ugg australia analysis
DESCRIPTION
This is an analysis my group wrote about a current brand, UGG Australia. The analysis was a project in my Advertising Principles class.TRANSCRIPT
2
Table of Contents
Executive Summary____________________________________Page 3
Knowledge Inventory_________________________________Pages 3-7
SWOT Analysis_____________________________________Pages 7-8
Brand Essence______________________________________Pages 8-9
Target____________________________________________Pages 9-10
Positioning_______________________________________Pages 10-14
A Day in the Life__________________________________Pages 14-15
Creative Evaluation________________________________Pages 15-19
Overall Brand Assessment___________________________Pages 19-20
Bibliography____________________________________Pages 21 to 22
3
Executive Summary:
The UGG Australia brand is the leading footwear line of its industry. They top all
sheepskin brands with popularity, comfort and quality. The brand re-positioned itself to a high-
fashion luxury brand after originally targeting surfers from 1978 to 1998. In, 1998 Deckers
Outdoor Corporation bought UGG Australia aiding the line’s transformation. With a little luck
and strong positioning tactics, UGG Australia boots became and remain popular. What once was
predicted as a trend that would fade away after a few seasons, UGG Australia defied predictions
and continues enhancing their products to keep up with fashion trends and consumer needs.
UGG Australia originally gained popularity from celebrities when the boots hit the
fashion scene. The brand quickly gained mainstream awareness through celebrities
photographed wearing the shoes in fashion magazines, tabloid magazines and entertainment
television shows. Next, Oprah featured the shoes on three of her Christmas specials, “Oprah’s
Favorite Things.” Demand for UGG boots skyrocketed after the first show, and UGG Australia
aligned with popular department store Nordstrom. They also expanded their international market
by opening retail stores around the world. Finally, UGG Australia wanted to give back to the
community and started the Art & Sole Auction to raise money for St. Jude Children’s Research
Hospital. UGG boots continue to stay in high-demand, and Deckers Outdoor Corporation
recently reported that UGG Australia sales totaled $104.4 million in the first quarter ending on
March 31, 2010. UGG Australia does not need to worry about a fade in popularity anytime soon.
4
Knowledge Inventory:
Explicit knowledge about the UGG Australia brand begins with exactly what their
products include. UGG Australia produces Unisex sheepskin boots that are made of twin-faced
sheepskin with fleece lined inside and tanned outer surfaces (Uggaustralia.com, 2010). UGG
boots typically have a synthetic sole. The heights, colors and materials of UGG boots vary based
on the style of boot or shoe. The boots have insulation inside the boots because of the
thermostatic properties of sheepskin; the thick fleece fiber inside the boot lets air circulate and
keep the feet at body temperature. UGG boots stay high in demand despite the current recession
because they have brand loyalty as well as an international following.
The UGG Australia brand began in 1978 when an Australian surfer named Brian Smith
came to the United States with a bag of sheepskin boots. Smith decided to stay in the U.S. and
make California his home. Next, he made the UGG boots popular among his fellow California
surfers (Uggaustralia.com, 2010). The brand continued to evolve and grow. In 1995, Deckers
Outdoor Corporation acquired UGG Australia and by 1998 the product line had already started to
grow. It added two boots, four slippers and a few casual options. In 1998, the UGG Australia
brand became recognized alongside some of the worlds most famous and fashionable footwear
brands and was positioned as a high luxury brand. This change was enhanced by the premium
distribution strategy and their high-end fashion marketing and communications campaign. The
brand directed most of their advertising efforts to high scale fashion magazine. In 2003, UGG
Australia was named Footwear News ‘Brand of the Year’ and was single-handedly responsible
for creating a completely new footwear category.
Nordstrom department stores soon became the main destination for UGG boot sales. At
the same time, UGG Australia opened 18 concept and outlet stores, 12 of which are in the United
5
States. The main competitors and brands that have attempted to create similar products are Emu
Australia, Warmbat, RocketDog, Bear Paw, Koolaburra, and Steve Madden.
UGG Australia’s mission statement is that they “market the premier brand in luxury and
comfort.” The philosophy that drives UGG Australia is that they “deliver on its promise of
luxury and comfort. UGG Australia is about accessible luxury. Ugg Australia products fit into
the consumer’s every day life offering them products that are fashionable, comfortable and
attainable” (Uggaustralia.com, 2010). UGG boots have a number of unique features and benefits
including using the highest-grade sheepskin available and using twin face sheepskin in many of
the core products. This makes the fleece on the inside soft because it is treated on both sides.
Grade A sheepskin is also very dense and soft making a comfortable and durable product. The
boot allows the material to breathe naturally, which takes away any moisture and lets the air
inside the boot circulate freely allowing feet to remain dry. Sheepskin is naturally thermostatic
keeping bare feet close to the natural body temperature regardless of hot or cold temperatures.
UGG boots keep feet warm in 30 degrees or below temperatures and let feet breathe in 80
degrees or above.
The chic appearance and versatility of the sheepskin makes them extremely popular,
especially when coupled with materials that offer insulation (McBrady, 2009). The boots feature
comfort, which is one of the many reasons they have a strong following around the world. Many
Hollywood stars and celebrities in the United States wear UGG boots, which has made these
boots staples in the wardrobes of those who follow and idolize mainstream pop-culture icons.
Females are the main target purchasing and wearing UGG boots. However, there have been
some backlashes against UGG boots and their brand by some celebrities and protesters.
6
The first of these controversies was in 2007 when celebrity Pamela Anderson, who is a
PETA member, had endorsed these boots and then realized they were made of sheepskin.
Moreover, she publicly bashed the brand and told others on her website not to buy the brand.
She continued to recommend other boot brands to rally against UGG Australia (Neal). The next
of these backlashes was in 2008 when the Princeton Animal Welfare Society staged a campus
protest against the fur industry—in particular against UGG Australia. There have been other
calls for the public to boycott the UGG Australia brand; however, these efforts have been far
from successful because the UGG Australia brand has a large consumer following.
According to an article, UGG Brand’s Staying Power Drives Growth For Footwear
Market, the company sales growth has reached double digits for eleven straight quarters. Most
recently, UGG Australia (in the 4th quarter, where sales rose from 15.7 percent compared to one
year ago) helped Deckers profit climb 29 percent from a year before to $5.22 per share (Much,
2010). They enjoyed their twelfth straight quarter earnings and sales went up 15 percent to $348
million. Although Deckers includes other shoe brands and companies, UGG boots and products
make up 87 percent of Decker’s revenue. Deckers also has UGG Australia to thank for their
increased ability to develop other brands due to the success of UGG; for example, the fall e-
commerce sales increased 27 percent (Much, 2010). In addition, the amount of UGG Australia
retailers increased 88.7 percent, and the brand’s overseas sales grew 96 percent, which accounted
for 20 percent of sales in 2009 (this is a four percent increase from 2008.) According to the same
article, the Deckers footwear market is currently up 10 percent and UGG Australia sales are
expected to be up 9 percent in comparison to sales in 2009 (Much, 2010). These numbers are
impressive in any economy, but particularly impressive during a recession. UGG Australia
7
continues to deliver quality products and customer relationships, which keeps customers
returning and purchasing the trusted product.
SWOT Analysis:
The UGG Australia brand is a strong and popular luxury brand. UGG boots are
considered to be luxurious and are known for their high production quality. The brand also has a
wide assortment of styles and colors that satisfy the many demands of consumers. The brand
also has very loyal consumer base that continue to purchase UGG boots because other brands in
the same category lack quality materials. This is all evident when Oprah endorsed them on her
daytime television show when she included them in her Christmas show, “Oprah’s Favorite
Things,” in 2003, 2005 and 2007.
No brand is perfect or appeals to everyone. First, UGG boots are also not inherently
weather friendly and require aftermarket products to keep them in pristine condition. In addition,
UGG boots provide no additional foot support. Another weakness is the limited exposure of the
UGG Australia men’s line. This line is largely unknown to its potential consumer base. Finally,
the brand is not animal-activist friendly due to the use of sheepskin and leather materials.
There is a lot of opportunity for the UGG brand to expand. The brand could promote its
beachwear line of sandals. They may also want to expand their product line to include women’s
heels. They can also promote their winter items and miscellaneous products including jackets,
hats, rugs, sheets and pillows. Finally, UGG Australia could do a considerably better job of
promoting their men’s line. Promotion of their products is the overall theme when it comes to
business opportunities.
8
UGG Australia also faces some threats. As mentioned earlier in the weaknesses, animal
activists may be a threat to the brand along with the outcry from officials who speak out against
production techniques. Competition and knock-off brands are another direct threat to UGG
Australia because they take away potential consumers. Lastly, the overall state of the economy
is a threat to the UGG brand because the economy decreases the amount of money spent in the
marketplace and consumers may begin to shy away from more expensive products such as UGG
boots.
Brand Essence:
~High-quality, fashionable footwear focusing on luxury and comfort
The UGG Australia mission statement states, “UGG Australia markets the premiere
brand in luxury and comfort” (UggAustralia.com, 2010). They focus on manufacturing shoes
that are fashionable, comfortable and attainable. The UGG Australia brand focuses on
consumers who value luxury and have higher incomes to afford the boots. They offer quality
over quantity by ensuring longevity and comfort through utilizing the best materials for their
boots. Grade A sheepskin and leathers are used to produce UGG boots, making them more
comfortable than knock-off brands that do not use real sheepskin. The materials and
9
craftsmanship are high quality to ensure longevity. Once the brand developed widespread brand
recognition and increased consumption, the logo along with the brand became a high-fashion
staple. People can instantly recognize a pair of real UGG boots as opposed to knock-off brands
because each pair has the logo sewed onto the back of the boots. Therefore, wearing real UGG
boots is a fashion statement because they are popular and recognizable worldwide.
Target:
UGG Australia targets women ages 25 to 45 years old; however, they are also popular
among suburban middle school and high school girls (Silverstein, 2007). This is primarily
because UGG boots are sold in high-end department stores, and department stores are located
within upper-class suburbs. UGG Australia also has a large university following nationwide
(Silverstein, 2007). Walking down a university campus in the winter, the majority of girls wear
UGG boots or knock-off pairs to reflect UGG boots as their first choice winter boot. In fact,
Blink Associates found that 56 percent of female students at Marquette University own UGG
boots and of that 56 percent, 55 percent own more than one pair. Students want to wear real
UGG boots because it shows that they own a luxury item and to keep their feet warm throughout
the fall and winter.
Although UGG Australia started as a shoe company designed around the surfing circuit,
most people do not associate UGG boots with warm weather regions. Moreover, they are more
popular in areas with four seasons or primarily cool weather climates because the sheepskin
keeps feet warm throughout the winter.
UGG Australia targets a large range of consumers. They offer shoes marketed toward the
entire family including infants, kids, men and women’s shoes by hitting the souvenir market,
10
fashion market and family stores (Silverstein, 2007). In addition, the brand also strongly targets
the international market. Today, the international market is one of the brands strongest target
markets proving the effectiveness of their logo worldwide.
Positioning:
Ten years after Smith introduced the UGG shoe line to surfers across California, the
UGG footwear line switched the product positioning to a high-end luxury and international high
fashion footwear line (Silverstein, 2007). In 1998, Decker Outdoor Corporation, who decided to
position the brand as a high-end maker of luxury footwear, bought the company. The line
consisted of two boot styles, four slipper styles and a few casual footwear styles. (Larkin, 2008).
Within three years, the UGG Australia brand was internationally recognized and vastly gaining
popularity. This strategic change in positioning was aided by aligning with specific retailers,
seeking prominent media forces and starting an annual philanthropy.
Currently, the brand is featured in department stores, various authorized retailers,
authorized online retailers and a flagship stores throughout the world. UGG boots and products
can be found in United States department stores such as Nordstrom, Bloomingdales, Von Maur,
Neiman Marcus, Saks Fifth Avenue, Lord & Taylor and Dillards. In addition, UGG Australia
has flagship stores in Tokyo, London, Manchester, China, Montreal and five flagship stores in
the United States (UggAustralia.com, 2010). Outside flagship stores the brand is primarily
outfitted with Nordstrom (Larkin, 2008). Throughout their stores, UGG boots are positioned at
these retailers in big displays near the aisles of their shoe sections.
11
UGG Australia also continues its popularity through heavy media attention and
positioning. UGG Australia boots are often featured in celebrity gossip magazines and television
shows because numerous celebrities are captured wearing them. In fact, this form of product
placement was one of the original ways UGG boots were first marketed and seen by the public.
Celebrities including Jessica Alba, Gwen Stefani, Pamela Anderson, Liv Tyler, Carmen Electra
and Kate Hudson are a few of the celebrities who are frequently caught wearing UGG boots
(Manning-Schaffel, 2006). In addition, through positioning and capturing celebrities wearing
UGG boots, keeps them a popular trend and “must have” style because celebrities are a main
outlet the public seeks for trend setting and fashion forecasting. Therefore, if celebrities stopped
wearing UGG boots, they would be less popular and cause sales to decrease.
12
The brand acquired its first major breakthrough when Oprah Winfrey took part in the
celebrity UGG boot craze after she received a pair of UGG boots. In 2000, two years after UGG
Australia’s new positioning as a luxury brand, Oprah loved the boots so much that she bought
350 pairs of UGG Ultra Boots for her staff (Larkin, 2008). In 2003, Oprah put UGG boots on
the map when she added the baby pink and baby blue classic short UGG boots to her annual
“Oprah’s Favorite Things” Christmas show. After the show aired, UGG Australia’s line became
a holiday bestseller and UGG Australia was named Footwear News’ Brand of the Year (Larkin,
2008). She continued to feature popular UGG boots on the same show. In 2005 she featured
UGG Uptown Boots, and in 2007 she featured UGG Classic Crochet Tall Boots (Larkin, 2008).
Now, UGG boots are regularly seen worldwide on high fashion runways and as popular street
wear.
UGG Australia is currently positioned through collaborations with other popular shoe
designers. Recently, UGG Australia announced they will collaborate with Jimmy Choo to create
a limited edition UGG boot line available in stores October 2010. By pairing with Jimmy Choo,
UGG Australia will not only broaden their brand awareness, they will increase profits because
this limited edition line will be priced between $495-$795 (Mellon, 2010). Since UGG Australia
13
and Jimmy Choo are well known international brands, these unique shoes will most likely sell
quickly.
UGG Australia also holds their annual Art & Sole Auction to raise money for the St. Jude
Children’s Research Hospital (St. Jude, 2010). This philanthropy project not only gains
recognition for the brand, it sheds a positive light on the brand by donating one of a kind UGG
boots to raise money for research. This annual event pairs with top designers and luxury fashion
brands such as Manolo Blahnik, Betsey Johnson and Stuart Weitzman to put their artistic skill to
work and design UGG boots. Each unique pair is auctioned off on the UGG Australia website
with 100 percent of the proceeds benefitting the hospital (St. Jude, 2010). While working with
philanthropy, this also gets consumers to the UGG Australia website in hopes that they will stop
to purchase more shoes. To date, the Art & Sole Auction has raised over $315,000 for hospital
research (St. Jude, 2010) and was named the Best Charity Event of the Year by Accessories
Magazine in 2007 (Larkin, 2008). Sharon Stone, John Travolta, Reese Witherspoon and Donald
Trump are a few top industry figures that annually participate in the event (Larkin, 2008).
14
Zang Toi Classic Tall Ugg Boots Stuart Weitzman Classic Tall Ugg Boots Rafe New York Classic Tall Ugg Boots
A Day in the Life:
Christina wakes up at 7 a.m. in order to make it to her 8 a.m. class. She straightens her
hair, brushes her teeth and goes to her closet to pick out an outfit. She is not in the mood to dress
up because it is cold outside. She wants to be comfortable and warm as she sits through classes.
Therefore, she puts on Pink! By Victoria Secret sweatpants and a Juicy Couture zip-up. This is a
typical casual outfit for her because her week consists of sitting in classes, studying at the library
and hanging out with her friends in the dorms watching Gossip Girl and the Bravo Network. She
quickly puts on socks and boots so her feet will be warm while walking to class. It is almost 8
a.m. so she grabs her North Face backpack and leaves for her first class.
15
After her first two classes, she goes back to her dorm cafeteria and eats lunch with her
girl friends. After lunch, she goes up to her room to study for a test she has in her next class.
Finally, she is done with class for the day so she heads back to her dorm room and stops to check
her Facebook before heading to dinner with her roommate. After dinner, their friends come up
to their room, and they watch a romantic comedy together before starting homework. She begins
working on a psychology paper due at the end of the week. She works on it for a few hours and
spends her last hour before bed chatting on Facebook with friends from home. After they finish
gossiping about boys and last weekend’s parties, she goes to sleep since she has to wake up early
for class.
Creative Evaluation:
The UGG Australia advertising campaigns communicates the strength of their brand
throughout their ads. UGG Australia primarily places advertisements in fashion magazines,
snowboarding magazines and surfing magazines. Each advertisement depicts a sense of luxury
because there is no copy, slogans or headlines. They merely show a model wearing the shoes
and the UGG Australia logo. UGG Australia focuses on comfort rather than performance, which
they try to promote in every ad campaign.
Below is an example of an advertisement found in a high fashion magazine:
16
This image portrays comfort and confidence. The ad uses a monochromatic brown color
scheme signifying warmth, comfort and relaxation. Brown is also the primary color of UGG
boots, so the viewer automatically connects the color with UGG boots. In addition, the model is
nude, which is usually a vulnerable state for most; however, her face flaunts sultry confidence
because she is wearing her UGG Australia boots. Her pose directs our eyes from her face and up
her legs to focus and rest on the UGG Australia logo. Lastly, the UGG boots are the final focus
of the ad to portray luxurious comfort.
Before seeing the advertisement shown above, many may not be aware that UGG
Australia has a men’s line because UGG boots are more popular among female consumers. This
advertisement also focuses on the topic of comfort because the couple appears comfortable
together and cozy wearing their UGG boots during a cold winter day. Another purpose of this
advertisement is to spark interest toward the men’s line.
The next advertisements are examples of UGG Australia’s attempt to reposition their
brand as a luxury item. The first picture shows their attempt to be different. There is a very
17
eccentric looking model wearing something one would only see on a runway. In the picture the
model is wearing two different styles of UGG boots sending the subconscious messages that
even though they are different, one can be comfortable while standing out.
The second image above is UGG Australia’s attempt to put UGG boots in the run for
“high fashion.” UGG boots were introduced on the runway in London fashion week. This
changed the position of UGG boots as a high fashion brand versus an outdoor boot. Currently,
UGG boots are displayed with other luxury brands like Versace and Dolce & Gabbana in
department stores worldwide. In the third advertisement above, UGG Australia not only portrays
that their shoes are rugged and very enduring, they also introduce the new accessory line. The
purse in the advertisement unites with the UGG boots because they are the same color and
feature similar qualities.
UGG Australia uses a lot of is “gratis” product placement. Gratis product placement is
the use of often capturing celebrities and prominent figures wearing UGG boots in magazines
18
and television shows. Companies have little control over gratis product placement because they
do not tell celebrities to wear the boots; they wear them because they like the product.
Therefore, gratis product placement can be considered a good form of publicity.
Above is an example of what the target sees in everyday magazines and tabloids. These
celebrities are merely walking advertisements for UGG Australia and Deckers Outdoor
Corporation.
UGG Australia targets their audience in a wide array of magazines. UGG Australia
advertisements are featured in magazines that reach massive audiences such as, but not limited to
Nylon, Teen Vogue, Glamour and O the Oprah magazine.
19
UGG Australia ads stay consistent among all magazines. They all consist of feelings of
luxurious comfort and most ads feature outdoor or high fashion images. Each advertisement has
no body copy and only shows the model, the shoes and the logo.
Overall Brand Assessment:
UGG Australia holds in itself a strong core product with its line of women’s boots. This
line is extremely popular among females ranging from teens through middle-aged adults. The
product has established a loyal consumer base that not only purchases a first pair but continue to
purchase the product. At the same time, their competition offers up answers to the demands of
some consumers including lower prices, different styles and faux animal materials. Another
shortcoming of UGG Australia is their widely unknown men’s line of footwear. According to
our on-campus survey, the majority of male respondents were unaware of anything UGG
currently offers to their demographic. Those who were aware of UGG offering male products
believed that they only offered traditional looking UGG boots for men, which they considered
“too feminine.”
In response to these weaknesses, we came up with a few ways to turn them into
opportunities. The first issue we addressed was the high-end cost that comes with UGG
Australia footwear. Lowering the costs would hurt the product’s image so we propose a way that
can benefit both UGG Australia and consumers. UGG Australia could partner their counterfeit
education program with special discounts to those who report sites selling knock-offs. This
would help eliminate some of the competition and allow those who might be looking elsewhere
to purchase UGG Australia products. In addition, UGG Australia could advertise this under a
new campaign promoting authenticity by showing that other products are not as good as UGG
Australia. Another issue to address is the promotion of the men’s footwear line. UGG Australia
20
could promote the largely unknown line by putting print-ads in men’s magazines including GQ,
Men’s Health, and Men’s Vogue or incorporate the men’s line into a campaign that promotes
UGG Australia footwear for the whole family. Finally, UGG Australia could promote the shoe
to college-aged males through viral videos that parody the women’s line and establish the fact
that a men’s line exists.
21
Bibliography
All About Ugg Australia- A Corporate Success Story . (2008, May 5). Articlesbase. Retrieved from http://www.articlesbase.com/ fashion-articles/all-about-ugg-australia-a-corporate-success-story-404063.html Imaginations of top designers on display in UGG Australia's Art & Sole Auction. (2009, October). St. Jude Children's Research Hospital. Retrieved from http://www.stjude.org/stjude/v/
index.jsp?vgnextoid=00962f4277e70110VgnVCM1000001e0215acRCRD&vgnextchannel=e2b24616a86d1110VgnVCM1000001e0215acRCRD
Manning-Schaffel, V. (2006, February 13). Brands Get Celebrity Exposure. In Brand Channel. Retrieved from http://www.brandchannel.com/ features_effect.asp?pf_id=301
Much, M. (2010, April 1). Ugg Brand Staying Power Drives Growth for Footwear Maker. In Investors.com. Retrieved from http://www.investors.com/NewsAndAnalysis/Article.aspx?id=529115
Neal, Kim. The Brand of Ugg. Article Snatch. Retrieved from http://www.articlesnatch.com/Article/The-Brand-Of-Ugg/1440
Silverstein, B. (2007, November 10). Ugg Australia: The good, the bad, and the UGGly . In Brand Channel. Retrieved from http://www.brandchannel.com/ features_profile.asp?pr_id=365
Ugg Austrailia. (n.d.). WatchMojo TV - Hulu- Vogue.TV. Retrieved from http://www.watchmojo.com/tv/Hulu/Vogue.TV/9863331/index.php?id=1 Ugg Australia. (2010). Retrieved from http://www.uggaustralia.com/ UGG® Australia and Jimmy Choo Announce a Limited Edition Collaboration. (2010, January 11). Ugg Australia. Retrieved from http://www.uggaustralia.com/ experience/pressreleases.aspx?p=pr
22
Ugg the Brand to Trust When Shopping for Your Family’s Boots? (2009). The Free Library. Retrieved from http://www.thefreelibrary.com/UGG+Australia+the+Brand+to+Trust+when+Shopping+for+Your+Family%3Fs+Boots-a01073939980