‐sales-­‐outpace-­‐growth-­‐of-­‐total-­‐footwear-­‐market-­‐in-­‐canada/  

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different lines of sneakers endorsed by famous basketball players and 3 major brands (Nike,

Adidas and UA) stand behind each of them. All in all, the competition level is moderate.

Competitive barriers that need to be overcome

The major barrier for WOW4 to overcome is brand awareness. With the increasing number of

Asian immigrants12, Li-Ning as well as WOW4’s brand awareness is promoting. However, effort

needs to be put on building WOW as an elite sneaker brand among local Canadians’ mind.

Potential competitive advantages

The high-end design and moderate price level are two selling points for WOW4. The sneaker

industry is dominated by the “swoosh” for decades. Younger generation is looking for

alternatives to better represent themselves. WOW4 is aimed to lead the trend.

Customer Analysis

Geographic

WOW4 will use Great Toronto Area and London as test places and will especially target in urban

areas. The main reason is that basketball is not as popular in Canada as that in the US, and in

comparison, GTA has the most active atmosphere for basketball since it has Toronto Raptors. If

it could success, Li Ning will then consider applying WOW4 in whole Canada.

Demographic

                                                                                                                                                                                                                                                                                                                                                                     10  http://www.footlocker.ca/en-­‐CA/Mens/Shoes/_-­‐_/N-­‐24Zrj  11  http://www.champssports.com/Mens/Basketball/Shoes/_-­‐_/N-­‐24ZfmZrj  12  https://web.archive.org/web/20141227134207/http://www.canadiana.ca/citm/specifique/asian_e.html  

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Based on a survey of people’s likeness of basketball sneakers13, the age of WOW4’s target

customers will range from 16 to 40, most of which are Generation Y. Some of them will be high

school, college or university students who love playing basketball and are supported by doing

part-time job. The others are amateur or professional basketball players who will use WOW4 as

their training shoes.

Psychological

One type of WOW4’s target customers is basketball lovers, or basketball sneaker lovers or

collectors. The other type of customer is sneaker critic who writes performance reviews of

basketball sneakers. Based on the prices, WOW4 mainly targets customers from middle class.

Behavioural

WOW4 will continue to focus on those loyal customers of previous Way of Wade collections.

What is more, since the majority of WOW’s target customers are students and younger

individuals, WOW4 is going to concentrate on the consumers who are seeking sneakers with

fashionable designs, high quality, and excellent customer services. (See Exhibit 2)

Company Analysis

Overview:

Li-Ning is a Chinese company, which makes athletic and sport equipment. Li Ning, a former

Chinese Olympic gymnast, founded the company in 1990. He is one of the most famous athletes

                                                                                                               13  http://fivethirtyeight.com/features/you-­‐see-­‐sneakers-­‐these-­‐guys-­‐see-­‐hundreds-­‐of-­‐millions-­‐in-­‐resale-­‐profit/  

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in China. Li Ning retired in 1988, and founded Li-Ning Company Limited in 1990, and Li Ning

has remained the chairman of the company's board of directors for 25 years.

Company Objectives:

Through sports, Li-Ning “inspires people the desire and power to make breakthroughs”. The core

values of Li-Ning is “Live for Dream, Integrity and Commitment, We Culture, Achieving

Excellence, Consumer Oriented, Breakthrough”

Marketing activities:

In order to be more adaptive for foreign customers, Li-Ning changed its logo in 2010 and opened

its U.S. headquarters in Portland. In 2006, Li-Ning signed a four-year deal with famous NBA

player O’Neal, which is the start of sponsoring NBA super stars. In September 2012, Li-Ning

signed into a partnership with NBA player Dwyane Wade, and then Li-Ning created a new series

of basketball shoes called “Way of Wade” (WOW). Then the company started to bring customer

new WOW every single year.

Company resources:

In the dynamic level, Li-Ning achieved huge success in China by sponsoring Chinese national

teams, such as China National Table Tennis Team, Shooting Team and Diving Team. In the

basketball area, Li-Ning sponsored all levels of Chinese basketball league, from high school

level to national level. Li-Ning also sponsored Spanish and Argentina national basketball team.

Both of these teams achieve good rank on Olympic basketball games.

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SWOT Analysis

Strength

Li-Ning has 25 years’ experience in designing and producing sports equipment. Comparing with

Nike Jordan, WOW is a new series of professional basketball shoes. Li-Ning devotes lots of

resources on this series of basketball shoes and changes design base on customers’ feedback.

Wade is a NBA super star who owns many honours in his career. On the other hand, Li-Ning

produces all levels of basketballs shoes and WOW is the representative of high end basketball

shoes.

Weakness

Li-Ning is a famous Chinese sports equipment producer, but not a well-known brand in North

American. Li-Ning enters North American market in 2010, during last 5 years, lacking of

distribution channel becomes a big problem to Li-Ning. Li-Ning has lost profit since 2008, the

main reasons are ineffective management, treats come from online shopping and increasing

labour cost.

Opportunity

GTA areas and London have better basketball culture than other areas of Canada. Large amount

of high school and university students live in this area. GTA and London is a big market for Li-

Ning, because people live in this area have higher income and better live style. Meanwhile,

Toronto raptors bring this area a lots of basketball fans.

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Threat

Although WOW is not plan to compete with Nike and Adidas, Nike and Adidas are still very

strong competitors to Li-Ning. Nike and Adidas own the most of the market shares. Also, LI-

Ning as a foreign company, it might faces more regulation from the province and federal

government. In Canada, weather is another big threat for Li-Ning; people usually play less

basketball during wintertime. (See Exhibit 3)

Marketing Strategy

Product

Way of Wade is a series of basketball shoes, which Li-Ning created in 2012. In general, Li-Ning

upgrades their shoes once per year14: WOW 1 was released in October 22, 2012, WOW 2 was

released in July 14, 2013, WOW 3 was released in September 22, 2014 and WOW 4 was

released in October 28, 2015. The frequency of release new shoes has increase from 6 months to

1 year, which makes this series of shoes more official and diversity. On the other hand, Li- Ning

designs new shoes and chooses new materials based on customers’ feedback. According to our

research, Li-Ning was planning to make WOW fashion and high-end in the first place. They tend

to use more premium leather to make the shoes, but they find out customers don’t care how

expensive the materials are. As the response of these feedbacks, Li-Ning started to use lighter

and more breathable materials. WOW 4 is the latest and the main series of product, which we are

going to bring to Canada and promote in London and GTA areas. This series of shoes have huge

                                                                                                               14  http://sneakernews.com/?s=way+of+wade  

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change both in materials and designs. It has 3 pairs of shoes: liberty, lucky 13 and vets day. You

can see pictures in Exhibit 4 below.

Each pair of shoes has the same basic design and unique details. For example: the themed

colorway features 13 lightning bolts on the tongue with three of the bolt in gold to represent his

three NBA championship victories with the Heat. In this series of shoes, Li-Ning uses carbon

fibre and other more breathable materials to make the shoes. New materials give the shoes more

strength outside and more comfortableness inside.

Huge difference between WOW and other basketball shoes is packaging. Several gifts are

included in premium and special edition of WOW 4 packages. We plan to offer only shoes in the

basic level of our product. However, in premium level, socks, wristband, extra shoelaces and

other small gifts will be included. In our special edition, only limited amount of shoes will be

offer online, within the shoebox, T-shirt and signature posters will be included.

Price

The determination of WOW4’s price level is critical for its marketing plan. As a result of a

thorough discussion, WOW4 is provided in three prices: $129.99, $159.99 and $199.99. Each

corresponds with basic, premium and special edition respectively. The detailed break-down

shows in Exhibit 5. All shoes have a landed cost as $57. Shoes in different price levels contain

various accessories, which contributes to the first mark-up. In terms of the retail mark-up,

footlocker raises the previous price by 100%15. Besides, according to Mr. Checkout

                                                                                                               15  http://www.bizjournals.com/portland/blog/threads_and_laces/2014/12/the-­‐cost-­‐breakdown-­‐of-­‐a-­‐100-­‐pair-­‐of-­‐sneakers.html?s=image_gallery  

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Distributors16, it is reasonable to assume that Footlocker accepts a 125% of the original cost as a

wholesale price, which equals $81 for basic and $100 for premium.

It’s worthy noticing that the price of WOW4 is ￥119917 in China and $20018 in the states

(basically the same without exchange rate). However, due to lack of brand awareness, it’s hard

for WOW4 to open Canadian market with such rigid and aggressive price. In order to survive in

a new market, the current prices are set based on competitor orientation against UA’s Curry 2

and Nike’s upcoming Kyrie 2. Moreover, for the purpose of bringing down the costs, selected

accessories will be given in different price levels.

Although WOW as well as Li-Ning have a well-designed reputation internationally, the main

focus of WOW4 is building a professional and trustworthy perception among Canadian

consumers. In terms of price-deciding, competitor-based methods and odd prices are utilized

currently. The goal for the future is using value-based methods to better indicate consumers’

perception for the product’s value. All in all, for the stage of entering the market, the price of

WOW is set to be competitive.

Placement

WOW4 will be distributed by the following two channels: Foot Locker and Li-Ning Online

Store.

Foot Locker

                                                                                                               16  http://mrcheckout.net/get-­‐product-­‐foot-­‐locker/  17  http://store.lining.com/shop/goods-­‐327918.html  18  http://shop.wayofwade.com/catalog/product/2242938  

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Foot Locker Retail, Inc. is an American sportswear and footwear retailer, with its headquarters in

Midtown Manhattan, New York City, and operating in approximately 20 countries worldwide.

Foot Locker Canada Co. has 161 stores operating across Canada (Foot Locker, Kids Foot Locker

and Champ Sports)19 (See Exhibit 6)

Our goal is to cooperate with Foot Locker Canada Co., so they would be responsible for carrying

our Basic and Premium line products. In the first few years, people would only be able to buy

WOW4 shoes in selected Foot Locker stores in Greater Toronto Area. We chose this way for the

following reasons. First of all, Foot Locker is one of the largest sport shoes and sport equipment

sales chain in Canada, and it would be the first place comes to people’s mind when they need a

pair of basketball shoes. Its stores are conveniently located in large malls and commercial areas.

Secondly, WOW4 shoes would be provided only in selected stores in Greater Toronto Area as

because we found it to be the ideal test market before we spread our business through the whole

Canada. If the sales look promising during the first few years, we can use this as leverage of

negotiation with Foot Locker to lower their share of the profit, so we can make more money.

Li-Ning Online Store

Li-Ning’s e-commerce business has been really successful in China. In 2014, its total revenue

grew by 48%. Its flagship stores on major e-commerce platforms such as T-Mall and JD have

more than doubled in size, with wider and better assortment and excellent operations. On 11

November 2014, Li-Ning recorded sales of RMB77 million, ranked No. 2 in sports/outdoor

                                                                                                               19  http://www.footlocker-­‐inc.com/pdf/2015/pr_2015_fl_2014_Annual_Report_Including_10-­‐K-­‐Final.pdf  

  16  

category which overtook Nike and Adidas and sold more than twice as compared to other local

competitors. (See Exhibit 7)

However, currently, on Li-Ning’s official North American WOW4 website, you can only

purchase WOW4 shoes and have them delivered to a US address. (See Exhibit 7) There is no

way of buying WOW4 shoes from the official website whatsoever. This gave birth to some non-

official websites while they sell fake or overly priced shoes to Canadian customers. (See Exhibit

8)

WOW4’s plan is to introduce the Canadian version of the WOW4 official website, allowing

customers to buy shoes online at the same price of what they would get if they go to a Foot

Locker location. However, some special editions of the shoes can only be bought online.

Promotion

One of Li Ning’s objectives is to communicate with their customers in various ways. As one

branch of Li Ning’s products, WOW4 will make communications via following channels in

order to draw customers’ attention and increase their desire. WOW4 decides to put about 50% of

its promotion budget in digital media, which are its own online store, its official page on social

media and online advertising, such as banner ads, YouTube video ads and email ads. In contrast,

the second biggest communication tool on which WOW4 is going to spend is public relation. To

be specific, WOW4 will sponsor a university basketball tournament in September, and title

sponsor Western University’s basketball team. Finally, other forms of advertising and sales

promotion will count for the rest of the promotion budget, including advertising in magazines,

  17  

giving out premiums, send free samples, and holding loyalty programs. Detailed strategy will be

explained next.

First of all, WOW4 will make effort to build on its own website especially for Canadian

customers, whose address is www.wayofwade.ca. To attract customers to visit and purchase via

its own website, WOW4 will offer special editions only in its online store. In additional, special

premiums, such as T-shirt, laces, socks, and autographic posters, will also be packed in the

package that customer receives if they buy the special edition online. Furthermore, consumers

can access to more color selections, and even more special editions, such as Christmas edition in

WOW4’s online store. Free shipping is offered on special shopping event days, for example,

Christmas, boxing day, Thanksgiving and so on. Here WOW4 is using a pulsing advertising

schedule. As mentioned above, financial budget of these digital media promotion will be

relatively high comparing to others. (See Exhibit 9)

As social media is playing a more and more important role in promotion, WOW4 is doing to

make its social media official accounts more active, such as Facebook and Instagram. To

increase the number of followers on Instagram and number of likes on Facebook, WOW4 is

going to offer a reward mechanism to its customers. Specifically, a customer who sends a

screenshot of following WOW4’s Instagram or liking its Facebook page can receive $10 off for

next purchase. Also, WOW4 will use both accounts to interact with its new and loyal customers

by releasing product related news, reposting good performance review articles of WOW4,

gathering participants for WOW4’s various activities, and sending prizes to a lucky customer

from those who actively interact with WOW4.

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In addition, digital advertising cannot be neglected. Television ads are excluded due to the high

expenses even though TV ads are very effective in increasing brand awareness. Instead, WOW4

decides to use banner ads and YouTube video ads, which will also be effective and efficient to

increase brand awareness in GTA, and more importantly, they are less expensive. At last,

WOW4 will also send direct advertising to previous customers via emails.

Meanwhile, event sponsorship is another method that WOW4 chooses to promote itself.

Specifically, on one hand, WOW4 is planning to hold and sponsor a basketball tournament

between three to four universities in GTA in September since new sneakers of WOW4 collection

is going to be released in September. WOW4 will invite University of Toronto, Western

University, University of Waterloo and McMaster University to participate in this tournament,

and sponsor a pair of WOW4 sneaker to every player who is going to play on ground and

requires them to wear the sneakers when playing. Also, WOW4 will put its logo and slogan

everywhere that easily seen when decorating the field, in order to raise brand awareness.

Besides that, a pair of WOW4 is going to be set as a part of the prize for the champion. On the

other hand, WOW4 is going to sponsor Western University’s basketball team around the year.

By sponsoring the team, WOW4 is able to have its name, Way of Wade 4, on the shirts that

sporting team and individual wear, and on the Mustang team bus. The bus with WOW4’s name

on it will travel around in GTA taking the team to away games and will definitely enhance the

brand awareness. Event sponsorship is an effective promotion tool even though it needs a big

percentage of the budget.

  19  

Finally, other form of advertising is also preferred by WOW4. Among various mediums, WOW4

will post advertisement on basketball magazines, which will reach specific customers who are in

need of basketball sneakers and those who are crazy about collecting basketball sneakers.

Another way WOW4 chooses to promote itself is to send free samples to those popular blogger

or YouTube video makers who often do reviews of basketball sneaker performance. In exchange

of the free pair of sneaker, WOW4 requires them to write an article or to make a special episode

in terms of WOW4. In addition, WOW4 will hold some loyalty programs. For instance, through

Instagram or Facebook, WOW4 can gather audiences who are previous customers to watch the

university basketball tournament for free. All of above activities will use up the budget whatever

is left over.

Financial Assessment

For projected revenue(see Exhibit10), WOW4’s main channel partner Footlocker has 51 stores20

in the target area. We assume each footlocker will sell one pair of WOW4 per day during the

first operating year, which contributes to 23,919 pairs and $2,042,869 for revenue. With the

increase of brand awareness, sales from Footlocker increase to two pairs per day during second

year and three pairs per day during the third year. Besides, according to NPD marketing research

group21, 4% of the basketball shoes on average are sold through online channel. We estimate the

online store sales based on the sales from Footlocker, which equals 2% in the first year, 3% for

the second year and an industry average 4% in the third year.

                                                                                                               20  http://www.mystore411.com/store/list_state/2174/ontario/Canada/Foot-­‐Locker-­‐store-­‐locations  21  https://www.npdgroup.ca/wps/portal/npd/ca/news/press-­‐releases/athletic-­‐shoe-­‐sales-­‐outpace-­‐growth-­‐of-­‐total-­‐footwear-­‐market-­‐in-­‐canada/  

  20  

In terms of projected income statement (see Exhibit 11), the total sales for the first year is

$2,083,726, which is based on our projected sales. Variable costs, which include cost of goods

sold, freight-in, insurance and tariff, increase through the three operating years as a proportion of

the increasing sales. Fixed cost is adjusted every year to correspond with the demand, among

which promotion increases $50,000 every year and has a starting cost as $300,000. WOW4 loses

$204,453 in the first operating year, which is understandable for the reason of entering the new

market and lack of public attention. The net income will roughly have an increase of $550,000

each year for the following two years. At the end of the third year, the net income reaches

$1,013,288.

For breakeven analysis (see Exhibit12), as a result of increasing fixed cost, the breakeven units

raise from 29,641 to 38,204. For the first year, the actual sale is below the target by 5122 units.

With the improvement of brand awareness, WOW4 will surpass the break-even point by a quite

large quantity for the following two years.

Implementation and Control

Action Plan

Short-term

Inventory

As one of the important methods to reduce our cost, we plan to cooperate with Chinese Shipping

Container Lanes. They are able to deliver our inventory from Li-Ning factories which located in

China to south coast of Canada. We plan to start our business with total 30,000 pairs of

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inventory. We estimate it will take us two weeks to deliver the inventory to Canada and less than

one week to pass the border service. If we start our business right now, in the worst scenario, we

will be able to run all of the business in December 15, 2015. Due to our target areas are GTA and

London, it will not take too long and spend too much on delivering inventories from our

warehouse to each Footlocker.

Tournament

We plan to organization a high school level basketball tournament. The tournament will start

from September to October in 2016. We will invite all the high school basketball teams to join

our tournament and the reward of the tournament will include cash and our latest WOW

products. In Li-Ning’s annual report, it says Li-Ning has the tradition to sponsor all levels of

sports tournaments, which is a wise way to expand our brand awareness. We will also the winner

of the tournament during the next year. We can provide them with all of the training equipment

and cash.

Sponsorship

Based on our research, we find out Western Basketball Team is sponsored by Under Armour,

which is the director competitor of us. In the best scenario, we will replace Under Armour and

become the new sponsor of Western basketball team. If we do receive good reaction throughout

this sponsorship, we might consider expanding our sponsorship to other universities.

Online discount policy

We will have discount on our products during all the shopping seasons. Not only the coupons we

mentioned before, but also up to 40% discount on Boxing Day and Black Friday. The discount

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products will not include our latest products. Li-Ning will release new special edition on the

holiday, such as WOW3-Christmas, our online store will have up to 15% discount on other

products when the new products are released.

Long-term

WOW4 will assess its operation based on both profitability and customer reviews. If the business

can gain profit in the short-term and keep increasing its brand awareness, as well as sales volume

in the first three years, WOW4 might consider expanding to other big regions in Canada, such as

Calgary, Edmonton, and Vancouver.

Contingency Plan

Since Footlocker is one of the most dominant basketball sneaker retailers in North America22,

some strict requirements might be offered to WOW4. Footlocker might want to prohibit

WOW4’s own website selling if WOW4 actually corporate with them, because online store will

carry a portion of sales off from Footlocker. In this case, WOW4 will decrease the wholesale

price for Footlocker in order to maintain its online store. Online store is very important to

WOW4 not only because it shows WOW4’s autonomy of the price and premiums, but also due

to its effect in increasing brand awareness.

                                                                                                               22  http://www.footlocker-­‐inc.com/  

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Exhibit 1: Competitors

  24  

Exhibit 2: Target Market Analysis

  25  

Exhibit 3: SWOT Analysis

  26  

Exhibit 4: Products

WOW 4: liberty

WOW 4 : lucky 13

WOW 4: vets day

 

  27  

Exhibit 5: Cost Breakdown

Exhibit 6: Footlocker Store

  28  

Exhibit 7: Li-Ning Online Store

China

United States

  29  

Exhibit 8: Non-Official Websites

Exhibit 9: Promotion

Communication Tools

  30  

Exhibit 10: Projected Sales

Year 1

Year 2

Year 3

  31  

Exhibit 11: Projected Income Statement

Exhibit 12: Break-Even Analysis

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References

Census metropolitan area of Toronto, Ontario <http://www12.statcan.gc.ca/census-­‐recensement/2011/as-­‐sa/fogs-­‐spg/Facts-­‐cma-­‐eng.cfm?Lang=Eng&GK=CMA&GC=535>    History of Basketball in Canada <http://www.nba.com/canada/History_of_Basketball_in_Canad-Canada_Generic_Article-18023.html> “Statistics Canada data” https://en.wikipedia.org/wiki/Greater_Toronto_Area#Demographics “Canada's business headquarters” https://en.wikipedia.org/wiki/Greater_Toronto_Area#Demographics “Champ’s Sport” http://www.champssports.com/Mens/Basketball/Shoes/_-_/N-24ZfmZrj “And $159.99 in Footlocker” http://www.footlocker.ca/en-CA/Mens/Under-Armour/Shoes/_-_/N-24Z10qZrj “Success in American market” http://www.businessinsider.com/nike-passed-on-stephen-curry-2015-5 “Reposition itself as a fashion brand” http://www.elle.com/fashion/trend-reports/news/g8418/timberlands-fashion-birkenstock/ “Have a rough 5% increase per year” https://www.npdgroup.ca/wps/portal/npd/ca/news/press-releases/athletic-shoe-sales-outpace-growth-of-total-footwear-market-in-canada/ “According to the statistics from footlocker” http://www.footlocker.ca/en-CA/Mens/Shoes/_-_/N-24Zrj “And champs” http://www.champssports.com/Mens/Basketball/Shoes/_-_/N-24ZfmZrj “Asian immigrants” https://web.archive.org/web/20141227134207/http://www.canadiana.ca/citm/specifique/asian_e.html “People’s likeness of basketball sneakers” http://fivethirtyeight.com/features/you-see-sneakers-these-guys-see-hundreds-of-millions-in-

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resale-profit/ “Li-Ning upgrades their shoes once per year” < http://sneakernews.com/?s=way+of+wade> “Footlocker raises the previous price by 100%” http://www.bizjournals.com/portland/blog/threads_and_laces/2014/12/the-cost-breakdown-of-a-100-pair-of-sneakers.html?s=image_gallery “Mr. Checkout Distributors” http://mrcheckout.net/get-product-foot-locker/ “It’s worthy noticing that the price of WOW4 is ￥1199” http://store.lining.com/shop/goods-327918.html “In China and $200” http://shop.wayofwade.com/catalog/product/2242938 “(Foot Locker, Kids Foot Locker and Champ Sports)” http://www.footlocker-inc.com/pdf/2015/pr_2015_fl_2014_Annual_Report_Including_10-K-Final.pdf “WOW4’s main channel partner Footlocker has 51 stores” < http://www.mystore411.com/store/list_state/2174/ontario/Canada/Foot-Locker-store-locations> “According to NPD marketing research group” < https://www.npdgroup.ca/wps/portal/npd/ca/news/press-releases/athletic-shoe-sales-outpace-growth-of-total-footwear-market-in-canada/> “Dominant basketball sneaker retailers in North America” <http://www.footlocker-inc.com/>