1. Case study of Oakley, Inc. Prepared by Donatas Sumyla 12/14/2004

2. Company Overview Why Oakley? Why Oakley? Principal activities are to design, manufacture and distribute consumer products; Principal activities are to design, manufacture and distribute consumer products; Products include performance and prescription eyewear, athletic equipment, apparel, footwear and watches; Products include performance and prescription eyewear, athletic equipment, apparel, footwear and watches; Sold through various locations; Sold through various locations; International; International; Has 550 patents and 875 trademarks; Has 550 patents and 875 trademarks;

3. Company Overview (cont.) Revenue in 2003 - $521.5 million; Revenue in 2003 - $521.5 million; Net income after taxes - $38 million; Net income after taxes - $38 million; Revenues increasing every year; Revenues increasing every year; Major competitors: Major competitors: Nike; Nike; Reebok; Reebok; Luxottica; Luxottica; In 2003 employed 2,456 people; In 2003 employed 2,456 people;

4. E-Business Marketing Goal and Strategy : New Product Development and Distribution Channel Processes: Idea generation; Idea generation; Idea screening; Idea screening; Differentiation through: Differentiation through: Category diversification strategy; Category diversification strategy; Distribution diversification strategy; Distribution diversification strategy;

5. E-Business Marketing Goal and Strategy Products: Products: Great accuracy; Great accuracy; Latest technologies; Latest technologies; Latest scientific capabilities; Latest scientific capabilities; Careful selection of the retailers for their ability to add value; Careful selection of the retailers for their ability to add value; Staff education; Staff education; Focus on introducing new categories and products; Focus on introducing new categories and products;

6. New Product Introduction (NPD) Oakley Thump™ - world’s first performance eyewear combining patented optics with an internally integrated MP3 music player; Oakley Thump™ - world’s first performance eyewear combining patented optics with an internally integrated MP3 music player; Launched on November 20 th, 2004; Launched on November 20 th, 2004; Product launches in international markets too; Product launches in international markets too; Expected success; Expected success;

7. Oakley Apparel Fastest growing and largest newer category contributor for past two years; Fastest growing and largest newer category contributor for past two years; Approximately 65% of sales generated from international markets; Approximately 65% of sales generated from international markets; Accessories represent the largest segment of this category; Accessories represent the largest segment of this category; Strong focus on sporting goods; Strong focus on sporting goods; Women’s apparel represents close to 20% of the category; Women’s apparel represents close to 20% of the category;

8. Oakley Prescription Eyewear Focus on ophthalmic frame and prescription lens categories; Focus on ophthalmic frame and prescription lens categories; Launched 7 exclusive ophthalmic frame styles and 3 additional exclusive frame styles in 2003; Launched 7 exclusive ophthalmic frame styles and 3 additional exclusive frame styles in 2003; In-house lens processing labs’ goals: In-house lens processing labs’ goals: increase capacity to meet demand; increase capacity to meet demand; provide tighter quality control; provide tighter quality control; provide simplified ordering; provide simplified ordering; Increase margins; Increase margins; Increase prescription penetration; Increase prescription penetration;

9. Iacon – Sunglass Specialty Stores A sunglass retailing chain located in Scottsdale, Arizona; A sunglass retailing chain located in Scottsdale, Arizona; Operated 80 mall-based stores/kiosks; Operated 80 mall-based stores/kiosks; Sunglass Club – a new Iacon concept targeted towards outlet malls; Sunglass Club – a new Iacon concept targeted towards outlet malls; Oakley products increased from 28% of Iacon sales for 2001 to 32% for 2004; Oakley products increased from 28% of Iacon sales for 2001 to 32% for 2004; Opportunity to expand retail operations and receive experienced retail management team; Opportunity to expand retail operations and receive experienced retail management team;

10. Financial Overview

13. : Key Growth Drivers: Development of electronics; Development of electronics; Proprietary advancements in eyewear technology and new styling; Proprietary advancements in eyewear technology and new styling; Enhanced product assortment combined with an expanded distribution network; Enhanced product assortment combined with an expanded distribution network; Company-owned retail store expansion; Company-owned retail store expansion; Strategic marketing initiatives; Strategic marketing initiatives;

14. Primary Stakeholders Customers Customers Investors Investors

15. Value Bubble Attracting phase; Attracting phase; Engaging phase; Engaging phase; Retaining phase; Retaining phase; Learning phase; Learning phase; *Mostly refers to Oakley’s website;

16. Attracting Has website to let people know about the company; Has website to let people know about the company; Well known brand; Well known brand; Good positioning and branding; Good positioning and branding; Focus on younger crowd interested in winter and extreme sports; Focus on younger crowd interested in winter and extreme sports; Content on the website; Content on the website; For customers; For customers; For investors; For investors;

17. Engaging To keep a visitor on the website; To keep a visitor on the website; Precise info about the product; Precise info about the product; Toll-free number available for not technology savvy people; Toll-free number available for not technology savvy people; Quick description of Oakley’s O Store®; Quick description of Oakley’s O Store®; Easy navigation; Easy navigation; Categorization; Categorization;

18. Retaining Easy to navigate website leaves a customer happy and willing to come back; Easy to navigate website leaves a customer happy and willing to come back; E-Newsletter; E-Newsletter; War Room News; War Room News; New Product Releases; New Product Releases; Holiday Purchases; Holiday Purchases; Privacy concern is a big issue for Oakley; Privacy concern is a big issue for Oakley; Focus on Customer Service; Focus on Customer Service;

19. Learning Through newsletters; Through newsletters; Gathering information; Gathering information; Email: Email: Feedback and comments; Feedback and comments; Helps in upgrading or enhancing the website; Helps in upgrading or enhancing the website; Toll-free numbers; Toll-free numbers; Gives a one-to-one contact with a customer; Gives a one-to-one contact with a customer;

20. Conclusion Will likely to be successful; Will likely to be successful; At least for another few years; At least for another few years; Reasons: Reasons: The sales forecast is looking good; The sales forecast is looking good; Company focuses on NPD and distribution expansion; Company focuses on NPD and distribution expansion; Positioning as a leader of the market; Positioning as a leader of the market; Questions? Questions?