Footwear Industry

INDIAN FOOTWARE INDUSTRY The Indian footwear retail

market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011.

Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07.

Presently, the Indian footwear market is dominated by Men's footwear market that accounts for nearly 58% of the total Indian footwear retail market.

By products, the Indian footwear market is dominated by casual footwear market that makes up for nearly two-third of the total footwear retail market.

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

The Indian footwear market scores over other footwear markets as it gives benefits like low cost of production, abundant raw material, and has huge consumption market.

The footwear component industry also has enormous opportunity for growth to cater to increasing production of footwear of various types, both for export and domestic market.

Business environment

Athletic footwear industry

Just do it

The Journey

1960s-Phillip Knight(CEO) & William Bowerman partnered to

sell running shoes to athletes. Headquarters- Washington

1978- BRS, Inc. officially renamed itself to Nike

2008- revenue in excess of $18.6 billion USD.

Marketing StrategyNike's marketing strategy is an important

component of the company's success. Nike is positioned as a premium-brand, selling

well-designed and expensive products. 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". 

Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams.

Nike's  marketing mix  contains many

elements besides promotion.

1. Advertising

2. Beatles song

3. Horror ad

4. Pretty ad

Brand Ambassadors

STRENGTHS

•Competitive• Self confidence•Employs more than 30,000 people worldwide•Belongs 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

NEW MODELS

COMPANY PROFILEAdidas 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.

The company is the largest sportswear manufacturer in Europe and the second largest sportswear manufacturer in the world.[2]

The company revenue for 2006 was listed at €10.084 billion, or about US $13.625 billion and the 2007 figure was listed at €10.299 billion, or about $15.6 billion.

MISSION: Our mission is to become the best sports brand in the world. To that end, we will never equate quantity with quality.

Products Of Adidas GroupAdidas Footwear, apparel, and hardware such as

bags and balls Reebok Footwear, apparel and hardwareRockport FootwearTaylorMade-adidas Golf Golf Equipment: metalwoods, irons putters,

golf balls, footwear, apparel and accessories

Operating Regions

More than 170 subsidiaries guarantee marketplace presence for adidas products around the world.

Sales and distribution of adidas products is grouped in four regions worldwide: Europe/Emerging Markets, North America, Asia/Pacific and Latin America.

Today, adidas is Europe’s biggest supplier of athletic footwear and sports apparel.

STRENGTHSAdidas 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 factoriesE-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 athleticsE-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

THREATEconomic downturn in North America and Asian Countries Increase in the price of providing technological solutions (e-commerce)Strong competition from some of its major challengers in all branches of the business Increase in the Price of Raw materialsNike's strong reputation in the footwear and apparel industry

Marketing Strategies of AdidasAdidas believes that

marketing is much more important because shoe is in the “shopping goods” category.

Adidas outsources its production and focuses on marketing

Adidas launched several campaigns like in 2004 IMPOSSIBLE IS NOTHING CAMPAIGN’,MATCH CENTRE CAMPAIGN

Cooperate with reference groups

Cooperate with famous designers

Change the traditional image of sport

It also partnered with MTV.

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 productsReduction 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

Bata Shoe OrganizationBata Industrials Worldwide Bata India Limited

Bata Industrials is a specialized division of the World’s largest shoe manufacturer: the Bata Shoe Organization (BSO)

Today, Bata Industrials is one of world’s largest manufacturer & marketer of Safety footwear The company headquarters is located in Best, the Netherlands.

Bata Industrials has operations and production facilities in most of the Countries worldwide.

Bata Industrials Footwear incorporates more than 100 years of experience.

Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932.

Bata India is the largest company for the Bata Shoe Organization in terms of sales pairs and the second largest in terms of revenues.

Bata India Limited is the largest footwear retailer in India.

Bata India has more than 1250 stores across the Country.

BATA – 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 segment did 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.

Marketing Strategy Bata is reinventing itself and has

introduced the concept of flagship stores to provide complete and unique shopping experience at par with their stores abroad.

International trends, relaxed ambience, great products, and courteous staff at the new-look Flagship store are all a part of Bata’s new marketing strategy.

Reposition brand 'Bata' - High brand recall for consumer lead to higher footfalls and better conversions

Target new market (ladies and kids) - Filling the missing 45% pie of footwear market

Improving shoe line - Launching international brands, focus on style will attract new young customer class

95 Paise Price Tags It was a strategy to begin

sales talk with buyers curious about price like Rs 299.95.

It would automatically create interest in the product. And from there salesmen can start their talk.

The Bata price also had a psychological impact on the prospective buyers as it fell short of an amount that might have looked like a high price.

The price tag was devised to communicate to customers that Bata values even their five paise.

Bata OverviewMarket segment low to medium priced

footwear for the common person across the globe

Local Strategy Bata runs semi-autonomous companies targeted at the low to medium end of the scale.

Marketing Approach 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

Bata’s Offerings

History Established in the year 1954 by Mr. D P Gupta,

Mr. P D Gupta and Mr. R K Bansal

Liberty Shoes Ltd. is a leading leather shoes brand and is engaged in the manufacturing, supplying and exporting of the same.

It is the only Indian leather shoe brand that

occupies fifth ranking among the top shoes manufacturing companies in the world

Liberty-Quality FootwearLiberty has been awarded

several times by prestigious awards such as:

2005 – 2006 Export Award

Golden Peacock Innovation Award in the year 2005&2007 

It has a patented technology "HUMANTECH" which states the company’s philosophy of the optimum utilization of human craftsmanship and technological excellence.

SAP was used first time in Indian footwear Industry by “Liberty”.

The products are quality tested and it also has management systems and tools in place such as :

In the year 2000, KAIZEN was implemented and is practiced throughout the organization.

The concept of 5S was introduced in the company in the year 2001 and presently it is in matured stage and is followed religiously.

It have received ISO 9001:2000 certification

Marketing StrategyLiberty has an extensive distribution channel which has enabled them to develop a firm grip over the market.02 Overseas Offices 14 Branch Offices 20 Overseas Showrooms 300 Liberty Exclusive Distributors 375 Retail Stores (10 outside India)

The company is broadening their product range from need based shoes to lifestyle shoes.

Liberty Shoes is increasing their presence in the high end market through concept stores called "Revolutions”.

Revolutions’ strategy is to target women and children to increase footfalls.

Apart from having presence in malls, Revolutions is also expanding its reach through the Shop in Shop concept.

In September 2005, Liberty Shoes and Pantaloon Retail entered in to a joint venture for the business of footwear retailing.

Another significant market that Liberty Shoes addresses is the institutional market. They manufacture safety shoes for industrial workers. 9% of their revenues came from this segment

‘Sapne Hue Apne’ the entire look of the campaign was thoughtfully stylized to strike a chord with the upmarket, fashion centric youth.

Sales through different channels of distribution

PRICING STRATEGY Liberty’s strategy is to scale

up in all directions, 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 the domestic 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 from the April 2005.

Liberty's strategy of introducing various price points to cater to different income groups will help them in garnering a greater market share.

Moving up the value chain by introducing 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.

SCALING IN ALL DIRECTIONS

Action Shoes Action is headquartered in Delhi.

Quality shoes for the whole family-ranging from casuals to formals.

Most Action offerings are in the mid - range price segments.

COMPLETE FAMILY FOOTWEAR

A backward integration strategy

A forward integration strategy

Action Shoes Quality commitment.Manufacturing excellence.Quality people.Quality customers.Social responsibility."Lala Muni Lal Mange Charitable Trust"

since 1977. Today it is engaged in various kinds of charitable activities.

Marketing strategy.Wide consumer base.Wide price products.

RELAXO

Relaxo

Relaxo stepped into the footwear industry in 1976 .

It started off with the manufacture of Hawaii slippers and subsequently diversified into manufacturing casuals, joggers, school and leather shoes.

From a modest sale of around Rs. 1 million in the year 77-78, it has today crossed the Rs. 2000 million+ figure.

Relaxo has the capacity to manufacture over 100 million pairs, per annum.

customer base of around 100 million people.

The Relaxo

advantageQuality

Response

assurance

Production

capacity

Marketing strategyEconomies of scale.

Outsourcing for many companies.

Hitting customer base in lower and middle class.

Slippers & School shoes

Low price products with good quality

COMPARISON OF COMPANIES

COMPANIES AVERAGE GROWTH RATE (2005 – 2008)

NIKE 10.7 %

ADIDAS 22.46 %

BATA 7.8 %

LIBERTY 11.16 %

COMPARISON OF THE COMPANIES (PORTER’S MODEL)

BASIS OF

COMPARISON

NIKE ADIDAS RELAXO ACTION BATA LIBERTY

BARRIERS TO ENTRY

ABSENT ABSENT ABSENT ABSENT ABSENT ABSENT

BARGANING POWER OF BUYERS

LOW LOW HIGH HIGH HIGH HIGH

BARGAINPOWER OF SUPPLIER

LOW LOW HIGH HIGH HIGH HIGH

THREATS OF SUBSTITUTES

HIGH HIGH HIGH HIGH HIGH HIGH

RIVALRY AMONG THE EXISTING COMPITITORS

HIGH HIGH HIGH HIGH HIGH HIGH

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, NIKEADIDAS

REVENUE COMPARISON

0

0.05

0.1

0.15

0.2

0.25

2005 2006 2007 2008

YEARS

RE

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NU

E (

BIL

LIO

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)

BATA

LIBERTY

Got your Choos?Premium pricing (as in the case of luxury

items) ensures that the item is not available to a wide market segment.

Jimmy Choo shoes are a fine example of a successful premium priced item

Premium pricing not only implies good quality but also ‘exclusivity’

Choos are also known for their uniquenessJimmy Choos are priced so that not many

people can afford them – only a certain ‘segment’ of the market wears them

Approx 99, 800

This patented pair costs £440

(approx Rs. 31,300)

This one costs a mere £465.00

(approx Rs. 33,000)

THE MOST EXPENSIVE SHOES

THE CINDERELLA SLIPPERSHow much could a pair of shoes cost?

Well, the world's most expensive pair of women's shoes costs a cool $2 million!

The one-of-a-kind 4½-inch stiletto sandals are studded with 565 platinum-set Kwiat diamonds (which include 55 carats of clear diamonds and one big 5-carat stone).

GROUP 5NAVEENNAKULKRANTIMILAN

NEHA GULATI