Because a
substantial and growing fraction of branded footwear sales is occurring at company Web sites, a
company’s sales of branded footwear in a particular geographic region depends on the effectiveness
of its online sales effort. The number of pairs a company sells online to buyers is a function of three
global factors and three region-specific factors. The three global determinants of the unit volume sold
online are (1) the number of different models and styles offered at the Web site, (2) the company’s
Internet sales price for these models, and (3) whether shipping fees are added to the buyer’s cost of
the footwear purchased online or whether the company offers free shipping (and thus absorbs the
shipping fees). The three region-specific factors are (1) the S/Q rating of the pairs available in each
region’s distribution center, (2) the company’s current advertising budget in the buyer’s region of the
world market, and (3) the appeal of the company’s celebrity endorsers in the buyer’s region.
Shipments to online buyers are always made from the distribution center in the region where the
online buyer is located. Since there are region-to region variations in the S/Q ratings of pairs in each
distribution center, company ad budgets, and celebrity appeal, it is logical that these three regionspecific
factors come into play in determining online sales in each geographic region. The more
favorably that your company’s S/Q rating, advertising, and celebrity appeal in a given region
compare with those of rival footwear companies and the more favorably that your company’s
average online retail sales price, models offered, and shipping charges compare with those of
other online competitors, the bigger your online sales volume and Internet market share.