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8/8/2019 19011871 Footwear Industry
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Footwear Industry
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INDIAN FOOTWARE INDUSTRY
y The Indian footwear retail market isexpected to grow at a CAGR of over 20% for the period spanningfrom 2008 to 2011.
y Footwear is expected to compriseabout 60% of the total leatherexports by 2011 from over 38% in2006-07.
y Presently, the Indian footwearmarket is dominated by Men'sfootwear market that accounts fornearly 58% of the total Indian
footwear retail market.y By products, the Indian footwear
market is dominated by casualfootwear market that makes up fornearly two-third of the totalfootwear retail market.
y As footwear retailing in India
remain focused on men's shoes,
there exists a plethora of
opportunities in the exclusive
ladies' and kids' footwear segment
y The Indian footwear market scoresover other footwear markets as it
gives benefits like low cost of
production, abundant raw material,
and has huge consumption market.
y The footwear component industryalso has enormous opportunity for
growth to cater to increasing
production of footwear of various
types, both for export and domestic
market.
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Business environment
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Athletic footwear industry
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Just do it
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The Journey
y 1960s-Phillip Knight(CEO) & William Bowerman partnered to
sell running shoes to athletes.
Headquarters-Washington
y 1978- BRS, Inc. officially renamed itself to Nike
y 2008- revenue in excess of $18.6 billion USD.
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Marketing Strategy
y Nike's marketing strategy is an important component of the company's
success.
y Nike is positioned as a premium-brand, selling well-designed and
expensive products.y Nike lures customers with a marketing strategy centering around a
brand image which is attained by distinctive ¶swoosh· logo and the
advertising slogan: "Just do it".
y Nike promotes its products by sponsorship agreements with
celebrity athletes, professional teams and college athletic teams.
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Nike's marketing mix
contains many
elements besidespromotion.
1. Advertising
2. Beatles song
3. Horror ad
4. Pretty ad
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Brand Ambassadors
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STRENGTHS
Competitive
Self confidence
Employs more than 30,000 people worldwideBelongs to Fortune 500 companies which
2007 total revenue exceeded 16 b. USD
Large scale operation
Strong and innovative marketing strategy
WEAKNESSES
Major income source-footwear
Exploit cheap workforce
Employees child labor occasionally
OPPURTUNITIES
There is also the opportunity to develop
products other than shoes such as sportswear, jewellery, clothing, etc. Such higher value items
tend to bring higher profits.
THREAT
Financial crisis may lead to job shortages in a
number of Nike·s worldwide subsidiaries;
The market for sports shoes and clothing is
very competitive
Nike is vulnerable to the international nature
of trade
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NEW MODELS
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COMPANY PROFILEy Adidas Ltd is a German sports apparel manufacturer and part of
the Adidas Group, which consists of Reebok sportswear company,
TaylorMade-adidas golf company, and Rockport.
y The company is the largest sportswear manufacturer in Europe
and the second largest sportswear manufacturer in the world.[2]
y The company revenue for 2006 was listed at ½10.084 billion, or
about US $13.625 billion and the 2007 figure was listed at
½10.299 billion, or about $15.6 billion.
y MISSION: Our mission is to become the best sports brand in theworld. To that end, we will never equate quantity with quality.
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Products Of Adidas Group
y Adidas
y Footwear, apparel, and hardware such as bags and balls
y Reebok
y Footwear, apparel and hardwarey Rockport
y Footwear
y TaylorMade-adidas Golf
y Golf Equipment: metalwoods, irons putters, golf balls,
footwear, apparel and accessories
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Operating Regions
y More than 170 subsidiaries guarantee marketplace presence
for adidas products around the world.
y Sales and distribution of adidas products is grouped in four
regions worldwide: Europe/Emerging Markets, North
America, Asia/Pacific and Latin America.
y Today, adidas is Europe·s biggest supplier of athletic footwear
and sports apparel.
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STRENGTHS
Adidas is popular in Europe among soccer and
athletic fans .
Reebok appeals to US fans of basketball and
football. It has become the biggest rival to the
world leader NIKE.
They have has global presence.
Adidas focuses on performance development
and technology development while Reebok is
purely sales driven
WEAKNESSES
Negative image portrayed by poor working
conditions in its overseas factories
E-commerce is limited to USA
The direct sale to consumers is creating
conflicts with its own resellers
OPPORTUNITIES
Increasing demand in the industry for products
available online
Increase female participation in athletics
E-commerce will reduce the cost of goods sold
thus improving the "bottom line"New technology and innovation to stay on top
of market need.
Collaborate with other online retailers to offer
Adidas products
THREAT
Economic downturn in North America and
Asian Countries
Increase in the price of providing
technological solutions (e-commerce)
Strong competition from some of its majorchallengers in all branches of the business
Increase in the Price of Raw materials
Nike's strong reputation in the footwear and
apparel industry
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Marketing Strategies of Adidasy Adidas believes that marketing
is much more important because shoe is in the´shopping goodsµ category.
y Adidas outsources itsproduction and focuses onmarketing
y Adidas launched severalcampaigns like in 2004IMPOSSIBLE IS NOTHING CAMPAIGN·,MATCH CENTRE CAMPAIGN
y Cooperate with referencegroups
y Cooperate with famousdesigners
y Change the traditional imageof sport
y
It also partnered with MTV.
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PRODUCT
Attracting competitors' customers.
Sharper product differentiation.
Finding other products' uses.
Increasing promotional effort.
PRICE
Increasing present customers' rate of usage.
Increasing the units of sales.
Special price packages/cross-selling products
Reduction in price.
Price incentive for increased use
PROMOTION
Attracting other market segments.
Seeking other distribution channels.
Advertising in other media.
PLACE
New geographical markets.
National market expansion.
Regional market expansion.
Export market expansion.
4P·s OF ADIDAS
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Bata Shoe Org anization
Bata Industrials Worldwide Bata India Limited Bata Industrials is a specialized division of
the World·s largest shoe manufacturer: theBata Shoe Organization (BSO)
Today, Bata Industrials is one of world·slargest manufacturer & marketer of Safetyfootwear The company headquarters islocated in Best, the Netherlands.
Bata Industrials has operations and
production facilities in most of theCountries worldwide.
Bata Industrials Footwear incorporatesmore than 100 years of experience.
Incorporated as Bata Shoe CompanyPrivate Limited in 1931, the company wasset up initially as a small operation in
Konnagar (near Calcutta) in 1932.
Bata India is the largest company for theBata Shoe Organization in terms of salespairs and the second largest in terms of revenues.
Bata India Limited is the largest footwearretailer in India.
Bata India has more than 1250 stores acrossthe Country.
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BATA ² Wrong Target
In the early 1990s, Bata decided to embrace the high-end segments of
the Indian shoe market as a part of its target market.
The segment constituted a mere 5 to 10 per cent of the footwear market
in India.
This segment was not sizable for a company like Bata and the segmentdid not gel with Bata·s distinctive competence.
The top end of the market suddenly became the main focus of the
company and it forgot its bread-and-butter shoes that had given the
company its identity.
The year 1995 saw the company running a loss of Rs. 42 crores.
After learning the lesson the hard way, Bata did an about-turn from its
adventure with high-end segment and returned to the mass segment.
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Marketing Strategy Bata is reinventing itself and has
introduced the concept of flagshipstores to provide complete and uniqueshopping experience at par with theirstores abroad.
International trends, relaxed ambience,great products, and courteous staff atthe new-look Flagship store are all apart of Bata·s new marketing strategy.
Reposition brand 'Bata' - High brandrecall for consumer lead to higherfootfalls and better conversions
Target new market (ladies and kids) -Filling the missing 45% pie of footwearmarket
Improving shoe line - Launchinginternational brands, focus on style willattract new young customer class
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95 Paise Price Tags It was a strategy to begin sales
talk with buyers curious aboutprice like Rs 299.95.
It would automatically createinterest in the product. And
from there salesmen can starttheir talk.
The Bata price also had apsychological impact on theprospective buyers as it fellshort of an amount that might
have looked like a high price. The price tag was devised to
communicate to customers thatBata values even their five paise.
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Bata Overview
Market segment low to medium priced footwear for thecommon person across the globe
Local Strategy Bata runs semi-autonomous companies
targeted at the low to medium end of
the scale.
MarketingApproach Bata clusters countries geographically
into groups; the expatriate would build
regional specialization & training
activities would be more relevant on a
regional basis for similar counties
International strategy Bata follows a multi domestic strategy. It
stands for low integration across
country units & high local
responsiveness
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Bata·s Offerings
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Historyy Established in the year 1954 by Mr. D P Gupta, Mr. P D Gupta
and Mr. R K Bansal
y Liberty Shoes Ltd. is a leading leather shoes brand and is engaged
in the manufacturing, supplying and exporting of the same.
y It is the only Indian leather shoe brand that occupies fifth ranking
among the top shoes manufacturing companies in the world
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Liberty-Quality Footweary Liberty has been awarded
several times by prestigiousawards such as:
y 2005 ² 2006 Export Award
y Golden Peacock Innovation
Award in the year 2005&2007y It has a patented technology
"HUMANTECH" which statesthe company·s philosophy of theoptimum utilization of humancraftsmanship and technological
excellence.y SAP was used first time in
Indian footwear Industry by´Libertyµ.
y The products are quality testedand it also has managementsystems and tools in place suchas :
y In the year 2000, KAIZEN was
implemented and is practicedthroughout the organization.
y The concept of 5S wasintroduced in the company inthe year 2001 and presently it isin matured stage and is followed
religiously.y It have received ISO 9001:2000
certification
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Marketing Strategy
Liberty has anextensive distributionchannel which hasenabled them todevelop a firm gripover the market.
02 OverseasOffices
14 Branch Offices
20 OverseasShowrooms
300 Liberty
ExclusiveDistributors
375 Retail Stores(10 outside India)
The company is broadening their product range from needbased shoes to lifestyle shoes.
Liberty Shoes is increasing their presence in the high endmarket through concept stores called "Revolutionsµ.
Revolutions· strategy is to target women and children toincrease footfalls.
Apart from having presence in malls, Revolutions is alsoexpanding its reach through the Shop in Shop concept.
In September 2005, Liberty Shoes and Pantaloon Retailentered in to a joint venture for the business of footwearretailing.
Another significant market that Liberty Shoes addresses is the
institutional market. They manufacture safety shoes forindustrial workers. 9% of their revenues came from thissegment
¶Sapne Hue Apne· the entire look of the campaign wasthoughtfully stylized to strike a chord with the upmarket,fashion centric youth.
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Sales through different channels of distribution
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PRICING STRATEGY
Liberty·s strategy is to scale up in alldirections, i.e.to widen customer
base by introducing products for all
categories of customers, through
different channels of distribution.
Liberty wants to create foothold in thedomestic and export market.
With the implementation of VAT at a
flat rate of 12%, the company has
taken a long term view of their pricing
strategy which has been revised fromtheApril 2005.
Liberty's strategy of introducingvarious price points to cater to
different income groups will help
them in garnering a greater market
share.
Moving up the value chain byintroducing brands to cater to higher
income groups as well as putting up
retail shops in malls will auger well for
the company.
This strategy will help establish their brands as well as increase margins.
Another interesting aspect is the
company's change in focus from
men's shoes to concentrating on shoes
for the entire family.
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SCALING IN ALL DIRECTIONS
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Action Shoesy Action is headquartered in Delhi.
y Quality shoes for the whole family-ranging from casuals toformals.
y Most Action offerings are in the mid - range price segments.
y COMPLETE FAMILY FOOTWEAR
y A backward integration strategy
y A forward integration strategy
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Action Shoesy Quality commitment.
y Manufacturing excellence.
y Quality people.
y
Quality customers.y Social responsibility.
y "Lala Muni Lal Mange CharitableTrust" since 1977.Today
it is engaged in various kinds of charitable activities.
y
Marketing strategy.y Wide consumer base.
y Wide price products.
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RELAXO
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Relaxo
y Relaxo stepped into the footwear industry in 1976 .
y It started off with the manufacture of Hawaii slippers andsubsequently diversified into manufacturing casuals, joggers,
school and leather shoes.
y From a modest sale of around Rs. 1 million in the year 77-78, ithas today crossed the Rs. 2000 million+ figure.
y
Relaxo has the capacity to manufacture over 100 million pairs, perannum.
y customer base of around 100 million people.
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The Relaxo
advantageQuality
Responseassurance
Productioncapacity
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Marketing strategyy Economies of scale.
y Outsourcing for manycompanies.
y Hitting customer base inlower and middle class.
y Slippers & School shoes
y Low price products withgood quality
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COMPARISON OF COMPANIES
COMPANIES AVERAGE GROWTH
RATE (2005 ± 2008)
NIKE 10.7 %
ADIDAS 22.46 %
BAT A 7.8 %
LIBERTY 11.16 %
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COMPARISON OF THE COMPANIES (PORTER·S
MODEL)
BASISOF
COMPARI
SON
NIKE ADIDAS RELAXO
ACT
IO
N BAT A LIBER
TY
BARRIER
S TO
ENTRY
ABSENT ABSENT ABSENT ABSENT ABSENT ABSENT
BARGANI
NG
POWER
OF
BUYERS
LOW LOW HIGH HIGH HIGH HIGH
BARGAINPOWER
OF
SUPPLIER
LOW
LOW
HIGH HIGH HIGH HIGH
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THREATS OF
SUBSTITUTE
S
HIGH HIGH HIGH HIGH HIGH HIGH
RIVALRY
AMONG THE
EXISTING
COMPITITORS
HIGH HIGH HIGH HIGH HIGH HIGH
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COMPANIES TARGETING THE CONSUMERS BASED ON INCOME PER ANNUM
BATA,ACTION, LIBERTY,
NIKE,ADIDAS,RELAXO
LOWER MIDDLE
CLASS
UPPER MIDDLE
CLASS
RICH CLASS
BATA,ACTION,RELAXOLOWER INCOME
GROUP
ACTION, LIBERTY,
NIKE,ADIDAS
PUMA,NIKE
AD
ID
AS
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REVENUE COMPARISON
0
0.05
0.1
0.15
0.2
0.25
2005 2006 2007 2008
YEARS
R E V E N U E ( B I L L I O N U
S
BATA
LIBERTY
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Got your Choos?
y Premium pricing (as in the case of luxury items) ensures
that the item is not available to a wide market segment.
y Jimmy Choo shoes are a fine example of a successful
premium priced item
y Premium pricing not only implies good quality but also
¶exclusivity·
y Choos are also known for their uniqueness
yJimmy Choos are priced so that not many people can affordthem ² only a certain ¶segment· of the market wears them
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Approx 99, 800
This patented pair costs £440
(approx Rs. 31,300)
This one costs a mere £465.00
(approx Rs. 33,000)
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THE MOST EXPENSIVE SHOES
THE CINDERELLA SLIPPERS
How much could a pair of shoes cost?
Well, the world's most expensive pair
of women's shoes costs a cool $2million!
The one-of-a-kind 4 -inch stiletto
sandals are studded with 565 platinum-set Kwiat diamonds (which include 55
carats of clear diamonds and one big 5-
carat stone).
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GROUP 5
NAVEEN
NAKULKRANTI
MILAN
NEHA GULATI