When New Products and 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 a premature change of strategy. That said, there are several things Pacer can do to halt its downward spiral. Henry Carson should have Sarah, or someone, conduct market research to give him a clear picture of how customers are reacting to the changes in Pacer's running-shoe offerings and the introduction 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 some respondents. The customer survey could start with focus groups and then expand to other, more quantitative types of research. When the 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 remind consumers 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 impulsive decision without solid reasons. When the results are in, then Henry and Pacer's other executives can either junk the program or continue with it. If the research shows that customers like the walking shoes, Pacer should proceed slowly, in a limited number of retail outlets. In today's athletic-shoe market, companies must offer colorful styling and technical innovations to keep up with the competition. Pacer wasn't wrong to...