Presentation by: Julie Perkins & Jody Vail March 21, 2006 Lady Foot Locker Presentation by: Julie Perkins & Jody Vail March 21, 2006

Situational Analysis Founded in 1982 More than 600 stores nationwide Athletic footwear industry offers a wide array of product segmentation LFL specializes in athletic footwear, apparel, and accessories There are very few retail chains that specialize in athletic footwear for women exclusively Competition consists of department stores, and apparel specialty shops

Situational Analysis Strong relationships with key suppliers is essential: Current products on shelves Special make-up products Highly competitive markets Advertising & in-store marketing Negotiate for: pricing product exclusivity shoe design colors material matching apparel

Situational Analysis Technological advances: Aided in developing further differentiation in the industry Increases consumer demand and competition Shortened product life cycle Promotional activity consists of: Health magazine “Race for Women” Sponsored events such as fitness classes, and spa treatments w/ well known instructors Receive market funds from vendors for advertising, in store displays, and sales associate education for products Athletic event sponsorships

Situational Analysis Trends within industry: Prior to LFL, women were purchasing Keds & Canvas shoes It is now possible to find a sneaker for every activity or sport and even casual wear The athletic footwear market has declined over the past couple years

Situational Analysis Objectives & Constraints: Staying current with new and updated products Working to secure product exclusivity (very hard due to other competitors within the industry) Financial Condition: Strong financial position Pricing strategy allows them to reduce inventory quickly and still maintain profits LFL is currently #3 in the top ten retailers for total pairs sold History of Problems: Suffered one huge product launch failure (Swoopes II) Initially product only sold 3%-4% per week and was forced to markdown after only 10 weeks Issue at Hand: Whether or not to launch a new product (Rebecca Lobo Reebok sneaker) Product exclusivity When to start advertising and launch product

Marketing Strategy Target Market: 18 – 37 year old active females Likely to be active in sports, fitness, and family life 12 – 17 year olds represented an important secondary market Sales however occurred across a broad age segment, the LFL customer was considered to be somewhat ageless market Total U.S. Athletic Footwear Market (% of total pairs sold by consumer segment) Footwear Category 1995 1996 1997 Aerobic 5.0% 5.8% 5.4% Cross Training 11.4 10.3 10.5 Basketball 2.8 9.7 9.2 Tennis/Court 4.1 5.1 4.5 Running 10.1 8.5 8.7 Casual Sneakers 25.5 33.4 34.5 Walking 26.1 24.9 25.2 Other 15.0 2.3 2.0 100.0%

Market Analysis U.S. Athletic Footwear Market (% of total pairs sold by footwear category) Segment 1995 1996 Men (17 + years) 33.0% 35.3% Women (17 + years) 41.8 39.8 Boys 10.2 11.2 Girls 7.1 7.7 Infants 7.9 6.0 100.0%

Marketing Mix Variables Product: Due to growing consumer demand, consumer segmentation, and increased competition, manufacturers frequently introduce new products which shortens product life cycles Pricing: Based on 30% – 55% supplier gross margins on wholesale selling price and 45% retailer markups on the retail selling price Typically offered at full suggested retail price for 1st two weeks Shoes were not marked down until they fell below a 10% weekly push Retail Channels: Competition was based upon several factors: 1) target consumer segment, 2) price, 3) merchandise assortment, 4) store reputation, 5) store location, 6) advertising, and 7) customer service Promotion: Celebrity endorsements National brand and image campaigns

Marketing Expenditures Total Advertising Expenditures for the Top 10 Athletic Footwear Brands Rank Brand 1997 (in millions) 1996 (in millions) 1 Nike $159.0 149.0 2 Reebok 55.0 84.0 3 Adidas 21.0 14.0 4 Fila 15.0 13.0 5 Converse 8.0 5.0 6 New Balance 4.0 3.0 7 Keds 8 Airwalk 2.0 9.0 9 Asics 10 Foot-Joy

Lobo Launch or No Lobo Launch? Facts surrounding the decision: The Lobo shoe would incorporate Reebok’s Hexalite technology Lobo’s contract with Reebok enabled them to involve her in product endorsements and ads, store appearances, and speaking engagements 12-17 year olds would be critical to reach due to their buying power, in the past this segment bought shoes based on fashion, styling, and brand appeal rather than performance When to launch the product: June at the start of the inaugural WNBA season or October when school basketball season begins? Retail Exclusivity: LFL desired exclusivity to help differentiate Marketing Support: Reebok would provide the launch plans and marketing funds (television, print, and in-store merchandise displays) Can a female athlete drive product sales or at least create demand?

SWOT Analysis Strengths: 3rd highest % of total pairs sold within a given year Great reputation for supply of women’s athletic shoes Few other chains specialize in women’s footwear Largest portion of sales during back to school season Prides itself on service 600+ store chains strengthens relationship with vendors Power to solely own the Rebecca Lobo launch Weaknesses: Sales below that of Footlocker and Kids Foot Locker Swoopes II launch failure 12 – 17 year olds do not purchase shoes for performance Web page is not kept up to date Lack of creative advertising

SWOT Analysis Opportunities: More product segmentation Technologies designed to enhance performance Increase in women’s sports participation Lobo contract enabled product endorsements, ads, store appearances, and speaking engagements 12 – 17 year olds critical is proceeding with Lobo launch also offer athletic wear and accessories to match Threats: Sales within industry starting to fall Increasing demand for men’s and children’s shoes Discount stores

The Decision Launch Lobo shoe with Reebok Take minimum amount of pairs for exclusivity (15,000) Price product at $80.00 Advertising and promotional support to commence in June October delivery date for purchase Rebecca Lobo is well known among teens and with solid marketing efforts the market can be reached effectively The Hexalite technology can be marketed as an attractive lightweight active wear shoe providing a great deal of comfort First 5,000 pairs sold will receive one of the following free tickets to a Lobo game photograph with Rebecca Lobo autographed accessories or apparel team shirt