In March 1991, Russ Lesser, president of Body Glove, a small


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In March 1991, Russ Lesser, president of Body Glove, a small wetsuit manufacturer, reviewed the progress his company had made, as well as the problems it had encountered, in the nine months he had been president. The company was performing well: it was profitable and was ranked number two in market share in the wetsuit industry. But Russ knew that he and his newly appointed management team could not afford to be complacent. The wetsuit industry was highly competitive and the markets were complex, with rapid growth, fashion conscious customers, and seasonal demand. Much of Body Glove’s success depended on its ability to respond quickly and in a coordinated fashion to changing market conditions. These responses should be facilitated by the company’s management processes, and Russ wondered if the company had the right processes in place. Wetsuits are form-fitting, insulating suits made of neoprene, a rubber-like material. The suits are designed to 747748protect water sports enthusiasts, divers, surfers, windsurfers, kayakers, distance swimmers, and whitewater rafters, from cold water temperatures. The suits are called wetsuits because they let a layer of water in between the skin and the suit, and this water, warmed by body heat, provides a layer of insulation. It was difficult to determine the precise size of the wetsuit market because most of the firms in the industry were privately held, but it was believed that the U.S. domestic industry generated over $60 million in revenues in 1990. It was clear that the wetsuit industry had grown rapidly since its beginning in the early 1950’s because of two main factors: One was the emergence of a multitude of sport-specific as well as “fashion” wetsuits which created the consumer desires to purchase a different wetsuit for each sport. The wetsuit manufacturers had also influenced consumer preferences and brand awareness with increased advertising and sponsorship of water sport athletes. Another contributing factor was the growth in participation in water sports activities, fueled by greater television coverage of water sports competitions. The industry was founded by small entrepreneurs, but by 1990 it was dominated by a small number of larger companies. O’Neill, the largest company in the industry, with approximately a 50 percent market share, had the reputation for producing high quality “basic” wetsuits. Body Glove, number two in the industry, was known as a fashion-conscious, high quality producer. O’Neill and Body Glove competed directly against each other in all market segments; the remaining manufacturers specialized. For example, Rip Curl, the third largest firm in the industry, focused on the surfing market. Competition in the industry was fierce, as the firms sought to increase their market shares at the expense of their competitors. Since the differences among wetsuit brands were subtle, most specialty surf and dive shops carried only two or three brands of wetsuits and made changes in their offerings only infrequently. General sporting good stores, such as Oshman’s and Sport Chalet, typically carried lines of lesser quality suits to satisfy their less experienced clientele and were more apt to make brand changes. Most buyers of wetsuits were very image and quality/comfort conscious. Switching costs involved in buying different wetsuit brands were low, making it imperative that Body Glove personnel take care to “earn each sale” and not become complacent. The company marketed itself as a wholesome “life-style” brand, while O’Neill had a “bad boy” image. Maintaining this image required Body Glove managers to approve everything sold with the company’s brand name on it for image and quality. Wetsuits were made of closed-cell neoprene of various thicknesses (1.5 mm to 6 mm). The thickness of the wetsuit depended on its design and its intended use. For example, deep sea diving required a very thick suit because of the extremely cold temperature of the water. Various tec…

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