Introduction

Converse’s Chuck Taylor All Star sneakers, a successfully turned around brand from Nike faced challenges as competition in the American sneakers market was growing and consumers were not responding positively to innovative designs of Chuck Taylor II sneakers. Converse, established in 1908, ruled the athletic shoe market from the 1920s to the 1970s, when competitors such as Nike, Adidas, and Reebok, who provided shoes with a higher level of comfort, took over Converse’s domination of the sport shoe market. This way Converse’s sneaker Chuck Taylor II, traversed a long journey over its life cycle overseeing the growth and decline phases. With a fading market share in the sport segment, Converse filed for bankruptcy in 2001. Although Converse lost its leadership in the athletic shoe market, creative consumers, such as artists, musicians, painters and singers, showed immense loyalty toward Converse’s Chuck Taylor All Star sneaker, reportedly due to its simplicity and design. Although Converse lost the battle against new competitors and could not revive Chuck Taylor II sneakers, Nike, realizing the brand potential of Converse, acquired the company in 2003 at a cost of US$305 million (Wayne, 2003).

Nike immediately repositioned Chuck Taylor II from sport shoes to leisure shoes as a symbol of freedom and individuality and to coordinate with the target segment where Converse sneakers had already gained popularity. The appeal of Converse sneakers was unique due to attractive designs and colors that Converse soon captured global markets with a presence in over 165 countries. The success of the relaunch of Converse was reflected in its increasing sales after the Nike takeover. In fact, by 2015, sales had reached $2 billion up from $200 million in 2003, contributing around 6.5% to Nike’s total sales (Bhasin, 2016). Moreover, between 2008 and 2012, Nike reported a compound annual growth rate (CAGR) of 5.3%, whereas Converse’s CAGR during the same period was more than double that of Nike – 12.7% (Sharma, 2013). Converse’s marketing approach for its repositioned Chuck Taylor All Star shoes was non-traditional, using unique marketing efforts such as music sponsorships, a virtual reality app and user-generated content. Such efforts resulted in Converse becoming one of the most engaged brands on social media.

However, recently Chuck Taylor II faced several setbacks. In 2015, a market survey indicated that the original Chuck Taylor All Star shoes were uncomfortable to wear, so Nike launched a redesign of the original version, called Chuck II (Daniels, 2015). Within a year, the redesigned version failed. Analysts mentioned that Chuck sneakers are probably one of the rare brands for which consumers loved imperfection more than perfection, resulting in dislike of the new Chuck variant (Jones, 2016). On the contrary, another group of analysts criticized Converse for innovating too late after observing thousands of sore feet (Krupnick, 2015). Critics also mentioned that Converse’s Chuck II failure could have been due to higher prices. Nike launched a newer version of sneakers not only to improve imperfections of the iconic Chuck Taylor All Star but also to fight competition from other brands. Brands such as Vans and Keds were flooding the market with their own sneakers, and consumers had started showing preference for them due to these brands offering more variants (Jones, 2016). Even on social media popularity of Vans in terms of number of tweets and YouTube views was much higher than for Converse. For instance, YouTube subscribers for Converse sneakers were approximately 20,000 and for Vans, they were almost double in number. In a survey conducted in 2016, Vans was as preferred a brand as Converse (Ranasinghe, 2016). In the midst to fight competition, Nike continued to innovate with Converse’s Chuck II sneakers, and at the end of 2016, launched the Chuck II Thermo-Boot. Industry experts are watching whether this innovation will pay off for the brand or whether Converse was better off than competitors without innovation (Kingsonfire.com, 2016). What should Nike do to sustain growth of Converse? Should it continue to innovate Converse? Should Nike redesign the Converse, a retro brand or just focus on its market expansion only with existing designs?

Background

In 1917, after undertaking intensive research and development, Converse All Star basketball shoes were produced, which over the years became one of the most successful shoes in the United States. In 1921, aiming to improve the shoe’s performance, Converse recruited basketball player Chuck Taylor (Garber, 2015), who made several suggestions for improvements to the shoe design and later promoted the sneakers. Taylor held basketball clinics in high schools all over North America and became the brand evangelist for Converse sneakers. In 1932, All Star sneakers were renamed Chuck Taylor All Star sneakers. Converse’s Chuck Taylor All Star sneakers became the first mass-produced basketball shoe for North American players, and Converse came to be considered “America’s Original Sports Company” (Turner, 2015). Through the years, it launched different colour variants of the Chuck Taylor All Star whenever the Olympic Games were held. The Chuck Taylor All Star sneaker slowly became the shoe most desired by sports professionals, serious players, and college and high school students. By 1957, it held almost 80% of the sneaker market share in the United States. In the 1970s, the sport shoe industry began to change. New rivals, such as Nike, introduced more advanced versions of sneakers that incorporated pumps and air cells for greater comfort. Converse responded by introducing more colour variations and additional models of its Chuck Taylor All Star, yet sports teams began to prefer Nike over Converse shoes. Nike was also cashing in on the popularity of the jogging and running shoe industry, which had started to take shape in the United States in the 1960s.

As Converse was facing stiff competition from Nike and Adidas, it realized that its Chuck Taylor All Star sneaker, with its distinctive look, colours and comfort, was gradually becoming the preferred shoe of rock musicians, artists, and the younger generation. Chuck Taylor All Star became a fashion status symbol with leisure appeal and was worn by celebrities such as Elvis Presley, Billy Corgan, and Kurt Cobain. After being defeated by Nike in the sports segment in the 1970s, Chuck Taylor All Star became a global symbol of American pop culture in the 1980s (Sommer, 2015). The company indicated, “We started on the court and got adopted on the street” (Converse, 2016). Converse responded by launching even more colour variants, prints and patterns to appeal to various age groups. By the 1980s, almost 60% of Americans had owned a pair of Converse sneaker at least once in their lifetime.

Although constant demand for the shoe and a $35 price tag provided good profit margins for Converse, by 2001, the company was forced to file for bankruptcy (Tkacik, 2003). There were two reasons for this: first, management tried to develop dual positioning for Converse, targeting both athletes and artists and thus offering both stylish and performance-led shoes. Consequently, Converse was unable to achieve market penetration across the creative community, its actual potential target segment; and second, ownership of the company changed hands several times during the 1990s and the company experienced increased mismanagement. Nike, however, saw potential in Converse, as the brand was well known in the United States and Converse could provide a mid-price range sneaker offering for its portfolio. Therefore, in 2003, Nike acquired Converse.

Rebirth of Converses Chuck Taylor Sneakers

Nike realized that Converse was well known for its retro style and was very popular among artists and young consumers in the age group of 16–25 years. At the time of acquisition, Nike felt that Converse had not captured the essence of the sneaker and that its appeal had been watered down. Nike wanted to change that and broaden the market for Converse and thus relaunch Chuck Taylor II as a retro brand. Retro brands refer to relaunch of historically successful brands (Brown, Kozinets, & Sherry, 2003). A retro brand has a symbolic story, represents a community of followers, possesses a strong sense of uniqueness and authenticity, and satisfies a specific desire. Nike believed that this was doable because like any typical retro brand, Converse sneakers were unique and authentic, had a community of followers, had a symbolic story, and satisfied the desire of self-expression.

Given that Converse was already well accepted among artists and musicians, it became a symbol of individuality, originality, and self-expression. Nike wanted to further nurture this concept to make it a shoe for the common masses. In terms of marketing, Nike perceived Converse as a “bottom-up brand” that had been first adopted by consumers without any strong celebrity endorsements unlike its other brands, such as its Michael Jordan line of products, which typically followed a “top-down” approach (Bloomberg, 2008). To enhance the fashion and leisure appeal of Converse, it launched new designer variants with bright high tops or studded black leather sneakers (Lorenzetti, 2013). Nike completely did away with Converse’s original mission to produce sport shoes. As the brand emerged and was accepted by the common masses, Nike further focused on providing deeper brand meaning to Converse, seeking to appeal to trendy and leisure-conscious shoe buyers. Nike sold all its brands under the corporate brand name of Nike so as to enhance brand image of all categories of shoes Nike offered. However, Converse was an exception to this. Rather, Converse were the only sneakers owned by Nike that were sold independently, without Nike’s stamp on them, as Converse’s Chuck Taylor stood for itself as a brand and did not require the help of a corporate parent to enhance its brand image.

Nike promoted Converse creatively. In August 2004, Converse launched its product-inspired advertisement campaign known as “Made by You.” Both celebrities and noncelebrity consumers were encouraged to send short films about what they did while wearing their Converse sneakers. In the first month after launching this consumer-engagement campaign, online shoe orders for Converse almost doubled. Visitor traffic on www.converse.com also jumped by 66%, in a year compared to website traffic in the previous one-year period.

Furthermore, as Nike proceeded to make Converse a global brand, it did away with the “All American” aspect in its messages. The spirit of individuality and independence was conveyed globally in 75 countries through its Converse “Connectivity” campaign, launched in 2008. This cross-cultural campaign highlighted region-specific celebrities and pop-culture icons, depending on the country in which the campaign was launched. Due to this global crosscultural approach, in 2008, Converse posted a 29% increase in revenue compared to 2007 (see Figure 1).Image

Converse launched several innovative advertising strategies over social media, which engaged consumers to a very large extent and hence raised their interest in buying Chuck Taylor. Despite being in the shoe industry, Converse used music sponsorships in an innovative manner. Typically, in music sponsorships, brands sponsor concerts and other similar events. Converse, on the contrary, provided a platform for struggling artists to launch their music free of cost. The following paragraphs explain these strategies in detail.

Social Media

Converse did not have a huge advertising budget, yet it was more successful on social media than Nike or Adidas, with a fan base of more than 15 million, which in 2011, was four times more than that of Nike and eight times more than that of Adidas. According to the former Vice President of Converse, Geoff Cottrill, the other companies acted only as party guests on social media platforms: rather than speaking highly of their products on social media, Converse listened to consumers’ conversations to track their needs and offered products to meet the demand.

Although Converse made timely announcements, provided information about its products, and held contests (such as design your own shoe) over social media, the major objective of Converse’s social media presence was to create strong brand advocacy. The content shared by Converse on social media varied with the nature of the platform. For example, given that Converse was specifically well-known among musicians and followers on YouTube and Facebook, Converse featured the videos of new bands that had appeared at music festivals. Converse also ran a call and response for interview questions to ask those bands on Twitter. In 2013, an official online brand community for Converse was launched called “Chuck Hacks.” In this community, fans were encouraged to share ideas about new sneaker designs with each other to foster creativity (Joseph, 2015).

Rubber Tracks Studio

Along with its social media strategy, Converse launched a recording studio called “Rubber Tracks” in 2011. The studio provided space and equipment to emerging artists who could record their songs free of charge and also retain all rights to their own music (Wong, 2016). Cottrill identified the strong connection that existed between music and Converse wearers. He mentioned that an opportunity for brand engagement was created especially for emerging music talents through the creation of the free music recording studio. Moreover, music is part of the emotional lives of all humans; many youngsters cherish the dream of becoming musicians and Converse could make this dream seem attainable. Cottrill specifically commented:

            Let’s say over the next five years we put 1,000 artists through Rubber Tracks, and one                  becomes the next Radiohead. They’re going to have all the big brands chasing them to sponsor their tour. But the 999 artists who don’t make it, the ones who tend to get forgotten about, they’ll never forget us (Sisario, 2010).

Cottrill felt that getting individuals closer to their dreams was a better marketing approach than simply showing them dreams, which is the approach used in traditional advertising. Consequently, between 2011 and 2016, more than 1,000 bands used the studio at no cost. In fact, “Warrior” by New Zealand singer Kimbra, along with Mark Foster from the American indie pop band Foster the People, was recorded in Converse’s Rubber Tracks studio. The recording studio not only provided a platform for creativity and self-expression, but according to Converse, it also helped to develop strong connections between music fans and brand lovers (Raso, 2015).

Made by You Campaign 2015

In March 2015, Converse celebrated 100 years of its Chuck Taylor All Star shoes by relaunching the “Made by You” campaign. Converse wanted Chuck fans to stamp their personality and individual style on Chuck Taylor sneakers, and celebrate the fans. Converse’s Vice President of Global Marketing, Ian Stewart indicated that the “‘Made by You’ campaign is about the celebration of fans of Chuck and their creative self-expression rather than just the sneaker” (Blattberg, 2015). Although Converse had always placed more importance on individual style than performance, this campaign encouraged consumers to celebrate their own individuality and share it with others. Once again, artists, photographers, painters, musicians, and the general public were encouraged to participate; the campaign also served as a platform for endorsement by participating artists. According to John Donnelly, a social media analytics expert, “Converse’s ‘Made by You’ campaign smartly combines two powerful social strategies: customization and visual storytelling” (Blattberg, 2015). This campaign gave Chuck fans the opportunity to express themselves while creating a social art gallery for Converse, bridging the gap between self, brand, and community. Converse fans posted thousands of photographs and homemade commercials at conversegallery.com. Around 1,500 submissions were received, the best of which were telecast on television in Converse commercials.

Virtual Reality

To further enhance brand engagement, Converse invested in three-dimensional technology with a virtual reality app. This was known as “In Their Chucks: 360°Experience,” where art installations were held for videos shot for the “Made by You” campaign. To immerse Converse fans in a 360-degree virtual reality experience, a gallery was set up in New York from March 2 to March 7, 2015, featuring 15 nine-foot-tall boxes that displayed images of various Chuck Taylor sneakers belonging to celebrities, along with the provision of Google Cardboard virtual reality goggles. Through the virtual reality app, consumers were introduced to interactive stories about celebrities such as actress Joanna DeLane and recording artist King Tuff in their Chuck Taylor sneakers (Rodriguez, 2015). With the Goggle Cardboard goggles, users could immerse themselves in four different types of environments, ranging from a zombie world to a psychedelic dream. Users were able to enter the lives of inspiring Converse wearers and experience every stain and scuff that these celebrities, as well as other artists and fans, accumulated during their journeys in Converse sneakers. As Ian Stewart Vice President of Global Marketing of Converse commented, “We wanted to bring the campaign to life, and there was no better way than through a high-impact, highly visible virtual reality experience” (Laufik, 2015). This campaign was global in nature, covering cities such as Shanghai (China) and London (United Kingdom).

Brand Engagement through Retail Outlets

In 2010, Converse opened two specialty retail stores, one in Boston and one in New York. The New York store, located in Manhattan, offered a variety of products, not only footwear but also the latest collections of men’s and women’s apparel and accessories. The chief executive officer of Converse, Jim Calhoun commented,

            Converse has deep roots in New York City culture – from basketball to the influential underground music scenes of the ’80s and ’90s. The newest Converse store will allow visitors to immerse themselves in a unique Converse experience. The varied product assortment will amaze and delight consumers looking for new and exclusive ways to engage with our brand.

The store showcased the entire range of shoes offered by Converse, including Chuck Taylor All Star, Star Chevron, One Star and Converse by John Varvatos. Converse also diversified into related accessories such as graphic T-shirts for both men and women.

Nike, along with its two fastest selling brands, Hurley and Converse, also opened other specialty stores in the United States. For example, Salvation stores, which was a new retail concept, provided Converse fans with the opportunity to design their own footwear, T-shirts, handbags and other accessories, using Apple iPads. Shoe customers could choose from 250 designs, with pricing that ranged from $10 for one side of the shoe to $20 for a complete design. By the end of May 2016, there were 103 Converse stores in the United States and 23 non-US retail stores (see Table 1).

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Redesign of Chuck Taylor All Star

In 2015, a survey report based on research conducted by Nike indicated that Converse was uncomfortable to wear, so Nike launched a redesign of its Converse shoes. Media reports commented on the move by stating that innovation came after “a billion sore feet” (Krupnick, 2015). Converse conducted two years’ worth of research, asking both current and potential fans what they liked about Chuck sneakers and what they did not like. Responses indicated that fans wanted better technology and comfort. As Jim Calhoun mentioned, “The expectations of kids is that things will be broken in, ready to use, super comfortable, super functional from the minute it leaves the store” (Kane, 2015). Although many fans considered Converse sneakers to be fashionable and cool, their flat, thin soles made them difficult to wear for extended periods of time.

Generally, firms redesign flagship products when sales show symptoms of decline. However, Chuck II, the redesigned Chuck Taylor sneaker, was intended to provide even more satisfaction and quality to Chuck consumers. As Cottrill mentioned, “We wanted to entertain the notion that maybe we don’t know our customers as well as we think we do” and “maybe they want more” (Gatchalian, 2015). Yet, there was another side of this research, as responses indicated that Nike should not make any changes to Chuck. The Chuck Taylor All Star brand community consisted of fans who apparently liked the authenticity and simplicity of Converse.

Nevertheless, Nike believed that the Converse sneaker required a complete makeover and the process of technological innovation began. Designers sampled almost every possibility from simple craft fabrics to materials used in NASA space ships. The depth of redesign can be understood from the fact that almost 15 versions of the Converse patch were debated, and hours-long conversations dealing with the length of the little plastic caps that are attached to the ends of the shoelaces took place. Other minor details such as tonal or contrast stitching were also debated. One executive commented that these details were so minute that consumers would probably never notice, but they needed to perfect the redesign.

After 18 months of intensive labour, the new Chuck II had the following major features: a more cushioned sole, based on Nike’s Lunarlon technology1, to provide better arch support; a foam padded collar; a non-slip tongue to enhance the look; and an embroidered All Stars patch, as the previous decal was deemed to not be trendy enough (Manning, 2015).

Launch of Chuck II

When Chuck II was launched in 2015, its sales pitch during advertisements boasted advanced technology resulting in a more comfortable shoe with a slick new look. However, this improved comfort came with a price tag ($75) that was almost double that of the original Chuck All Stars (ColumbianHomes.com, 2016). After promoting Chuck II for almost a year, Nike realized that the redesigned version was a failure. Between July 2015 and September 2016, Converse’s sales fell by 1.4%; over the previous four years, it had grown by almost 15%. Industry experts felt that replacing the old look with a slick new look was a mistake. The media reported that despite the increased comfort, consumers preferred the older classic model to the new one. Consumers were also upset about the removal of the lines on the shoe toe along the sole, what fans affectionately referred to as “racing stripes.” Apart from these appearance issues, consumers were not convinced that Chuck II was worth double the price of the original Chuck. One senior Converse executive commented, “Trying to solve for consumers’ needs and what they want out of a product, that’s challenging too. Doing both, that’s where we want to take Converse” (ColumbianHomes.com, 2016).

Converse sneakers faced a similar problem in the 1990s, when the owners decided to switch to a better manufacturing facility to be able to fabricate the shoe with fewer inconsistencies. Die-hard Chuck fans, known as Chuck Heads, revolted and demanded that they replace the imperfection in the rubber tape that lined the shoe base. Converse had to find a way to put it back to appease angry fans. One executive commented, “That’s the thing with a fashion icon, it’s supposed to be exactly like it always was” (Moore, 2015). In 2015, Cottrill, who prior to working at Nike had been an executive at Coca-Cola, commented that “there’s an inherent risk in ‘improving’ an iconic product” (Brady, 2015). He clearly remembered how even after successfully passing blind taste tests, consumers became rebellious when Coke changed its original formulation. For Converse, at least a segment of consumers indicated that they did not want any changes made to the Chuck Taylor.

The Road Ahead

Consistent investment in non-traditional marketing initiatives helped Converse gain footholds, not only in the United States, but also globally. Approximately, 42% of Converse’s sales were driven from the North American market, indicating huge growth potential in international markets. Today, Converse is a global brand with a presence in over 160 countries through retailers and self-owned company retail outlets. However, Converse recently faced many challenges. First, is the failure of innovation of Chuck II sneakers. Between 2012 and 2014, Converse sales had increased by 15%, however, in the last two quarters of 2015, sales growth stumbled. It was not clear whether fluctuations were the result of Chuck II’s poor performance. Converse continued to innovate and by the end of 2016, Converse designed variations of the Chuck II, including Thermo-Boots. Will these boots entice consumers? Should Converse focus on such product redesigns is what analysts are wondering.

Furthermore, Converse also faced challenges from several look-alike brands that infringed its copyrights. According to experts this infringement was difficult to be proven in court leading to severe potential loss to the Chuck sneaker image (Oster, 2014). Experts believe that Nike was able to pump new life into Converse, however with increasing competition, popularity of competitors’ brand, copyright infringement problems and failure of Converse’s innovation efforts. In the glimpse of all these challenges can Converse retain its market position? How should it craft its future growth strategy? Should it focus on mere market expansion or design innovation as well?

Discussion Questions

1. What is product life cycle? Do you think Chuck Taylor was successfully reborn?

2. What is meant by an iconic brand? What is the risk of changing the product design of an iconic brand? Explain in the context of the Chuck Taylor All Star sneakers.

3. Would it be appropriate to call Converse a retro brand? Why or why not?

4. What is music sponsorship? Why did Converse leverage it? Was music sponsorship an appropriate marketing strategy for Converse? Why or why not?

5. Explain how marketing is changing with the evolution of new technologies such as virtual reality. Do you think such new technologies should be used for Converse’ newly launched Thermo-Boots? Why or why not?

6. Discuss the future growth strategy for Converse. Do you think current strategies adopted by Converse including innovative marketing and product redesign can sustain its growth? Why or why not?

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