Product Life Cycle Essay

Life Cycle Hats are a product that have become deeply incorporated in the American culture and lifestyle. In the United States, hats are nearly always present in everyday life, from sports events (i. e. baseball games) to the streets of New York where one might see people wearing hats as a fashion accessory in their everyday life. Today, there are a plethora of different styles and varieties of hats. For example, one can buy university hats, sports teams hats and even superhero hats, thus causing the hat industry grow everyday. In this paper, I will analyze the hat industry life cycle, specifically focusing on the â€Å"New Era† company, one of the most popular hat companies in the United States and worldwide. The New Era Cap Co. Inc. was founded in 1920 and was first known as E. Koch Cap Co. Their headquarters is located in Buffalo, New York, and the CEO of the company is a member of the Koch family – Mr. Cristopher H. Koch. The New Era Cap Co. has expanded globally into Canada in North America, Brazil in South America, Korea and Japan in Asia, and more than 40 countries in Europe. Even though hats are New Era’s biggest product, they also sell other products such as jackets, tees, hoodies and many cleaning kits and accessories for hats. New Era provides products for men, women and kids of all ages, and among their most famous hat lines are the MLB, NHL, NBA, NFL and College lines. New Era offers different styles of hats such as the â€Å"fitteds,† which have different sizes to fit varying head sizes, and also the â€Å"snapbacks,† which you can adjust to the size of your head. Target Markets New Era targets its products towards a younger crowd, usually sports fans, ranging from kids as young as 15 years old to people around 35 years of age. The reason New Era targets a younger market is because the hats are accessories generally used by younger people, and it is hard to find peoNple older than 35 years of age wearing hats on a daily basis. In addition, there are many rappers today that wear New Era hats in their music videos and at concerts. Furthermore, various athletes can be seen representing their sports teams via New Era hats. As a result, this causes younger people who look up to these musicians and athletes to want to wear New Era hats. Overall, New Era does a great job at targeting their marketing towards younger people. Today, the United States is the country with the biggest market which New Era sells its product to. Followed by the U. S. market is the European market, which is so large that it consists of more than 40 countries. However, both locally and globally, New Era always try to target the same type of crowd. An example that supports this statement comes from Brazil. In Brazil, New Era is already beginning to produce hats representing popular Brazilian soccer teams, which is exactly what the Brazilian sports fans want. The 4 Ps While New Era’s main product is undoubtedly their headwear products, the company also manufactures apparel products such as tees, jackets, hoodies, belts and also cleaning kits for hats, which only adds value to their products. While most of their headwear products are made with sports teams logos on the front, their apparel products focuses more on the New Era Brand rather than sports teams. Many of their t-shirts present the New Era logo on the front instead of teams logos, which is similar with their hoodies and belts. The cleaning kits for hats is a superb deal for New Era because it causes customers to buy accessories that compliment their other products. The kit also keeps the customers happy because when hats get dirty, they definitely do not look nearly as attractive, so having a cleaning product at hand is very convenient. New Era’s prices range depends greatly on the hat style, as well as whether the product is a new arrival or whether it is a sales item. For new arrivals, the price generally ranges from U$25. 00 to U$50. 00. For the â€Å"snapback† styles (adjustable hats), the price can range from roughly U$20. 00 to U$40. 00. However, the fitted styles (ones that are made in different sizes) can range from U$10. 00 to U$50. 00. There is also a section of superhero hats that range from approximately U$20. 00 to U$50. 00. The hats labeled as â€Å"sales items† range from U$10. 00 to U$35. 00. In the United States, a great percentage of the New Era products are sold online on New Era’s website. The website is very easy and friendly to use, providing pictures of every single product available, making it extremely easy and convenient to purchase New Era products online. In the US, there are also specialized retail stores such as â€Å"LIDS† that strictly sell hats, with New Era being their most predominant brand. In countries like Brazil and countries in Europe, there is no specialized store like â€Å"LIDS,† but there are New Era hats being sold at stores specialized in sports. In these countries, New Era also runs their own retail stores where they have all of the same styles of hats than the ones available on the website, making them dream stores for hat lovers. Much of New Era’s promotion is done through sports events to target their main public. An example of that is the fact that New Era makes the hats of all Major League Baseball teams, while also holding over 200 licenses to make hats for other various sports teams. New Era also sponsors major events in the sports world, such as the 13th Annual Transworld Skateboarding Awards. Furthermore, in April of 2012, New Era became the official on-field hat provider for the National Football League (NFL). Ultimately, New Era focuses most of its marketing and promotion efforts towards sports events where they are most likely to reach all of their customers, as well as potential customers, at once. Product Life Cycle New Era Cap Co. Inc. has been around since the 1920s, and their product is in the maturity stage at the PLC. New Era already has an established brand worldwide and its sales and profits have reached a peak. Obviously, if New Era decides to open more global operations in South America or maybe Australia, they could make much more profits, but at the stage they are at right now, they reached maturity. The customers that purchase New Era hats today are the late majority, and even though New Era is always trying to come up with new designs and styles, the essence of the product remains the same. As it is normal in this stage, New Era spends a lot of its money and efforts towards marketing to try keeping the name of the brand growing and to attract more customers as well. As for competition, for a product that has reached its maturity as New Era hats have, there should be more competition than what they have today. New Era only faces serious competition from two companies today, as we are going to find out in the next section. Competition Although New Era is the leading hat company in the United States, there are other hat companies that compete against New Era for a bigger share in the market. The biggest competition New Era faces comes from the company Mitchell ; Ness Nostalgia Co. (known simply as Mitchell ; Ness) which is based in Philadelphia – PA. Mitchell ; Ness is actually older than New Era Cap Co. Inc. , as it was founded in 1904. However, differently than New Era, Mitchell ; Ness does not only focus its sales on hats, but also throwback jerseys, hats, tees, fleeces, and jackets. Mitchell ; Ness, however, competes head-to-head against New Era because it produces hats for NBA, NHL, NFL, and NCAA, essentially the same styles as New Era. The difference between the two is that New Era is more known for its fitted hats, while Mitchell ; Ness is more known for its snapback hats. New Era is also a much bigger company than Mitchell and Ness, with 1700 employees worldwide as compared to Mitchell ; Ness’ 200 employees in the US only. In terms of money, New Era’s revenue in 2007 was U$343. 7 million, while in 2012 Mitchell & Ness’s revenue was 30 million. The other strong competition New Era faces comes from a younger company called Zephyr Hats. Zephyr Hats was founded in 1993 and similarly to New Era, Zephyr hats only focuses on producing hats – nothing else. Zephyr, however is a much smaller company than both New Era or Mitchell ; Ness, and as of now they only produce hats for the NHL and NCAA schools. Also, Zephyr has a very strong commitment to its customers to deliver the best quality product they possibly can, and to serve the customers the best they can before anything else. It will still take a while for Zephyr Hats to expand as large as New Era or Mitchell ; Ness, but they are definitely on the right path towards achieving such a goal. New Era Cap Co. Inc. also faces competition against the black market. There are many fake New Era products being produced and sold around the world, proving to be a major challenge that the company has to face. With the ncreasing popularity of the brand, people try to take advantage of it by producing hats that bring the New Era logo, but that are not made by the real New Era Cap Co. Inc. Whereas some of these ‘fake’ hats may look very similar to the real ones, there are a couple of small defects on them that help to distinguish the fake hats from the real ones. Outside of the US, especially in developing countries like Brazil, th e black market problem is huge because people can buy â€Å"fake† hats for a lot cheaper than what they cost in the retail stores. Recommendations It is true that New Era Cap has made its name globally and seems to only be growing, despite its competition and other problems, such fake production of New Era Hats. However, there are many ways in which they can improve their brand name and keep the brand growing. New Era is very active in the sports scene (NBA, NFL, NHL, NCAA, Skateboarding, etc), and one way in which they could improve themselves as a brand would be to promote tournaments and competition that bring the New Era name. These events can include skateboarding competitions, street basketball tournaments, high school football tournaments, etc. This would help the name of the brand through supporting these sports and expanding their name to different groups of fans. New Era should also think about a solution to decrease the amount of fake New Era hats in the black market. One solution could be a promotion where every time someone purchases an authentic New Era Hat, they get a coupon with a number which they can enter on New Era’s website for the chance to win a prize (ex: 5 free New Era hats). Another promotion could be – â€Å"every 3 New Era Cap purchases, get 30% off the next purchase. This would give incentive to people to buy legitimate New Era Cap products, thus increasing their revenue, improving their name brand, and stopping the circulation of fake New Era in the black market. One other recommendation for New Era would be to pursue licences and contracts to start making hats for soccer clubs worldwide. Just like the hats they make for MLB and NFL, New Era could and should open their brand to the Premier League (England) and other European soccer leagues. Soccer leagues are known to have very devoted fans that would be more than willing to purchase merchandise, such as hats, if they were available in the market.