Analysis

When new products and Customer Loyalty Collide

Situation Analysis :

Pacer did not make a mistake trying to match some of its larger competitors' moves. It just didn't play the game very well. The company should have done more consumer research before making such major changes in its offerings. Going to its most important customers,serious runners, for input on the existing product line and suggestions for improvement might have prevented what looks like apremature change of strategy.That said, there are several things Pacer can do to halt its downward spiral. Henry Carson should have Sarah, or someone, conductmarket research to give him a clear picture of how customers are reacting to the changes in Pacer's running-shoe offerings and theintroduction of walking shoes. This research should target both dealers and consumers, and it needn't be complex. The dealer survey,for example, could be as simple as sending out a brief letter and questionnaire and following up with personal phone calls to somerespondents. The customer survey could start with focus groups and then expand to other, more quantitative types of research. Whenthe information is gathered, Henry will be in a much better position to decide on a future direction for the company.In the interim, Pacer should reintroduce the original Pacesetter model to gain sales from runners who still remember it and to remindconsumers of Pacer's performance-oriented running-shoe heritage.

Problem Defintion :

The walking-shoe program should stay on course until the research results come back; there's no sense in making another impulsivedecision without solid reasons. When the results are in, then Henry and Pacer's other executives can either junk the program orcontinue with it. If the research shows that customers like the walking shoes, Pacer should proceed slowly, in a limited number of retailoutlets.In today's athletic-shoe market, companies must offer colorful styling and technical innovations to keep up with the...