1. Customer-Driven Feasibility Study
Shoe Skins
Customer-Driven Feasibility Study
Bristol, Cuozzo, Holz, Lyman,
Patibandla, Sexton

2. Executive Summary: Shoe Skins
Research Performed and Customer Pain.
Shoe Skin System, Benefits, Micro-Market
Macro-Market information
Macro-Industry information
Key Learning’s and Conclusion
Dave L. will take this slide.
Shoe Skins is a unique system that makes footwear fun by allowing children to easily change the look of the their shoes any time they want.

3. Research Leads to Customer Pain
Child and parent
interviews
42 survey
respondents
Secondary
Sources
“I like clothes and styles that nobody else has. “ Phoebe (Age 7)
“Being different makes me feel good.”
Colin (age 8)
“At school, you don’t like to be the same.
You want to stand out.” Vika (age 11)
“you can save money by not having to buy more shoes. Molly (Age 10)
Dave L will take this slide
It was clear from the children we interviewed that kids like to express their individuality, but in the hopes that it makes them fit in with their peers. These kids like to express themselves not just with their actions such as through speech and movement, but through their appearance as well. When we talked to the children about being able to change the appearance of their shoes, they very much liked the idea and expressed that they would buy it, show it to their friends and share it. The children and parents we interviewed all loved the idea of having a choice and being able to add variety to the color and style of their shoes. Some of the kids we interviewed had many shoes and now they could have one shoe with many varieties, thus saving money on buying multiple shoes. Some mothers saw this as a major bonus and said, “that the one thing I splurge on for the kids is their shoes, because the cheap ones don’t wear well or last long.”
We believe that through the shoe skins system that includes a base shoe, interchangeable skins, and a online presence where kids can browse/create designs and interact with each other, kids will want to buy shoes skins to fit in with the crowd, but still express their individuality. One concern with the parents is that they will not be influenced by the child’s “psychological” need for shoe skins at least enough to purchase them on regular basis since for them it is more of a need and safety issue. To address this concern, we interviewed parents and confirmed that at the right price of between $15 and $20 for the base shoe and $8 and $10 for a package of 5 shoe skins they would be willing to buy this for their kids. According to these parents, their children should be comfortable and protected with they shoes they are wearing. They want to ensure their kids are wearing the right shoes for the appropriate activity. They also want to ensure they are getting a good quality product that will last a long time. The purchase price must factor in these considerations to ensure parents will not only buy the base shoe but continue to buy the shoe skins over time.
90% of the adults surveyed said their children were part of the decision making process of what shoes to buy
Majority liked to buy shoes at a retailer (most cited Payless, Stride Rite and a variety of discount chains) accompanied by their child. The second most popular way to buy was online.
“like the way shoes feel.” Irina (Age 8)
“Shoes that could change colors would be cool. Allison (Age 8)
Having to buy
multiple shoes for
kids.
Limited choices and styles with existing shoes.

4. Benefits of the Shoe Skin Solution
The Shoe Skin System
Online purchase and community
Variety of colors and styles
Offers individuality and self-expression
Ability to share, collect, and trade skins
Cost effective – less need for other shoe purchases.
Coolness factor of having something new and innovative
Green – reusable skins
Be part of an online community with fun games and activities.
Dave L. will take this slide
After our team conducted a week of interviewing kids and parents we identified a number of motivations for why our customers will want to buy.
Variety of colors and styles
Offers individuality and self-expression
Ability to share, collect, and trade skins
Cost effective – less need for other shoe purchases.
Coolness factor of having something new and innovative
Be part of an online community with fun games and activities.

5. Potential Pricing PRIMARY SOURCES SECONDARY SOURCES
All parents interviewed would pay $30 for the shoe skin system.
40 parents surveyed on typical price paid for a pair of children's shoes:
< $ % 35.9%
$25-$ % 43.6%
$35-$ % 17.9%
> $ % 2.6%
SECONDARY SOURCES
Pricing of existing novelty shoe offerings:
Customizable Converse sneakers: $58 - $95
Heelys: $43 - $80
Crocs: $20 - $40; Jibbitz (clip-on decorations) $3 - $6
Sneakart stickers: $12-$14
We’ve benchmarked pricing against existing novelty shoe offerings:
Customizable Converse sneakers: $58 - $95.
Heelys: $43 - $80.
Crocs: $20 - $40; Jibbitz (clip-on decorations) $3 - $6
Sneakart stickers: $12-$14
In addition, in our primary research all of the parents interviewed were comfortable with an approximate $30 charge for the shoe skin system. (~$20 base shoe and ~$10 for 5 skins).
Forty parents were surveyed on: How much do you typically pair for a pair of children's shoes?
Less than $ % 35.9%
$25-$ % 43.6%
$35-$ % 17.9%
More than $ % 2.6%
This data supports a pricing range of $20 to $30 for the Shoe Skins system.
This data supports a pricing range of $20 to $30 for the Shoe Skins system.

6. Target Market Target Market: 5-12 age group
US Census: Estimated 36M 5-12 YO in 2008
Composes 68% of the total $ 6.2M children’s footwear market
5-12 YO market: $4.2M in 2009
We’ve targeted the 5-12 year old age group. The US Census Bureau estimates that in 2008 there were 36 million children between the ages of 5 and 12 in the US. Assuming that kids tend to grow into adult shoe sizes around age 12, we estimate that our target market composes 68% of the children’s footwear market – with a value of around $4.2 million in 2009, projecting slow by steady growth to $4.4 million by 2011.
Example of the potential opportunity in the “novelty footwear” market:
In 2006, Heelys net sales were $186 million. (target market boys and girls ages 6-12)
Crocs annual revenues for 2008 were $721 million, Americas revenues $366 million

7. Related Offerings and Expansion Possibilities
Licensing potential
Possibility of full outfit creation geared around unique Shoe Skins.
Shoe Skin accessories, such as jibbets or matching laces.
Shoe ad-ons to make them bounce, make noises, or light up.
Limited editions created by artists.
Color, and pattern options truly endless.
Shoe Skins would have massive benefits for related offerings and expansion possibilities. There could be licensing possibilities with Marvel Comics (Batman, Superman, etc.), American Girls, Disney, etc We have considered the possibility of full outfit creations geared around unique shoe skins. There could be dresses, pants, and tops, or even hats that could be added. We could even have holiday or theme outfits that could be created online to really stand out at school or among family and friends, further enhancing individuality. There could be shoe skin accessories, such as jibbets or matching laces. Our team has even considered some outside of the box ideas such as shoe add-ons such as something to make them bounce (many kids, especially boys suggested this), make noises, or have them light up based on proximity to friends or to match their mood or outfit. We have even thought of having limited edition Shoe Skins created by artists to make them truly unique and special. The possibilities are truly endless.

8. Macro Market Size
Macro trends indicate a huge potential for Shoe Skins beyond Children’s Shoes
Market size in Volume Sales:
Growing at CAGR of 5.1% during year & expected to grow at 6.4% during year
Children’s market represents 22% of overall US footwear market
Volume sales are growing at a higher rate than value sales
Both Children’s and Women’s footwear
market is expected to grow at a faster
rate compared to Men’s market
Macro trends indicate a huge potential for Shoe Skins beyond Children’s Shoes. Going forward, growth is expected to be higher in footwear than in many other clothing categories. Women will continue to treat shoes as an important fashion accessory and Children continue to need more shoes as they grow.
Overall footwear market is expected to grow at 6.1% in volume sales. Where as Children’s footwear market is expected to grow at 6.4% and Women’s at 6.6%, a much higher rate than Men’s (5.1%). Growth rates in value sales indicate that there might be a downward pressure on prices. This continuous pressure to keep the prices low reflects on the lower growth rates on value sales. Though overall footwear market is expected to grow at 1.5%, Children’s footwear market is expected to grow at 1.9% and Women’s at 2.1% in terms of value sales.
Children’s footwear market only represents 22% and Women’s 53% of the overall footwear market. Though our primary target segment is boys and girls ages 5-12 years old, the true market size and growth rates are difficult to estimate and we could only assume that it represents the major portion of the children’s market. The length and breadth of our offerings also redefines the macro market.

9. Macro Trend Analysis Summary
Description
Favorable
Unfavorable
Political
Regulatory Environment
____
_____
Economical
Economic Down Turn
Social
Going Green √
Obesity
Technological
Online Shopping
Online Social Networking
Regulatory Environment:
U.S. Consumer Product Safety Commission imposes strict regulations on children’s products around materials, potential for choking hazards, etc requiring increased vigilance in product design and manufacturing standards.
Economic Down Turn:
Per the Euro Monitor International, the economy is predicted to contract by % in 2009 with a slow recovery of 1.5% in By the beginning of 2009, residential investment in the USA had fallen for ten consecutive quarters and will probably remain depressed for several more quarters. Though this trend presents challenge for shoe skins due to decrease in consumer spending, children’s market seem to be growing at a stronger rate than rest of the segments.
Going Green:
Continuous focus on saving the planet by “Green Initiatives” in the US as well as around the world. This encourages providing and using the environmentally friendly products. Shoe skins is in a better position to take advantage of this trend by providing re-usable skins to change the shoe style instead of replacing the shoes.
Rising Obesity:
Obesity continuous to be an issue in Children and Adults in the US. According to Business Week article from last week ( adult obesity rates increased in 23 U.S. states last year and did not fall in a single state, an annual survey released on July 1 found. Adult obesity rates now exceed 25% in 31 states, up from 28 states last year and 19 the year before that. Survey indicate that among children ages 10-17, about 30% are overweight or obese in 30 states. This creates an opportunity for products and services to actively engage children in physical activities.
Increased Online Shopping:
There is an increase in online shopping for the last several years at an annual rate of around 25%. This trend continues to force retailers to provide online shopping experience that is similar or better than that of a physical store. There are several advantages for retailers as they can extend the offerings and effectively target the marketing efforts with e-commerce suites while developing wide customer base. However, the biggest challenge is to create the strong brand awareness before fully exploiting the benefits of online retailing.
Online Social Networking:
The pros of this trend are fairly similar to online shopping with ability to access wide range of customers connecting through friends and family. Social networking is also becoming an effective business tool in connecting buyers and sellers of like interests becoming one of the building blocks for businesses of all sizes in 21st century.

10. Macro Market Summary Overall Assessment: Favorable
Easy access to large customer base
Opportunity for effective/focused marketing
Favorable social trends to re-usable and fitness related products
Overall, Macro market assessment presents favorable trends to Shoe Skins. Technological advancements with ecommerce help to increase the focused marketing by identifying customer purchase trends. Online social networking presents easy access to wide customer base through friends and families. Businesses also started to use these different social networking tools such as Facebook, Twitter, Myspace etc for effective marketing. Social trends increasingly encourage environmentally friendly products as well as fitness related products and services. Shoe Skins discourage buying of new shoes as shoes can be revived more often with trendy skins. Replacing new shoes with new reusable skins is more environmentally friendly and fun for children to stay connected with their friends by sharing the skins.
Rising obesity in the US has been a growing concern. Surveys indicate that among children ages 10-17, about 30% or nearly 1 in 3 Kids and Teens are obese in 30 states. Several healthcare providers initiated collaborative efforts with national medical associations, leading insurers and employers to offer comprehensive health benefits to children and families for the prevention, assessment, and treatment of childhood obesity. This creates an opportunity for products and services to actively engage children in physical activities.

11. Industry Attractiveness
SUPPLIERS
Low
NEW ENTRANTS
Moderate
SUBSTITUTES
All Shoes: Moderate Customizable Shoes: Low
BARRIERS TO ENTRY
Moderate
RIVALS
Moderate
Eric to take this slide. (discuss with Andrea)
SUPPLIER Threat Level : Low
Many manufacturers in China and other Asian countries
If suppliers don’t have high quality at a low price, there are other competitive suppliers to meet this demand.
NEW ENTRANTS Threat Level: Moderate
Manufacturing and Distribution connections are critical
Moderate Startup costs
Experience in shoe design and development
Building brand name takes successful marketing campaigns
Crocs, Heelys,
BUYERS Threat Level: varies
End consumers: Boys and girls ages 5-12 & Adult making the buying decision
Large Retailers Threat Level : High
Large chain stores have immense buying power
Small Retailers Threat Level : Moderate
Small retailers can exert some power
Online Threat Level : Low
Most fragmented purchasers; little power
SUBSTIUTE Threat Level: varies
Shoe Substitutes: Threat Level : Moderate
Variety of styles in sandals, flipflops, sneakers, boots, shoes, etc.
Superman & Batman sneakers vs. Superman and Batman Skins
Customizable Shoe Substitutes: Threat Level : Low
Many footwear styles – none currently instantly customizable
Instant gratification missing in current substitutes
Can translate model into complementary products
RIVALS Threat Level: Moderate
Footwear industry is fragmented
Ways to compete include intellectual property or patents for shoe design and function
Influx of Crocs knockoffs demonstrate potential for rampant patent infringement
A unique, protected design will moderate rivalry
BUYERS
Large Chains: High
Small Retailers: Moderate
Online: Low ?

12. Industry Trends: Our Response
Summary Assessment: Moderately Attractive
Not a sure bet
Niche products
Thoughtful about strategy
Design strategy (IP)
Channel strategy
Crocs and Heelys are recent examples of specialized footwear breakthroughs.
Eric to take this slide. (discuss with Andrea)
Overall, the footwear industry is moderately attractive. There are few, if any, substitutes for shoes. However, there are many different types of shoes available and many makers of shoes. With the availability of Asian contract manufacturing, supplier power is diminished and manufacturing startup costs are less of a barrier to entry, but industry savvy is still key to developing and launching a successful product. The specific channel strategy will determine the dynamics of that vector, which run the gamut from highly unfavorable with mass merchandisers to highly favorable via online sales.
In summary, the footwear industry isn’t a sure-fire winner. However, the success of recent niche players such as Crocs and Heelys demonstrate that the footwear industry can successfully support specialized products like ShoeSkins.
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13. Conclusion Tell them what you told them.
What did we learn about our original idea. Bring this up here.
What is potentially the critical flaw
What is potentially the critical strength.
Questions we still have…more questions than answers?
Dave L. to take this slide.

14. Appendix

15. Who are the customers? Who is seeking the benefit? Who else would buy?
Boys and Girls
Ages 7-12 yrs
Friends important
Very active (sports, dance, etc.)
Parents
Want durable shoes that are comfortable for the kids
Want their kids to be happy
Save money on multiple shoe purchases
Who else would buy?
Companies
Access to a large target market to extend their brands.
Grandparents/Aunts/Uncle
Want their kids to have something to remember them by and like them.
Want their kids to have best, latest things.
With further research, we feel that our primary target segment is boys and girls ages 7-12 years old. We interviewed children under 7 years old, but found that while the need to be unique and fit in was mentioned it wasn’t critical at those earlier ages. We also felt that the online presence would not be as important for children under 7 years of age. Also, over age 13 we found that self-expression with shoe skins would be less important since children would move on to other forms of self-expression. We found that children with very active in sports and other activities such as music, dance, art, etc. would like shoes skins.
Parents are critical to this process since in most cases they are the buyers. It is true that some children will be able to use their own funds (allowances for instance) to purchase shoe skins, but in all cases during the interview children indicated that parents, almost always the mothers, would buy their shoes. In some cases grandmothers or aunts would buy shoes for the kids, but not very often. We found that cost was a critical factor for parents buying shoe skins. They also want to make sure the money spent on the shoes will go a long way so they wanted their shoes to be durable. They want their kids to be happy and take care of the things they own, so ensuring they buy a shoe (or in this case a system) they really like would be important for purchasing decisions.
Companies might purchase the skins themselves and distribute for promotional purposes. New characters from animated or children action movies might make it on to a skins to be given away at McDonalds, Movie theaters, etc.
Grandparents and aunts specifically are other possible buyers. They enjoy buying the kids special items that stand out which helps to make the kids remember them.

16. Benefits over other solutions
CROC
Jibbets
Custom
Converse
SNEAKART
Cool styles, make your own styles.
Use with any shoe.
Strong word-of-mouth.
Loyal customer base
Established brand.
PROS
Crocs and the jibbet accessories is probably the largest competitive threat due to the strong word of mouth promotion and the loyal customer base. Almost all kids have at least one pair of crocs and they usually never stay in the closet for very long. The opportunity for shoe skins is that crocs can only be warn at specific times. For instance, you can’t wear them in winter and they are not very functional for strenuous activities like gym in shoe, sporting events or even around the house play. They also break very easily. Shoes Skins on the other hand can be worn at any time, any season and for most activities.
Mainstream brand solutions don’t give you many options for different styles. They mainly have options to change colors. Converse side had a step by step process to customize the shoe, but it was not easy to change. Doesn’t allow swapping with friends either. On the other hand, converse is an established brand with a large customer base.
Sneakart is another option, but it has not really established itself in the US. They have cool styles and additional color schemes but they hard to adhere and can fall off easily. The shoe skins system will have a more durable adhesive system that will allow the skins to remain on the shoe after many uses.
There are many, very detailed “hip-hop” style shoe art. Does not cater to young children in terms of style and doesn’t allow swapping.
Break easy
Warm weather only, limited activities
Difficult online setup
Limited to colors.
Hard to Adhere
Fall off easy
CONS
Many styles, accessories
Share and swap.
Online social network
Many activities
Any season, any weather.
Easy to attach, remove
Durable
SS BEN

17. Other ideas we’re considering
Other ideas that came up during interviews.
Shoes that click, make noise
Skins that match your outfit for the day.
Theme shoes (elf shoes, princess slippers, etc.)
Shoes that bounce
chameleon shoes
Track your swapped style on the web. What are your shoes doing now?
Track fitness (How far you walked/ran today)
Others as well (see notes)
Long list of additional ideas have come up during the interview process:
Shoes that click, make noise
Skins that match your outfit for the day.
Theme shoes (elf shoes, princess slippers, etc.)
Bounce shoes
chameleon shoes
Track your swapped style on the web. What are your shoes doing now?
Track fitness (How far you walked/ran today)
Kids could update which skin they are using and track which skins their friends are using.  They could say do this before they go to school to either a) use the same skin as their friend OR b) ensure they are unique with their skin for that day. 
Skins could tell friends where they are (GPS connection).
Site could make suggestions for matching clothing to your skins.  Recommend clothes to purchase.
Chip to identify group of "skin friends".  skins will make sound, distinct tune, light up, etc. if one of the friends are nearby. 

18. Current Challenges
Do we want to take on the full shoe manufacturing? Should we just stick with skins for any shoe?
Will it stay on with excessive activity?

19. Shoe Skins
Shoe Skins is a unique system that makes footwear fun by allowing children to easily change the look of the their shoes any time they want.
Children like the ability to express themselves, but they also like to be part of the crowd. Shoe skins allows kids to be part of something fun- sharing skins, trading decorating ideas, seeing who has the coolest designs. At the same time they can show their individuality by picking a shoe skin design that fits their mood and their interests.
We will support the Shoe Skins product with a highly interactive website featuring shoe designs, games for kids. We are also exploring the possibility of allowing the customer to submit their own skin design which they can keep exclusively for themselves or make available to others. Another web element under investigation is to give local retailer the ability to create their own local Shoe Skin sites featuring exclusive designs. We would provide a set of web templates to simplify web development for the retailers and insure a consistent look and feel for Shoe Skin branded sites.
The Shoe Skin System
Web site mock-up

20. The System
The Shoe Skins system comprises a base model casual shoe (or line of shoes) plus a removable “skin,” such as those available for laptops and cell phones.
The skin will affix to a special surface on the shoe.
Shoe Skins will be sold separately in many different colors and patterns and contain robust potential for licensing opportunities.
There is a strong potential for diversification by increasing the number of products that we apply the special surface to. A line of shoes, hats, backpacks, etc…
We also see the potential for licensing the technology to 3rd parties and/or licensing comic book , television and movie images for use on the skins. (Star Wars shoe skins, Superman skins, Hannah Montana, etc…)