Out From The Shadows: Shimano Snow Technologies

What would K2 snowboards be without the Clicker? After all, a reported 60 percent of K2’s snowboard-related business is from Clicker boots and bindings.

But K2 didn’t do it alone. There from the beginning has been Shimano, the giant Japanese bicycle-component company that revolutionized the bicycle industry with its quick-release SPD pedal technology.

While in the past Shimano was apparently happy to hang back and let K2 handle the snowboard marketing and brand extension for Shimano, recently the brand has been more aggressive getting the word out about its own, separate Shimano Snow Technologies division.

How will this affect its relationship with K2, and what can we expect from the new marketing push? SNOWboarding Business visited Shimano Snow Technologies Product/Team Manager John Telfer at his Irvine, California office for the lowdown on the company’s quest to become a high-profile snowboard player.

SNOWboarding Business

: How did the relationship with K2 start?

Telfer: Back around 1992 the Shimano bicycle business was hurting, and the fishing business hadn’t taken off yet. Everyone within the company was tasked to start looking at other industries that made sense for us.

About the same time, K2’s Brent Turner knew that step-ins were the next thing coming in snowboarding–and he was looking for a company to make it happen for K2.

He and others at K2 knew the bike industry; they knew SPD. So K2 made some inquiries with Shimano Japan.

I was working for Shimano America as a systems analyst. I was also a hardcore snowboarder and was actually looking to make a move into the snowboarding industry. When I got whiff of this project, I did a quick analysis for the president of Shimano Japan, and started lighting fires as fast as I could. I knew step-ins were the next thing, and I knew we could do it, but I never thought we would get involved with the industry as much as we have.

Shinpei Okajima the head of Shimano’s actions sports design team and I got together with a couple of the guys at K2–basically Brent Turner, Luke Edgar, and Jason Kasnitz–and started playing around with different ideas.

K2’s vision was definitely SPD. But as an engineering company, we wanted to look at all the possibilities. It was the spring of ’93 when we did our first on-snow test up at Mt. Bachelor. We were testing side mounts and we went through several iterations of that before we applied the SPD approach.

Why didn’t K2 buy the technology and take it as their own?

Developing a mechanical-based system is far more complicated and expensive than a strap setup. K2 had the insight to partner with someone who had already made the investment in the facilities, so they didn’t need to worry about what would have been be a long-term, heavy capital-investment project.

We’d make the capital investment and put a ton of money into R&D, but could leave setting up a sales, distribution, and marketing network to them. That’s a huge investment.

We’ll never be a marketing company, so it was perfect for us to have K2 involved. It was a two-way street. It’s a really unusual relationship, but it really worked at the time and it still makes sense now. We’re just acting as a manufacturer with a single buyer. We make our margins from K2 and K2, as distributor, makes its margins from the retailers.

By the second year it became clear that K2 wanted to make boots one way and we wanted to make boots another–which is good. We’ve been making footwear for a decade, and we have our own ideas about footwear. So K2 became not just a distributor of our product, but a distributor of our brand name.

So explain the launch of Shimano Snow Technologies and its role in the market.

To be honest with you, we’re trying to figure it out ourselves. We think our technology, quality, and superior fit allows us to supply retailers with the best boots in the industry. We are very proud of that line, so we want to be a player. That requires a little bit of marketing. We can’t just rely on our manufacturing and innovation. And we can’t just rely on K2. As everyone has seen, and not just people in the snowboarding industry, K2 is really pushing its brand name. It’s not intentional, but that comes at the expense of our brand. So it’s up to us to make people know that we do have these lines of boots and we’ve been pushing the envelope since day one.

Will this marketing drive affect the way K2 and Shimano share information on product development?

As far as systems are concerned, It always has been and will be a collaborative effort. We spec’ed the HB out together. We’re not in the business of branding bindings, so we share any binding innovation with K2. It’s a system, the Clicker system, and a completely joint project between Shimano and K2.

But if K2 comes up with something, they put it in their boots. If we come up with something, we put it in ours. If it’s something that can be shared without diluting the two brands, we’ll share it. We want to see K2 sell a lot of boots and K2 wants to see Shimano sell a lot of boots because they’re distributing them. But at the same time, we want our boot lines to have some of their own personalities.

Is the average rider confused about the difference between K2 and Shimano?

There’s a ton of confusion. I don’t know how many times I’ve heard the boot called the K2 Skylord. The boots are sharing catalog space with K2. They’re sharing shelf space with K2. They’re being sold by K2. So of course there’s some confusion.

That’s a lot of where my new focus will be. I’m moving a bit from R&D to focus more on marketing. Well, it’s really not marketing, but brand identification.

So how is that going to change?

As far a distribution goes and K2’s marketing for us, it’s not going to change too much. We’re working on some promotional programs and a straight advertising program with TransWorld’s two magazines, with Snowboarder and with Onboard in Europe. The first thing I want to clear up is that we’re not pulling away from K2 by any measure.

Those guys at K2 are incredible. They’re not as strong image-wise as some of the other companies, but those guys are ’core snowboarders who have done a great job selling our product.

My program is just to support them by supporting our brand. It’s hard to say we need better distribution with the binding; the system is very well distributed. But I think sales would do even better if the consumer knew about the Shimano brand and came in looking to buy the Shimano brand and not just Clicker boots. I keep hearing the same thing: people want Clicker but they don’t know who you are. It’s obvious there hasn’t really been any Shimano brand promotion.

How big is the Shimano boot program?

I can say that the snowboard division is a incredibly small percentage of total Shimano business. I would say less than five percent for sure, and yet we’re already being treated as the third part
of the company triad–which is pretty remarkable. Bicycle is by far the biggest and fishing is pretty healthy, but much smaller than that.

We don’t expect this business to be anything like our bicycle business. We really had an opportunity to give something to snowboarding, to push it forward. There’s lots of activities where it would be far easier for us to make money. But this was something we were qualified to do.

What are the key attributes retailers should know about Shimano that would distinguish you from K2.

I don’t want to say distinguish because any time you distinguish from someone you’re basically saying you’re better than them by some measure.

But aren’t you? At least on some measure?

I guess we have our strengths and weaknesses like everyone else. Shimano as a whole will always have the most innovative product out there. Everyone else is going to argue about that, but that’s our focus. We’re engineers. Everyone but myself is an engineer at this company. Our investment in R&D is gigantic. For sure we have the largest ratio of R&D to marketing–and we probably always will.

We’ve had problems making money on boots because our quality is so high and yet we’re still trying to hit the same pricepoint as not only non-step-in boots, but maybe lower-quality step-in boots at a high margin. It’s a tough thing for us.

It’s almost a disadvantage that our company is R&D driven and the guys in that department are never satisfied. They always can come up with something new or better. It’s often just a matter of yanking the product out of their hands and telling them, "This is well ahead of the rest of the market, let’s go ahead, produce it, and ship it."

We own our own factories. Our sourcing doesn’t move. Retailers can expect a real consistent year-after-year output from Shimano. This program is basically picking up speed. It’s not slowing down.

There are at least eleven different step-in models on the market now. Is the variety helping or hurting the category?

We hoped from the start that there would be other step-in companies. Step-ins were needed for snowboarding. It’s gaining momentum, but not as fast as we expected. That’s because companies, ourselves included, did not fully meet the expectation of riders. The entire step-in market has been a disappointment really because products haven’t reached their potential, and the companies from the start have really been cannibalizing each other.

You expect the strap makers and those with lots invested in strap-binding sales to really attack step-ins. Right from the start a lot of our competitors were digging on us and other competitors. All that did was slow things down and give the step-in category in general a lot of negative press.

It’s funny because all the negative talk just degrades the entire category and shows our weaknesses. It’s just not our style. If we’re going to spend money on advertising, we’re going to talk about the features of our product. I guess it’s nice people are wasting their money blindly swinging at us.