reveries - jochen zeitz

DECEMBER 2002

"Always novelty," says Jochen Zeitz, CEO of Puma, whose leaping-cat logo is ripping up the sports-as-fashion world. "We're always looking for the next thing," he says.

"Let's talk about this year," he continues. "Certainly, our Cameroon soccer team wearing sleeveless shirts -- which was a big revolution in a traditional sport -- had never been done before. We broke the rules of soccer by having soccer players wear a new and innovative style when they played."

That one created a huge amount of publicity for Puma. And how about that sushi bar promotion? During the World Cup in Japan, Puma placed its "Shudoh" soccer cleats in glass cases on tabletops in sushi bars in New York, Madrid and Tokyo. Chefs also dressed up in Puma-wear as they whipped up "Shudoh" sushi rolls.

Pretty wild stuff for a brand that had been relegated to the discount bins not so very long ago. But these days, sales are up -- way up. In fact, worldwide sales were up 38 percent in the first three quarters of '02, with sales for the fiscal year projected to leap by 50 percent.

Puma's return to fighting form is readily traced to Jochen's ascent to CEO in 1993. He used to work for Colgate-Palmolive in New York and Hamburg. Then, in 1990, a headhunter gave him a call one day and suggested he look at this small company in Southern Germany. He decided Puma looked like a great opportunity for a young manager to get involved and really make something happen.

Yes, well, the young manager in just three years' time became, at age 30, the youngest chairman of a publicly traded company in German history. The press made a big story out of this, but Jochen says he didn't think about it that much because he had such a huge task on his hands.

"I was really focusing on the business itself and trying to turn the company around together with my team," he recalls, adding, "It wasn't something that I felt was special. I sort of blended out the public aspect and focused on the job itself."

The biggest obstacle, he says, was that the company had been restructured many times before and its people didn't believe that another restructuring could turn things around. Eight years of consecutive losses had de-motivated Puma's people.

The key step, Jochen explains, was to make all the changes as quickly as possible, and without having to go back a second time and make further adjustments. "We were looking at trying to build the ideal company in our minds, and then we restructured Puma accordingly," he says.

"We did everything that you need to do -- from reengineering to cutting costs, closing production facilities, warehouses, and so on and so forth. We just streamlined the entire organization without compromise."

All of that was done in just six months -- back in 1993 -- and Puma has been profitable (and giving its larger rivals fits) ever since. It was a massive job. "Yes, it was," he agrees, "but it's a long time ago already."

In light of your background at Colgate-Palmolive, how is selling sneakers like selling toothpaste?

It's very different. At Colgate-Palmolive, we didn't spend hours talking about the thickness of a stripe in our toothpaste!

How is the Puma customer different from your rivals' customers?

It depends on the product line. There is not this "one customer" anymore. There are different consumer groups that have different expectations, who buy your brand for different reasons. We are targeting those different consumers with different concepts and product lines.

How do you balance the Puma image between footwear, apparel and accessories? Which one leads?

Usually footwear leads. But I'd say the more fashionable you want to become and get, the more important apparel gets as well, and accessories. I think one segment benefits from the success of the others. At the end of the day, all three segments can truly set trends and lead the way. But traditionally, in our industry, it usually starts with footwear.

How does your distribution strategy fit with your marketing strategy?

Marketing and distribution have to complement each other. The message you communicate you ultimately need to see represented where you actually sell your product. So, both work hand in hand.

Depending on what product, what concept -- what product line -- we offer and promote, we're making sure that it's also represented in the channels we think are appropriate.

Our Nuala line for example, which is our luxury sports line, we distribute in more fashion-related stores, while the traditional sports line we sell in traditional sports stores. So, depending on where our different consumer groups shop, we segment the products that we would sell in those particular channels.

What is the thinking behind the concept stores you have opened around the world?

When you're a small brand and retailers only give you so much space to represent your product or your brand properly, you have to find ways to really present the consumer with what your company is all about.

Our stores give us a great platform to show to everyone what we have to offer in terms of concepts and products. That's something a traditional retailer couldn't do, because they usually buy items, especially in the U.S. Very few give you a chance to represent your brand with a shop-in-a-shop or POP material.

Showing the brand and what Puma's all about -- in prime locations in metropolitan areas -- that's the goal because that's setting the trend for the brand and is a communication and marketing tool, as well as a sales tool.

Are the stores different in Athens, New York, Paris, London and Tokyo?

No, they're all the same concept, but of course adjusted to the building they're in. Every country -- every building -- has its special flair and feel. Although the interior is the same, we always adjust it to the location. But we work with the same architect and use the same design and display principles.

We also have global marketing concepts and campaigns, and there really isn't a difference between them around the world. We certainly put different weight on different campaigns in the various regions but the core creative is the same.

Are the days of celebrity endorsements of sporting goods ending?

No, I don't think so. But they are not what they used to be -- in terms of when you endorse an athlete that you automatically sell a lot of products. Today, consumers certainly look at an endorsement differently than they did ten years ago.

When Boris Becker started wearing our products and was a winner, there was a huge boom. But the days are over where the consumer buys something because an athlete is successful. There are some exceptions -- maybe in basketball or in soccer.

But at the end of the day, the consumer today doesn't buy only because a player is playing great, but because the player has a great personality that matches with the brand that he or she is representing. That is what it is all about. It is less a selling tool and has become more of a marketing tool.

How do you identify the next Serena Williams?

You need to have the know-how in the company with people who are enthusiasts about sports and who follow sports and who have the instincts. It's not something that you can plan; it's just something that you have to have within your company.

So, if you have an open environment and you foster entrepreneurship and initiative, then automatically your people will be watching and trying to find the next athlete or the next great concept for the company.

How do you encourage creativity and innovation at Puma?

I think you have to live it, ultimately. Words on paper don't mean anything. You have to live it yourself. Your whole management has to live it and if you see any deviation, you have to step in to correct things.

So, if somebody doesn't come through with an idea that he or she has, because of whatever reason, you have to adjust your organization accordingly. Ultimately, management needs to live the environment and needs to hire people who are interested and willing to change, rather than just to work on their particular area of responsibility.

So the corporate culture then really is manifested in the brand's image and the way the brand is marketed?

Yes, and the way you hire and support people, as well. We hire people with all kinds of different national cultures and backgrounds. That ultimately gives us a unique mix of people who can then influence each other in positive ways. So, we hire the people and give them a chance to really show their ideas. Hierarchy in our company certainly doesn't play any role.

How do you make sure that the innovations benefit the bottom line?

It's hard to say that everything benefits the bottom line, because you have a lot of ideas that you need to try out to find out whether they benefit the bottom line.

Creativity is the underlying principle of whatever we do and channeling creativity through our virtualized structure, through IT, and through the processes that we set up -- that's the goal of the company.

Ultimately, we come out with more and more creative ideas. But to say that you can always make sure creativity ends up in the bottom line, I think, is impossible. You need to give creativity a chance to develop as well.

Puma's stated mission is to become "the first truly virtual sports company." What does that mean and how are you accomplishing it?

It means that we don't operate out of one headquarters. I truly don't believe that having everything in one place ultimately is the way to go, especially if you work in a global marketplace. Therefore, we've created three headquarters -- one in Germany, one in the U.S., and one in Hong Kong.

Those three headquarters share the various corporate functions. That means we hire people for different functions in different countries and they are all connected through IT and communicate through IT. We are trying to use planes less and less.

"Virtual" actually may be the wrong word. One should probably say a "virtualized" company, where location doesn't really play a role anymore. It's totally independent from location and how you do business, and move things forward. Take product development, for example. It's actually divided among all the three hubs, with certain development functions in Germany, certain in the U.S., and others in Hong Kong.

They each complement each other and work together. It's all integrated through proper IT, so no matter where you are, you can access the same kind of information and add to the entire development chain.

What is your view of the Internet as it relates to your marketing strategy?

It's absolutely crucial. Without the Internet we couldn't possibly live a virtual life, because ultimately you need to access all the information, no matter where you are -- whether you're traveling, whether you're in Germany, the U.S., or Asia. From that perspective I think it's absolutely one of the key cornerstones of our strategy.

It certainly will become even more of an element of commerce in the future. And of course commerce doesn't end just with selling things. It's also a way to integrate your supply chain as well, which is commerce with a different definition.

How will Puma as a company change over the next five years?

It will change through our output. What we have established as a company is an automatically changing organism that constantly evolves, that's what we are. Ultimately, the output will determine how we change as a company, because our success will be determined by the products that we put into the marketplace.

So, the product and the successes that we have in the market will continue to change the company as well. But to say Puma, as a company, will become younger or older -- I don't see that. Change is part of our culture.

We have evolved over the last ten years and we will continue to evolve. But to say, this is where we're going to be in five years as a company, I think that's very hard to determine because you can't predict change.