Cima Essay

1425 words - 6 pages

I. Factual Summary • Cima's sales and profits had grown steadily. However, the growth was beginning to slow as a result of foreign competition and a changing boot market.• Cima focused on classic boots that were relatively insensitive to fashion trends.• The boot market had shifted to a more casual, stylish hiking boot that appealed to hikers interested in a boot for variety of uses. These boots are inexpensive and lightweight. Fashion also became a factor, and companies like Nike and Reebok marketed lightweight boots in a variety of materials and colors to meet the demand for styling in addition to performance • Cima's target markets are mountaineers and serious hikers. In 1994, they had 6.25% of the retail market share in the United States.• The demand for Cima boots is seasonal, and most of the purchases are made during the summer months when the mountains and trails are most accessible.• Cima implemented a computer-aided design (CAD) system in 1993 to shorten product development. Significant cost savings were achieved as the new approach improved the profit and quality of the company's boots.• Cima uses traditional styling to avoid fashion obsolescence and the need for frequent design changes. However, all boots have features that the company believed is essential to positioning. Cima priced its boots higher than competitors, supporting the positioning of the boots as the top quality product at each price point.• Cima boots are distributed in 10 western states and western Canada through specialty retailers.• Promotions are directed to costumers and to retailers. Cima uses print advertising, product literature, and point of sales to promote its boots. The company regularly exhibited at industry trade shows.• Retailers are encouraged to take 50 percent margin on the retail-selling price.II. Company Problem/Opportunity • Cima's profit margins were low and decreased from 1992 to 1995 as a result of foreign competition. Furthermore, the current market for mountaineers and hikers seem to be mature and slow growth rate • Cima lost two stores at Colorado ($130,000 a year) because the customers shifted to competitors' brands (Asolo and Merrell). Customers are looking for the lower-priced boots.• The company has opportunity to increase sales by using mail-order catalog.• Cima has the opportunity to expand more product lines, and capture the fashion conscious segment. The company utilized operating at 85 percent capacity only, and it can penetrate more market in East coast.III. Alternatives Solution 1. The Margaret's proposal (project 1) She proposed to expand the sales and profits of Cima by entering the "Weekender" segment of the hiking boot market. The estimate market share is about 25 percent and it is growing quite rapidly. The target market of...

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