BUSA 270/ACCT 470

Case Study: Skechers

Revised Due Date: Tuesday, September 29
Instructions
Read the case below and respond to the questions following. Format your paper in
a question and answer format. Please remember to include your name and a page
number on each sheet.
Case
Skechers USA, Inc., is a $2-billion-a-year company, describes itself as an awardwinning global leader in the lifestyle footwear industry, [and] designs, develops and
markets lifestyle footwear that appeals to men, women and children of all ages . . . .
With more than 3,000 styles, Skechers meets the needs of male and female
customers across every age and demographic.
Any shoe company could say something similar. What separates one from another.
Increasingly, it isnt the shoes. It is the information.
Information systems are woven into every part of Skechers business. Its recent
investment in Oracle applications, including cloud computing demonstrates the
companys commitment to information systems. Mark Bravo, Skechers Senior Vice
President of Finance, says, As we manage growth, we are establishing a business
structure that lowers costs and creates more value and flexibility across the
business. The . . . cloud services helps us to lighten our IT overhead and enable us
to respond more quickly to market opportunities. Therefore, it was natural that
Skechers would turn to information systems to help with customer retention.
In a fast-moving consumer product category like shoes, using information to
understand, attract, and retain customers is even more important than having the
latest technology. Many companies use loyalty programs to help retain customers.
A pizza shop might give its customers a card that is punched every time they buy a
pizza. When the card has ten punches, the customer can order a free medium pizza
with two toppings. Loyalty programs reduce the chances of a regular customer
switching suppliers even if another shop sells pizza for less during a promotion or
offers a different advantage.
After Skechers decided to offer a loyalty program, their challenge was this: How to
design the program for greatest sales impact? The company had to balance ease of
earning rewards, the value of the rewards, and other factors so they gave away as
little as possible while retaining as many loyal customers as possible. In the pizza
shop, a free pizza after twenty might put the rewards too far out in the future to be
attractive. Ten is a good middle ground.

BUSA 270/ACCT 470 Case Study: Skechers

The loyalty program that Skechers designed, planned jointly by their marketing and
information systems departments, is called Skechers Elite. (See
http://www.skechers.com/elite.) Members earn free merchandise ($10 credit for
every $100 spent), get free shipping and enjoy special promotions. In addition,
Gold members (who spend at least $300 on Skecher shoes in a calendar year) get
higher merchandise credits, sneak peeks at future products and earn other higher
benefits.
Skechers couldnt operate Skechers Elite without information systems. The system
that supports this loyalty program records information about members, their
purchases, and the rewards theyre entitled to, so members can track their
participation online. In addition, the system provides Skechers management with
information about the purchase patterns of regular customers, such as shoe designs
that appeal to them. The system also lets Skechers send targeted promotional
materials to its best customers.
Does this information technology pay-off? According to industry analyst, Peter Chu,
it does. He found on November 2, 2011, that Skechers (SKX) stock performance
outpaced that of the other shoe manufacturers he tracked. He considers that
performance a bullish sign of underlying fundamental and technical strength.
Questions
Each question contributes 10 points to the 50-point total value of this assignment.
1. What kind of information does the Skechers Elite program need to operate?
Build a list. Be as specific as possible in this list, share brief descriptions if
necessary. When the program first launched $10 certificate was disbursed for
every $150 of merchandise purchased. Now its $100. The amount of
purchase to quality for Gold level was $750. The limit has since been
reduced to $300. What information might Skechers have collected that
encouraged them to reduce their limit?
2. Aside from its direct benefit in increasing customer loyalty, what other
benefits might the program provide? For example, how could Skechers use
the information in its planning and sales activities?
3. Based upon class video and discussion of cloud computing structure and
benefits, which are potentially applicable to Skechers? Why? How might
these facts relate to Peter Chus, conclusions?
4. In the five years from 2005 2010. Skechers approximately double its
revenue from about $1 billion to about $2 billion. This is a high growth rate.
How do you think this growth rate affected their spending on information
technology? How might this growth rate precipitated Skechers adaption of
cloud computing technologies?
5. In its 2011 annual report, Skechers warns investors that Many of our
competitors are larger, have been in existence for a longer period of time,
have achieved greater recognitions for their brand names, have captured
2

BUSA 270/ACCT 470 Case Study: Skechers

greater financial, distributions, marketing, and other resources than we do.
Part of this wording is required by financial regulations, but it is nonetheless
true. Identify three companies who compete with Skechers. How can
intelligent use of information systems help Skechers overcome the difficulties
described in its annual report?

Rubric
Assessments will be completed referencing the following rubric.
45 50

40 - 44

35 39

X < 34

Q1

Comprehensive
identification/descri
ption of major and
minor data
elements; strong
conceptual
understanding of
business model and
relationship to
loyalty marketing
efforts. Offer
examples/details of
information
supporting
conclusion.

Identification/descri
ption of major and
some minor data
elements; grasp of
relationship
between business
model and loyalty
marketing efforts.
Offer at least one
example of
information
supporting
conclusion.

Identification of
some major and
one or two minor
data elements.
Inaccurate or
incomplete
illustration of
relationship
between business
model and loyalty
marketing efforts.
Offer no or
inaccurate
example/details
of information
supporting
conclusion.

Q2

Accurate and
complete
identification of
benefits of
customer loyalty
program. Thorough
and accurate
planning and sales
examples.

Accurate but partial

identification of
benefits of
customer loyalty
program. Partial
discussion of
planning and sales
examples.

Inaccurate or
incomplete
Identification of
benefits of
customer loyalty
program. Partial
discussion of
planning or sales
examples.

Q3

Enumerated
assimilation of
video and article
references,
Relationship to case
and discussion of
relationship to
bottom line and
financial metrics
and statements.

Limited assimilation
of video and article
references.
Relationship to case
incomplete and
discussion and
impact to bottom
line taken no
further. Limited or
inaccurate financial

No financial
discussion.
Reference to
video or articles
limited. Case
reference
incomplete. No
discussion of
bottom line
relationship.

Identification of
one or two major
data elements;
no minor data
elements.
Incomplete and
incomplete
illustration of
relationship
between
business model
and loyalty
marketing
efforts. No
attempt made to
identify
information
supporting
conclusion.
Inaccurate and
incomplete
identification of
benefits of
customer loyalty
program.
Inaccurate
discussion of
planning and
sales examples.
No financial
discussion. No
clear references
to class content,
video and/or
article.
Inaccurate
relationship to
case. No attempt
or inaccurate

BUSA 270/ACCT 470 Case Study: Skechers

metric/statement
implications.

Q4

Identify, discuss and

justify spending
patterns and impact
on IS investments;
accurate and
complete relation to
benefits of cloud
computing.

Identify, discuss and

justify spending
patterns on IS
investments;
incomplete relation
to benefits cloud
computing.

Q5

Discuss necessity of
such a clause in
financial
statements.
Identification of
three competing
companies. Three or
more market
realities and
appropriate benefits
of IT investment
discussed.

Incomplete
discussion of
necessity of such
clause in financial
statements.
Identify three
competing
companies. Two or
three market
realities, but
incomplete relation
to IT investment
options.

Identify spending
patterns, limited
discussion or
justification of IS
investments.
Incomplete or
inaccurate
relation to cloud
computing.
No financial
discussion.
Identify three
competing
companies. One
or two market
realities;
discussion
incomplete or
inaccurate.
Incomplete or
inaccurate
relation to IT
investment.

discussion of
financial
implications.
Identify spending
pattern but no
discussion and
no justification of
IS investments.
Incomplete and
inaccurate
relation to cloud
computing.
No financial
discussion.
Identify two or
less competing
companies. One
or two market
realities not
discussed.
Incomplete and
inaccurate
relation to IT
investment.