Toms Shoes Evaluation Essay

Toms Shoes Marketing Case Study Essay

2462 WordsApr 1st, 201110 Pages

Executive summary
TOMS Shoes(TM) was found in 2006, the founder Tom Mycoskie aimed that for every single pair of shoes the company sells, they give away one pair of free shoes to the child that needed(Armstrong and Kolter,2011). This concept is highly suited the current marketing environment, it built a strong market position by matched their customers view of self to their brand image. These strength has lead to the company's success in the shoe industry. However weakness of the company are, the company only uses the power of mouth, and refuses to advertising previously. On top of that,the fabric shoes they made is mainly focuses on the colleague students and teenagers(Schectman,2010). Opportunity for the company might be to expand…show more content…

So that their customers feel the shoes are representing their view of self, which is to help others, involved in charity program. By making a fabric shoes cost between $35-$45, TM think their marketing strategy is good enough to get the market grow(Newman,2007). They think it is quite enough to using the “word of mouth” to get the message to all possible consumers, so TM didn't spend money for advertising in the past(Griffin,2007). However, they should considered that youth market are extremely focused on new updated product because they've grown up in such environment with advertising all around(Tali,Shlomo and Sam,2007). Therefore it is a chance that they might be noticed the brand who did advertised more. Opportunities for the company to grow is to letting the world knows TM. There are poor children needs help in many of the Asia. Therefore if the company can opened in Asia market, it can create mass attention for this “one for one” business. Additionally, the labor and material might be cheaper in countries as China so that the can satisfied the customer’s need in a lower price(Friedman,2009). In conjunction, expanding the brand into a different market such as doing sport shoes in order to attract a different group of people with different life-style(Griffin,2007). The competition with other fabric shoes such as Vans and Converse will influences the future growth of TM. Both of these two brand has a strong market

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I’VE STUMBLED across an interesting paper, which looks at the economic impact of TOMS Shoes. When you buy a pair of TOMS, they give another pair to an impoverished child. TOMS has come under a fair amount of criticism for what it does, including a bombastic Marxist take from Slavoj Žižek, a Slovenian philosopher.

Economists have also waded in to the debate. Dambisa Moyo, one economist, suggests that aid can end up replacing local markets, thereby hindering development. Another looked at used-clothes imports to Africa and concluded that they provoked a depression in local apparel industries. The latest paper, which looks at TOMS shoes, gives further succour to the naysayers.

The authors, all from the University of San Francisco, focus on the effect of TOMS donations of children's shoes on local shoe markets. They look at the results from a randomised control trial with about 1,000 households in El Salvador, a country that consistently comes in the bottom half of income-per-capita tables. 

Economic theory cannot help the authors to predict what will happen. Some theoreticians predict that those households that receive a free pair of shoes are unlikely to need that extra pair. As a result, they buy fewer shoes, with the unfortunate result of hitting local shoe shops. That may crimp economic development. 

Nonsense, say other nerds. Imagine that one child in a big family gets a free pair of shoes. The parents cannot face putting up with the moans of jealous siblings; so they rush out and buy shoes for their other children. Shoe markets get a boost. 

So to resolve this conflict the authors come up with a simple experiment. All the households were given discount coupons that could be put towards purchases at a local shoe store. But only half were given a pair of children’s shoes at the beginning of the experiment.

Now, the results. In the abstract, the authors modestly report that “find no statistically significant difference in...shoe purchases between treatment and control households.” In other words, it seems, TOMS shoes had no effect on local markets.

But take a closer look at the results and you may reach a different conclusion. In all regressions shown in the paper, the “point-estimate” for the impact of shoe donations is negative. That is, receiving TOMS shoes had a negative impact on future shoe purchases. So while statistical significance is nowhere to be seen, by dint of their consistency the results are reasonably convincing. I'm also wondering whether the authors, who measured the impact of TOMS shoes after only a few months, left enough time for their results to shine through. After all, people don't buy shoes that frequently.

(For a deeper discussion of the impact of aid and growth, see our Free exchange column from a few months ago.)

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