SanukIntroduction to Costa Rican market

“Devoted to the relentless pursuit of creating unique footwear designs, Sanuk prides itself in bringing: freedom,

style, and comfort to everyone's feet.”

By: Preston Hayes

About Sanuk Established 1998 in Santa Cruz, California

Jeff Kelley stumbled upon the idea after a routine surf session• “I could actually feel myself using my toes and

muscles in the ball of the foot to project myself up, that is when a little light went off in my head.”

2 weeks later• Prototype of the award winning “Sidewalk Surfer”

was created

Sidewalk Surfer

Created a new category of footwear

Currently produce 132 different styles of close-toed and thong sandals

Target Market Men and women 15-35

• Leading active outdoor lifestyles

Major emphasis on surfing and climbing

Majority of sales occur in brick-and-mortar outlets• Val Surf, Ron Jon’s, REI, Bass Pro Shops

Currently sold in over 24 countries

Advertising/Marketing Celebrity Endorsements

• 77 professional surfers, kayakers, and climbers currently on the Sanuk team

Print Advertising• Full-page articles in action sports magazines

Social Media• Facebook, Twitter, YouTube, Sanuk Blog

Awards 2007 SIMA

• “Footwear Product of the Year”

2007 Footwear Plus Magazine’s • “Footwear Industry Product of the Year”

2008 Trade Publication Magazine’s• “Innovation of the Year Award”

2010 SIMA• “Footwear Product of the Year”

Costa RicaBusiness Opportunity

Country Description Geography

• Located in Central America• Approx. 51,000 sq ft (size of Louisiana)• Pacific & Caribbean coasts / central mountain

range

Population • 4.5 million people• Growing at rate of 1.3% per year• Mostly European ethnicity• Spanish is primary language

Country Description – Cont’d

Education:• Highly educated

9 years of school required• Literacy rate of 96%

Health:• Life expectancy between 75-80 yrs• Infant mortality rate of 9.45/1000

Country Description – Cont’d

Workforce of 2.05 million workers

Economy:• Shrank in 2009 due to 8% drop in tourism• GDP: $38.27 billion• Per Capita Income: $6,900• Currency: Costa Rica Colon• Commerce, tourism, and services make up

68% of GDP

Political Environment Mature democracy

History of domestic and foreign efforts to promote peace

No military• Only a professional Coast Guard

High levels of non-violent crimes• Due to complex judicial system• Subpar police presence

Political Environment – Cont’d

State monopolies on key industries

Open international relations to remove barriers to trade

US most important trade partner• Accounts for more than half of total exports,

imports, and tourism

Extensive infrastructure in place

Costa RicaIdeal Market for Sanuk Expansion

Tourism is Key One of the top destinations for

adventure travelers

“Smile! Pass it on”• Promotes a relaxing carefree lifestyle

Topography allows for the most diverse action/adventure sports in western hemisphere

Surfing

Fishing

Rafting/Paddling

Unlimited!

Sanuk Target Market Tourist

• Outdoor enthusiast between ages of 15 and 35

$2.2 billion per year tourism industry• Ranked 56th in the world for tourist arrivals• Over 2 million visitors a year

82% of tourist obtained University Degree• High level of disposable income

Extend focus beyond surfing

Secondary Market Local Residents age 15-35

• Active in adventure sports and outdoor activities

• Interact frequently with tourist population Primarily through hospitality industry

Costa RicaProduct Availability/Merchandising

Retail Strategy Introducing 8 different styles

• 5 men’s • 3 women’s

Display Configuration• 4 sided• 3 pegs per side• 12 units per peg

Sanuk Display• Offering 11% display allowance• Main form of in-store advertising*Total= 12 cases or 144

units

Side 1THE STANDARD FRAIDY CAT

Male Sidewalk Surfer Female Sandal

$48

$36

Side 2DONNY DONNA

Male Sidewalk Surfer Female Sidewalk Surfer

$48

$52

Side 3SLACKER YOGA MAT

Male Sandal Female Sandal

$26

$28

Side 4YOU GOT MY BACK PANCHO

Male Sidewalk Surfer Male Sandal

$55

$30

Packaging Strategy Freely hanging package design

• Major success• 60% of Sandals purchases are impulse• Encourages Interaction• Frees up employees

Communication Strategy Following Sanuk’s current U.S.

strategy • Point of sale displays• Print advertising in lifestyle magazines• Airport advertisements• Athletic endorsements

Print Advertising Full-page ads in 2 lifestyle magazines

• Leading publications on adventurous outdoor activities in Costa Rica Costa Rica Outdoors Costa Rica Adventure Travel

Print Advertisements

Airport Advertisements Raise awareness as soon as

consumer reaches destination

Two major airports• San Juantamaria Airport• Daniel Obuder Airport

Ads will promote adventurous spirit & follow Sanuk’s positive positioning

Athletic Endorsements Introducing 2 new athletes

• Local Costa Ricans Selected based on respect in the eyes of the

locals&

Athletic ability

Costa RicaDistribution

Channel Options Direct Importing

• Free Trade Agreement with China will lower duties

Broad National Distribution• Use Gollo Group distribution

center in Alajuela

Superior Distribution Network• Speed to market• 2 primary targets - Pacific Coast & inland

mountainous region

Pacific Coast Surf shops, beach apparel shops, and

hotels in the following cities• Tamerindo• Jaco• Playa Grande• Hermosa• Dominical• Pavones

Inland Regions Shops and hotels near the following

landmarks• Lake Arenal• Cerro Chirripo• Rio Pacuare• Rio Reventazon• Rio Sarapiqui• Rio Naranjo• Rio Savegre

Costa RicaCompetition

Competitive Environment Limited competition in geographic area

• Internet presences only

Local companies currently focus on different, lower-end consumer

Biggest threat is Reef Sandals• Largest market is US• Experience with international branding• 60% sales in international markets

Competitive Environment – Cont’d

Additional threat - Rainbow Sandals• Strengths

Major competitor in US market Primary target market is surfers Competitive advantage of better performance

coming out of water• Weaknesses

No closed toe shoe Viewed as high end flip flop

Summary Costa Rica represents a significant

opportunity for Sanuk expansion• Ideal target market• Predominant outdoor lifestyle• Unique tourism dynamic – high levels of

disposable income Allows Sanuk to maintain premium price/margin

strategy• Superior product line vs. competition