19011871 Footwear Industry

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Footwear Industry



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.



Business environment



Athletic footwear industry



Just do it



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.



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.



Nike's marketing mix

contains many

elements besidespromotion.

1. Advertising

2. Beatles song

3. Horror ad

4. Pretty ad



Brand Ambassadors



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



NEW MODELS





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.



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



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.



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



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.



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





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.



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.



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



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.



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



Bata·s Offerings





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



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



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.



Sales through different channels of distribution



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.



SCALING IN ALL DIRECTIONS





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



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.



RELAXO



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.



The Relaxo

advantageQuality

Responseassurance

Productioncapacity



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



COMPARISON OF COMPANIES

COMPANIES AVERAGE GROWTH

RATE (2005 ± 2008)

NIKE 10.7 %

ADIDAS 22.46 %

BAT A 7.8 %

LIBERTY 11.16 %



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



THREATS OF

SUBSTITUTE

S

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,NIKE

AD

ID

AS





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



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



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 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).





GROUP 5

NAVEEN

NAKULKRANTI

MILAN

NEHA GULATI

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19011871 Footwear Industry