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Analysis of the Entrepreneurial Success of Spanx

Research Paper (undergraduate) 2017 8 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media

Excerpt

Content:

Introduction

Business Analysis
1) Market & Sector Attractiveness
2) Industry attractiveness & Sustainable Advantage
3) Team Potential

Recommendations

Conclusion

References

Introduction

This report provides an analysis of the business opportunity recognized by Spanx’ founder Sara Blakely, and how effective was its development. John Mullins’ seven domains model (2003) is used to carry out the analysis. To conclude, the author will offer several recommendations for young entrepreneurs outlining what can be learned and how to enhance the start-up process with the lessons acquired from the case (Forbes 2012).

Business Analysis

1) Market & Sector Attractiveness

Back in 2000, the hosiery and sock mills market was already a sizable industry, with product shipments value of $2.5 Billion (Census 2004). With a growing number of women in the USA, this value was bound to increase over the years.

With Spanx, it all started when founder Sara Blakely wanted to wear a control top pantyhose for a smooth line under tight pants while leaving her feet bare for open toed shoes. No such product was on the market so she had to cut the feet area off (Pride & Ferrel 2008). She recognized that other woman had the same problem and thus decided to manufacture the innovative footless pantyhose. There was clearly the need for tailored hosiery. Blakely had the whole US female demographic to tap into, which clearly shows the market opportunity she recognized. These factors created a favourable environment for Blakely’s product to prosper.

2) Industry attractiveness & Sustainable Advantage

Even though there were around 250 companies producing hosiery, there was relatively no competition over fitted footless pantyhose (Census 2004). This meant that Blakely’s products were differentiated and unique in the industry. In an easily accessible industry, she had the opportunity to cement a sustainable advantage early on with her unique selling proposition. "Women used to associate control with pain, and so now they are surprised at how relaxed and smoothing the items can be," explains Spanx spokeswoman Misty Elliot (2007). Spanx’ products were both control tops for a better line and confortable at the same. Women were looking good and were confortable, which is everything they could ask for (Sara Blakely 2003). With no similar products on the market, Blakely clearly had a sustainable advantage to build on.

3) Team Potential

Clearly going from a $5000 to a billion dollar business is no shear luck. Blakely recognized an innovative solution and wanted to create a product sellable to millions of people. Success did not come overnight. She was rejected various times by manufacturers; she spent weekends driving the five and a half hours to North Carolina, knocking on the doors of hosiery mills, begging them to manufacture her product (Forbes 2014). She had faith in herself & her product, “when I invented Spanx I heard 'no' for two years. It didn't faze me. I didn't have a special ability; it was sheer drive and telling myself to keep going” (CBS interview with Blakely 2011). Leaders do not perceive failure as a bad thing. It is also possible to respond positively to challenging situations with perseverance and passion towards long-term goals (Posner & Kouzes 2010). Her relentlessness, perseverance and clear vision, showed that she was bound to become a leader.

The next challenge was to translate that vision into a profitable and sustainable business. With no prior experience in business, Blakely appointed Laurie Ann Goldman, who had a robust experience in leading marketing role with Coca Cola. Under her leadership, Spanx grew from a Start-up to a global retailer (Business Insider 2012). With limited funds, Blakely focused on public relations to market her company. One of the factors that made her products famous was the word of mouth. Undoubtedly, word-of-mouth recommendations from people they know and trust are the best way to promote your product to consumers (Nielsen 2015). As Blakely herself emphasises, “The power of woman discovering the brand from other woman was a better strategy… There’s something about saying ‘look, feel my back, no lines’ that’s powerful” (Forbes 2012). Another brilliant move by Blakely was to seek celebrity endorsements. She sent out products to celebrities all over the world. Some of the most notable celebrities that recommended Spanx products were: Oprah, Gwyneth Paltrow, Kate Winslet, & Julia Roberts just to name a few. This created an amount of exposure that no advertising campaign could match. All these moves and decisions highlight Blakely and her team’s ability to execute, through clearly defined objectives & exceptional decision-making.

In addition, what really made a difference was the connectedness the organization had with its customers and prospects. The company conveyed a young, energetic and beautiful personality. Blakely’s charisma & character were impregnated in all her products and branding. A successful brand name like Spanx is distinct and memorable; without one a firm could not differentiate its products, and shoppers’ choices would essentially be arbitrary (Pride & Ferrel 2008). Blakely recognized the value of the ‘k’ sound; it is a trade secret that ‘k’ words make people laugh and feel good (Kaputa, C. 2012). According the Spanx website, the brand name SPANKS hit her one day, which then became SPANX, because made up names are more successful than real ones. The brand name clearly is memorable and pleasing. It breaks down the distance barriers between the company and the customers who are able to adhere to the brand. It doesn’t end here; Blakely went on to name her product lines in an unreserved and benevolent way. She calls her lightweight girdle Power Panties, her active wear In It to Slim it, her casual separates Bod a Bing, and her lightweight undershorts Skinny Britches (Kaputa, C. 2012). This type of branding, engages with customers, and women instantly feel confortable with the products and relate to it.

The branding strategy compiled with a proficient team with a clearly considerable ability to execute, ensured that Spanx became a global brand. In 2011, estimated revenues were at just under $250M, and as many as four Wall Street investment banks valued the company at $1Billion (CNN 2012).

Recommendations

One of the most important factors of success for entrepreneurs is their mind-set. Having the right mind-set is the foremost attribute required by every entrepreneur (Evan Michael 2016). An entrepreneurial mind-set comprises several characteristics; one that we keep hearing is: passion. The energy of passion will keep you going when the tasks are unpleasant, the money isn’t coming in, and your physical energy has done left the building; it will fuel your business when the economy gets tight and the competition gets fierce (Entrepreneur 2014). This means that it is crucial to recognize a vision, an industry or a goal that you are passionate about and pursue it. That passion will power your relentlessness and perseverance. Successful entrepreneurs not only passionately seek new opportunities, but they pursue opportunities with enormous discipline (McGrath & MacMillan 2000). Sara Blakely has clearly shown over the years her entrepreneurial mind-set through an unwavering resilience & a disciplined passionate pursuit to make a difference. Another key characteristic of this mind-set is that entrepreneurs engage the energies of everyone in their domain; they involve many people both inside and outside the organization (McGrath & MacMillan 2000). Laurie Ann Goldman former CEO of Spanx In an interview with Style Blue Print states: ‘Strive for the three “Be’s”: Be naïve, be real, be hungry. Be naïve enough to believe in your dreams, but also be aware of the obstacles. Be real enough to connect with consumers and cross that difficult divide from brand loyalty to brand love. Be hungry enough to realize that when ideas stand still they eventually are replaced by better ideas’ (Style Blue 2016).

Entrepreneurs have to acknowledge that failure is a key to success. No one enjoys discussing or disclosing past failures. We’d much rather become great business successes and fixate on this side of entrepreneurialism, but the reality is that most entrepreneurial success is only the result of experiencing extreme hardship, massive failure, and in following through on the words of Confucius: “our greatest glory is not in never failing, but in rising every time we fall” (Entrepreneur 2016). Failure emphasizes on two factors: either not enough effort was put into the task or project, or somewhere along the line, the process put in place does not fit. Therefore entrepreneurs have to embrace failure and learn from it.

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Details

Pages
8
Year
2017
ISBN (eBook)
9783668393752
File size
453 KB
Language
English
Catalog Number
v352993
Institution / College
Grenoble Ecole de Management
Grade
16.5/20
Tags
analysis entrepreneurial success spanx

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Title: Analysis of the Entrepreneurial Success of Spanx