The Rise of New Balance
Here is the video we made from this transcript: YouTube
Boston-based New Balance was founded in 1906 by William Riley. At first, the company was solely manufacturing arch supports designed to improve shoe fit. And believe it or not, Riley found inspiration for his arch supports from observing chickens in his yard. He explained that the chicken’s three-clawed foot results in perfect balance .
It took New Balance quite some time to market its name and gain an important share of customers. Its defining moment was when it decided to pivot into the athletic market in the 1930s by producing footwear for baseball players and track and field athletes . However, the brand was still small and it relied heavily on word of mouth.
It was not until Jim Davis bought the company in 1972 that the company grew exponentially. At that point in time, the company was employing only 6 people and churning out 20 to 30 pairs of shoes per day. The 1970s saw an explosion of joggers in the Boston area as running shifted from an activity reserved only for athletes to a leisure-based one. Davis invested heavily in capital improvements to increase capacity in order to satisfy the surge in demand.
New Balance launched the 320 in 1976, which was voted as the number one running shoe by Runner’s World magazine. Their “N” logo, designed by Terry Heckler, gained in popularity, although there were fears that the logo would confuse consumers who would associate it with Nike . Their ad campaigns for the 320 did not center only around the younger population and this was part of the company’s ingenuity in attracting a broader consumer base.
Moreover, the shoes were given numbers instead of names to create a sense of equality amongst all products. With his clever marketing strategies in place, Davis managed to grow sales from 100,000 dollars to 60 million dollars in 10 years. And that was only the beginning. Sales reached 100 million dollars by 1991 and 550 million dollars by 1997 .
The company launched the 991 in 2001, which was worn for quite some time by late Apple CEO Steve Jobs on keynote events . This is also the same year that New Balance acquired the trainer brand P.F. Flyers, which it relaunched in 2003. Then in 2004, it bought lacrosse equipment manufacturer Warrior Lacrosse, now known as Warrior Sports .
In the midst of the US Presidential Election in 2012, New Balance manufactured a unique pair of shoes for President Barack Obama. But this gesture from New Balance was part of a bigger plan. At that time, there were concerns about domestic manufacturing and fears of having to move abroad to keep costs down.
New Balance was also pushing the Berry Amendment, a 1941 rule that requires clothing for American soldiers to be manufactured domestically. And in 2018, it was finally awarded a contract worth 17 million dollars by the Department of Defence to supply sneakers to military recruits . In the meantime, the company launched new product lines, namely a skateboarding shoe called New Balance Numeric and another line called Fresh Foam.
Historically, New Balance was not big on celebrity specific endorsements. They were more inclined to sponsorship deals with sports clubs and events. In 2015, they forayed into the soccer space by signing a 40-million-pound contract with Liverpool, which unfortunately did not get renewed in 2020 .
But the company can rely on its other sponsorship opportunities to make up for that. At the end of 2015, it signed a 10-year sponsorship deal with the New York Road Runners, the association that organizes the New York City Marathon. The deal also called for New Balance to produce all the race shirts and manage the New York Road Runners’ e-commerce platform . To take it a step further, New Balance went back to their roots when they signed a sponsorship deal with the New York Mets baseball team in 2018 .
But the company realized that it needed to play big in the celebrity endorsement space in order to compete effectively with Nike, Adidas and Under Armour. As a result, the company signed Kawhi Leonard to cement a strong position in the basketball market . New Balance even became an official marketing partner of the NBA in 2020. As part of the deal, the company will create content that feature New Balance sponsored athletes in their respective NBA uniforms and team logos .
New Balance definitely grew into a multinational multi-billion-dollar company. Under the leadership of Davis, revenues grew to 4.5 billion dollars in 2018 and they are expecting to rake in 7 billion dollars in annual revenues by 2023 .