Are you a shoe lover? Then you might have come across a pair of New Balance shoes! It is one of the top sneaker brands that is performing well in the market.
Any fashion enthusiast would love to keep a pair of New Balance in their collection. As a shoe lover, you may wear New Balance. However, what about the business aspect of this company?
How New Balance is “balancing” itself in the market?
Like every other company, New Balance has its own set of strengths and opportunities it relies on. Adding to it, it does have a share of weaknesses and threats that may hamper its profits!
In this article, we’ll dive deep into the New Balance SWOT analysis
Before moving ahead, here is a quick overview of New Balance
William J. Riley | |
100 Guest Street, Boston, Massachusetts, U.S. | |
Footwear | |
US$5.3 Billion | |
6500+ | |
New Balance |
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New Balance SWOT Analysis: Balancing The Success!
Strengths Of New Balance
Shoes Are Manufactured In The US
New Balance is very different from its competitors due to a different approach when it comes to manufacturing the shoes. While most of its rivals produce their footwear in Europe, New Balance proudly manufactures its shoes right in the United States. Admittedly, manufacturing in the United States can be more costly compared to some European locations, but New Balance’s emphasis on craftsmanship, ethical labor practices, and supporting the local economy makes this decision worthwhile.
Strong Brand Reputation
When it comes to brand reputation, New Balance has done it correctly. But, how has this been possible? All this has been possible due to its quality service and the premium quality that can be felt in every shoe the company sells. The customer base of New Balance is quite diverse. And all the customers rely on this brand for quality, style, and performance. Hence, this brand has been able to make its mark and present itself as a strong and reputed business.
Partnerships With Athletes
Similar to many athletic shoe brands, New Balance boasts a robust association with leading sports figures. Among this impressive roster, you’ll find around 400 Major League Baseball athletes who proudly don the brand both during their games and public appearances. Names like Evan Longoria, the third baseman for the Tampa Bay Rays, and Miguel Cabrera, the first baseman for the Detroit Tigers, are associated with New Balance.
Sustainable Practices
The manufacturing and operation processes of New Balance are quite sustainable. They have drastically changed a lot of manufacturing material to ensure it is not hampering society at any point. One notable stride is their conscientious choice of eco-friendly materials. By opting for sustainable materials in their products, New Balance reduces the environmental footprint associated with traditional manufacturing. The company uses preferred leather and recycled polyester for production.
Effective Marketing Through Movies
New Balance, primarily known for its sneakers, has ingeniously harnessed the power of pop culture to make its already iconic footwear even more appealing.
Sneakers are quite popular in today’s generation and New Balance did a great work by marketing its sneakers by placing them in popular movies.
Some notable movies where New Balance sneakers have appearances are “Gone Girl,” starring Ben Affleck, and “Ted 2,” featuring Mark Wahlberg. These placements in high-profile films catch the attention of every film enthusiast but also imprint New Balance sneakers into the minds of viewers as a fashionable and desirable choice.
Weaknesses Of New Balance
Price Point
Manufacturing in the USA is pricier compared to Europe, resulting in higher production costs for New Balance, rendering their products less competitively priced. Despite New Balance’s efforts to set itself apart from rival brands, consumers often find it challenging to justify the premium price tag. While the brand strives for uniqueness, the discerning customer may question whether the added cost aligns with the perceived value, especially when comparable options are available at more affordable rates.
Major Revenue Comes From The US Despite International Presence
While New Balance enjoys a global footprint, the lion’s share of its revenue streams in from a select few regions. Specifically, nearly 76% of its sales emanate from the USA and the broader North American region, leaving the rest of the world contributing a smaller portion. This concentrated revenue source poses a vulnerability, as any economic turbulence or issues in these key markets can impede the company’s ability to achieve its full potential. Diversifying its revenue sources and expanding into untapped international markets could potentially mitigate this risk, ensuring a more resilient and globally balanced revenue stream for New Balance.
Opportunities For New Balance
Relaunch The Customization Option
New Balance used to provide its customers the option to customize the shoes in terms of material or color. The service was known as NB1. However, this service was closed after the pandemic set in. Maybe, the company can think of relaunching this since the pandemic period is over. This service was unique and was well received by the customers. People did love to pay a little extra to get the customized shoe design they always wanted.
Leverage Emerging Technologies
New Balance can gain a competitive edge by wholeheartedly embracing technological progress. By incorporating smart functionalities into their footwear, such as integrated fitness tracking or personalized coaching apps, they can effectively allure tech-savvy consumers who crave innovative and interconnected products. This move towards a more tech-integrated approach could be further facilitated through partnerships with tech companies or by investing in robust research and development initiatives.
Expand In The Asian Market
New Balance is doing pretty well in the American and European countries. However, there is still a pretty huge opportunity for the Asian market. The only thing that the company may have to think about is the pricing range as per the buying market of this region. The buying capacity is quite different for the Asian market. Considering the pricing of the New Balance products is at a higher end, it needs to calculate certain pricing points to gain good profit margins.
Threats To New Balance
Intense Competition
The main competitors to New Balance would be heavyweights such as Nike and Adidas. These companies are performing better compared to New Balance and are good in strategic marketing as well. In terms of revenue, the contrast is stark: Nike soared above $46.71 billion in 2022, casting a shadow over New Balance, whose revenue hovers around $5.3 billion. The gap in the numbers is massive which indicates how rigid competition New Balance has to face.
Counterfeit Products
The market is flooded with numerous inexpensive knockoff versions of renowned footwear brands, often available at remarkably low prices. Many consumers are primarily interested in aesthetics rather than quality, motivating them to opt for these imitation products. They suffer from a loss of market share and revenue as a consequence. New Balance can invest in educating customers about the genuine pointers that they can check while purchasing.
Currency Fluctuation Issues
New Balance is present in many countries across the globe. Hence, they do business that involves currency exchange rates. Fluctuations in the currency can have a negative impact on the profit margins, manufacturing costs, and ultimately, the company’s profitability. As the major profit is coming from the U.S., the currency fluctuations of the dollar can have an immense impact. New Balance, like every other company, is taking a lot of measures to counter the currency exchange impacts.
Bottom Line
Bottom Line
Manufacturing its shoes in the USA, prioritizing craftsmanship and ethical labor practices, has set it apart from competitors, even though it entails higher production costs. New Balance has a strong brand reputation along with partnerships with athletes and a commitment to sustainable practices.
New Balance’s clever marketing strategies, such as product placements in popular films, have amplified its appeal, especially among the younger generation. However, the brand faces certain weaknesses. The weaknesses include the premium price point for its products and its overreliance on the U.S. market for revenue.
Looking forward, New Balance has exciting opportunities to explore. Relaunching customization options, leveraging emerging technologies, and expanding into the Asian market present avenues for growth. Nevertheless, the brand is not immune to threats. It faces intense competition from industry giants like Nike and Adidas. The prevalence of counterfeit products is also a major threat to the brand’s profitability.