What Are Croc’s Core Competencies?

What are Croc’s core competencies?  

Crocs has three main core competencies: 1) its proprietary “croslite” material, 2) its highly flexible supply chain, and 3) its marketing campaign.

Croslite

Crocs owns the formula for the proprietary resin known as “croslite,” which gives the shoes their properties of extreme comfort and odor resistance. This closed-cell foam material molds to the shape of the customer’s foot, providing extreme comfort; is extremely light; does not skid; is odor resident; and does not mark surfaces.

Supply chain

Crocs’ highly flexible supply chain also provides the company with a major competitive advantage. Unlike traditional shoe companies, Crocs was able to respond to variability in customer demand extremely quickly and capably. Snyder and other key Crocs executives came from manufacturing backgrounds so they were “accustomed to producing what the customer needed, when it was needed, and responding rapidly to changes in demand.”

Unlike many of its competitors, Crocs owned its own manufacturing facilities in Mexico and Italy, allowing for a much greater degree of vertical integration than its peers. The company, in 2006, also created state-of-the-art compounding facilities in Canada, China, and Mexico.

This allowed it to flexibly meet customer demand during the selling season. By contrast, other shoe companies would place bulk orders for each season’s inventory many months in advance and were often unable to adjust to changes in demand during the selling season.

This meant that these companies would frequently overestimate or underestimate demand, leading to lost sales or an inability to unload excess inventory. Crocs, however, could fill new orders during the season and quickly manufacture and ship new product to retail stores.

In addition, Crocs’ highly flexible supply chain allowed the company to develop strong relationships with retailers who were looking for a reliable partner. As the company became more important to its retail partners, some retailers even dedicated entire areas of their stores exclusively for Crocs production, thereby boosting Crocs’ presence even more.

Marketing

Crocs also benefited from a great approach to marketing, which was thanks in part to its highly flexible supply chain. Initially, the company sold primarily to small retailers who were willing to take on more risk than the larger chains. In this way, it helped establish the brand and build a brand presence.

After seeing much success with small retailers, the company was approached by larger retailer. At this time, Crocs was in a much stronger negotiating position and was able to negotiate very favorable terms with many large retailers. By mid-2007, roughly 75% of the company’s revenues came from large retailers.

Furthermore, the company practiced a highly flexible approach to marketing as well, just as it did with its supply chain. It spent according to what it could afford. When sales went up, it increased marketing spending. It also kept ad campaigns ready to go within a week if sales grew enough to support the additional spending.

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