Action Performance Companies

Action Performance Companies, Inc.

ACTION PERFORMANCE COMPANIES, INC.

I. BACKGROUND OF CASE

A. HISTORY

Action Performance Inc. is the leader in design, marketing, promotion, and distribution of licensed motor sports merchandise for the NASCAR circuit. (Action Performance, 1) The company was established in 1992. Action Performance is a conglomerate that produces sells, and distributes NASCAR racing products. Action Performance is able to hold the leading position in the merchandising arena of motor sports because they've had the opportunities to acquire companies that center on every part of licensed motor sports merchandise. The major subsidiaries of Action Performance are Revell, Winner's Circle, and Action Racing Collectibles for die-cast collectibles. The companies that are used for the apparel lines are: Chase Authentics, and McArthur Towel and Sports Inc. Between every one of Action Performance's companies they clutch over a hundred years of merchandising experience.

Understanding Action Performance Companies, Inc is needed to realize how they have excelled throughout their subsidiaries. Chase is the foremost apparel company, as well as, the single most worn brand in racing. Chase was acquired by ATN in 1998. Chase products are also sold trackside and in major department stores nationally. McArther Towel and Sports Inc. were acquired in 2002 by ATN and gave McArther the ability to broaden its products into the NASCAR industry.

B. EXTERNAL ENVIRONMENT

Action Performance Companies has competition from several of the major retail merchandising companies in America. The primary competition ATN is Mattel, Inc., Hasbro, Marvel Enterprises, Inc., and Boyd Collection Ltd., Reebok, Nike, and Adams Golf. Action Performance Companies secondary competition is everything that can maneuver away consumers from ATN's products such as, entertainment, sporting events, or any other type of discretionary income alternative.

C. TARGET MARKET

Action Performance Companies, Inc., has a primary target market of men ages 16-45 years old that have a love for the racing industry. Secondary target market is any person that is able to watch or experience the racing industry.

D. PRODUCTS

Action Performance has a vast collection of products focused towards the racing industry. ATN is most known for their die-cast replicas collectible cars that represent thirty-three top race drivers of the NASCAR and Indy racing circuits. ATN is also the largest apparel distributor for the motor sports industry. Their apparel product lines range from t-shirts to hats to jackets. The products licensed for ATN are the top in the industry. One of the most innovative products that they offer their customers serves to promote awareness for other retailers or wholesalers in the industry. AP is a promoting firm that ATN uses and owns to help their middle-men create awareness for their stores.

E. PRICING TACTICS

I was unable to find any strong pricing tactics. ATN does not really give any price breaks or promotions such as coupons, or free shipping. ATN seems to stand basically on straight pricing strategies.

F. DISTRIBUTION TACTICS

Action Performance has fifteen distributors throughout North America. The distributors are more locally planted throughout the southern regions due to the design that racing is extremely popular throughout the south. At the moment their distribution channels is their greatest difficulty. ATN presently uses a network of distributors. One of their strongest distribution channels is The QVC Channel they allocate a time block Friday nights especially to ATN product sales.

G. PROMOTION TACTICS

Currently, Action Performance Companies Inc. is working with DreamWorks Animation, Joe Gibbs Racing, Interstate Batteries, The Home Depot to promote their latest NASCAR racing special centered on the film, Madagascar. Tony Stewart and Bobby LaBonte will drive cars that promote the film at the Charlotte race. ATN is teaming up with Dale Jarrett and Kyle Petty to drive special Mother's Day car at Darlington. Each of these promotion tactics target segments that are not their primary market. These programs are used to build awareness about ATN and to use a cause marketing approach to increase their reputation.

II. PROBLEM DEFINITION

In evaluating Action Performance Companies, Inc., It is obvious that their major issue is regarding the company's channels of distribution. ATN is losing revenues quarterly mostly to none paying receivables.

III. IDENTIFICATION OF ALTERNATIVES

A. SWOT ANALYSIS

1. STRENGTH

Action Performance Companies, Inc. strength is that they are the leader in design, marketing, promotion, and distribution of licensed motor sports merchandise.

2. WEAKNESS

Action Performance Companies number one weakness is their channels of distribution they are losing revenues quarterly. By using networks of channels they are losing revenues because of the taxes to be paid on allowances for receivables.

3. OPPORTUNITIES

ATN has the opportunity to increase revenues by targeting other segments through their promotion department. By using cause marketing they are increasing their awareness to other segments.

4. THREATS

The major threat for (ATN) is approaching from major sports memorabilia companies. Some of the companies are Brunswick Corp., Artic Cat, Inc., Cinram International, Inc. (USA). Other competition is coming from athletes who are starting to create companies that focus specifically on sports memorabilia.

B. ALTERNATIVES

1. CANCEL DISTRIBUTION CHANNELS

If (ATN) would create a mega-retail department store owned and operated by the company they could cut out all middle-man and save drastically on distribution costs. By having mega-department stores like, BassPro, they could create entertainment for their existing customers and have the potential to attract many new customers through awareness